UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
TRANSITION REPORT PURSANT 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 IH 35 South, New Braunfels, TX
(Address of principal executive offices)
78130
(Zip Code)
Registrant’s telephone number, including area code: (830) 302-5200
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
Class B Common Stock, $0.01 par value
RUSHA
RUSHB
NASDAQ Global Select Market
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes
No
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 if the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2021 was approximately
$2,091,623,197 based upon the last sales price on June 30, 2021 on The NASDAQ Global Select MarketSM of $43.24 for the registrant’s
Class A Common Stock and $38.14 for the registrant’s Class B Common Stock. Shares of Common Stock held by each executive officer
and director and by each shareholder affiliated with a director or an executive officer have been excluded from this calculation because
such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other
purposes.
The registrant had 43,049,158 shares Class A Common Stock and 12,344,153 shares of Class B Common Stock outstanding on
February 15, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant’s definitive proxy statement for the registrant’s 2022 Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission not later than 120 days after December 31, 2021, are incorporated by reference into Part
III of this Form 10-K.
RUSH ENTERPRISES, INC.
Index to Form 10-K
Year ended December 31, 2021
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Item 10
Item 11
Item 12
Item 13
Item 14
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part I
Part II
Market for Registrant’s Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Controls and Procedures
Other Information
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
and Related Shareholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15
Item 16
Exhibits, Financial Statement Schedules
Form 10-K Summary
Part IV
Page No.
1
20
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28
28
29
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32
45
46
79
79
81
81
81
81
81
81
82
85
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-K (or otherwise made by the Company or on the Company’s behalf
from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases,
conferences, website postings or otherwise) that are not statements of historical fact constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act of 1934, as amended (the
“Exchange Act”), notwithstanding that such statements are not specifically identified. Forward-looking statements
include statements about the Company’s financial position, business strategy and plans and objectives of
management of the Company for future operations. These forward-looking statements reflect the best judgments of
the Company about the future events and trends based on the beliefs of the Company’s management as well as
assumptions made by and information currently available to the Company’s management. Use of the words “may,”
“should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect” and “intend” and words
or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are
intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements reflect our current view of the Company with respect to future events and are subject
to risks and uncertainties that could cause actual results to differ materially from those in such statements. Please
read Item 1A. “Risk Factors” for a discussion of certain of those risks. Other unknown or unpredictable factors
could also have a material adverse effect on future results. Although the Company believes that its expectations are
reasonable as of the date of this Form 10-K, it can give no assurance that such expectations will prove to be correct.
The Company does not intend to update or revise any forward-looking statements unless securities laws require it
to do so, and the Company undertakes no obligation to publicly release any revisions to forward-looking statements,
whether because of new information, future events or otherwise.
NOTE REGARDING TRADEMARKS COMMONLY USED IN THE COMPANY’S FILINGS
Peterbilt® is a registered trademark of Peterbilt Motors Company. PACCAR® is a registered trademark of PACCAR,
Inc. PacLease® is a registered trademark of PACCAR Leasing Corporation. Navistar® is a registered trademark
of Navistar International Corporation. International® is a registered trademark of Navistar International
Transportation Corp. Idealease is a registered trademark of Idealease, Inc. aka Idealease of North America, Inc.
Blue Bird® is a registered trademark of Blue Bird Investment Corporation. IC Bus® is a registered trademark of IC
Bus, LLC. Hino® is a registered trademark of Hino Motors, Ltd. Isuzu® is a registered trademark of Isuzu Motors
Limited. Ford Motor Credit Company® is a registered trademark of Ford Motor Company. Ford® is a registered
trademark of Ford Motor Company. SAP® is a registered trademark of SAP Aktiengesellschaft. This report contains
additional trade names or trademarks of other companies. Our use of such trade names or trademarks should not
imply any endorsement or relationship with such companies.
Item 1. Business
PART I
References herein to “the Company,” “Rush Enterprises,” “we,” “our” or “us” mean Rush Enterprises, Inc.,
a Texas corporation, and its subsidiaries unless the context requires otherwise.
Access to Company Information
We electronically file annual reports, quarterly reports, proxy statements and other reports and information
statements with the SEC. You may read and copy any of the materials that we have filed with the SEC at the SEC’s
Public Reference Room at 100 F Street NE, Washington, DC 20549. You may obtain information about the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to you on the SEC’s website
at www.sec.gov.
We make certain of our SEC filings available, free of charge, through our website, including annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports.
These filings are available as soon as reasonably practicable after such material is electronically filed with, or
furnished to, the SEC. Our website address is www.rushenterprises.com. The information contained on our website,
or on other websites linked to our website, is not incorporated into this report or otherwise made part of this report.
4
General
Rush Enterprises, Inc. was incorporated in Texas in 1965 and consists of one reportable segment, the Truck
Segment, and conducts business through its subsidiaries. Our principal offices are located at 555 IH 35 South, Suite
500, New Braunfels, Texas 78130.
We are a full-service, integrated retailer of commercial vehicles and related services. The Truck Segment
includes the Company’s operation of a network of commercial vehicle dealerships under the name “Rush Truck
Centers.” Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino,
Ford, Isuzu, IC Bus or Blue Bird. Through our strategically located network of Rush Truck Centers, we provide
one-stop service for the needs of our commercial vehicle customers, including retail sales of new and used
commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance
products.
Our Rush Truck Centers are principally located in high traffic areas throughout the United States. Since
commencing operations as a Peterbilt heavy-duty truck dealer in 1966, we have grown to operate over 125 Rush
Truck Centers in 23 states. In 2019, we purchased a 50% equity interest in an entity in Canada, Rush Truck Centres
of Canada Limited (“RTC Canada”), which currently owns and operates 15 International locations in Ontario,
Canada.
Our business strategy consists of providing solutions to the commercial vehicle industry through our
network of commercial vehicle dealerships. We offer an integrated approach to meeting customer needs by providing
service, parts and collision repairs in addition to new and used commercial vehicle sales and leasing, plus financial
services, vehicle upfitting, CNG fuel systems and vehicle telematics products. We intend to continue to implement
our business strategy, reinforce customer loyalty and remain a market leader by continuing to develop our Rush
Truck Centers as we expand our product offerings and extend our dealership network through strategic acquisitions
of new locations and opening new dealerships in existing areas of operations to enable us to better serve our
customers.
Rush Truck Centers. Our Rush Truck Centers are located in Alabama, Arizona, Arkansas, California,
Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, Nevada, New Mexico, North
Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah and Virginia. The following chart reflects our
franchises and parts, service and collision repair operations by location as of February 15, 2022:
Rush Truck Center Location Commercial Vehicle Franchise(s)
Truck
Sales
Parts
and
Service
Collision
Center
Alabama
Birmingham
Mobile
Arizona
Flagstaff
Phoenix
Phoenix East
Tucson
Yuma
Arkansas
Jonesboro
Lowell
North Little Rock
Pine Bluff
Russellville
California
Ceres
Fontana Heavy-Duty
Fontana Medium-Duty
Fontana Vocational
Long Beach
Los Angeles
San Diego
None
Peterbilt
Peterbilt
Peterbilt, Hino
Peterbilt
Peterbilt, Hino
Peterbilt
International, IC Bus
International, Isuzu, IC Bus
International, IC Bus
International, IC Bus
International, IC Bus
Ford
Peterbilt
Peterbilt, Hino, Isuzu
None
Peterbilt
Peterbilt
Peterbilt, Hino, Ford
5
Yes
Yes
No
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
No
No
No
Yes
Yes
No
No
No
Yes
No
No
No
Yes
No
Rush Truck Center Location
Sylmar
Victorville
Whittier
Colorado
Colorado Springs
Denver
Greeley
Pueblo
Florida
Haines City
Jacksonville
Jacksonville East
Lake City
Miami
Orlando Heavy-Duty
Orlando Light & Medium-Duty
Orlando North
Orlando South
Tampa
Georgia
Atlanta
Atlanta Bus Center
Augusta
Columbus
Doraville
Gainesville
Macon
Smyrna
Tifton
Valdosta
Idaho
Boise
Idaho Falls
Lewiston
Twin Falls
Illinois
Bloomington
Carol Stream
Champaign
Chicago
Effingham
Elk Grove
Huntley
Joliet
Quincy
Springfield
Indiana
Gary
Indianapolis
Kansas
Kansas City
Salina
Topeka
Wichita
Kentucky
Bowling Green
Missouri
Cape Girardeau
Commercial Vehicle Franchise(s)
Peterbilt
Peterbilt
Ford, Isuzu
Truck
Sales
Yes
Yes
Yes
Parts
and
Service
Yes
Yes
Yes
Collision
Center
No
No
No
Peterbilt
Peterbilt, Ford, Isuzu
Peterbilt
Peterbilt
Peterbilt
Peterbilt, Hino
Peterbilt
Peterbilt
None
Peterbilt, Isuzu
Ford
Isuzu
Isuzu
Peterbilt
International, Hino, Isuzu, IC Bus
IC Bus
International, IC Bus
International, Isuzu, IC Bus
International, Hino, Isuzu, IC Bus
International, IC Bus
International
International, Hino, Isuzu, IC Bus
International, IC Bus
International
International, Hino, IC Bus
International, IC Bus
International
International
International, Hino
International
International
International
International
Hino, Isuzu
International
International
International
International
International
International
Hino, Isuzu
International
International
International
Peterbilt
International
6
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
Yes
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
No
Yes
Yes
No
No
No
No
Yes
Yes
Yes
No
No
No
No
Yes
No
Yes
No
No
No
No
No
No
Rush Truck Center Location
Joplin
Kansas City
Kansas City Used Trucks
St. Joseph
St. Louis
St. Peters
Sedalia
Springfield
West Plains
Nevada
Las Vegas
New Mexico
Albuquerque
Farmington
Las Cruces
North Carolina
Asheville
Charlotte
Hickory
Ohio
Akron
Cincinnati
Cleveland
Columbus
Dayton
Lima
Oklahoma
Ardmore
Oklahoma City
Tulsa
Pennsylvania
Greencastle
Tennessee
Memphis
Memphis Used Trucks
Nashville
Texas
Abilene
Amarillo
Arlington
Austin
Austin North
Beaumont
Brownsville
College Station
Corpus Christi
Cotulla
Dalhart
Dallas Heavy-Duty
Dallas Medium-Duty
Dallas Light & Medium-Duty
Dallas South
Commercial Vehicle Franchise(s)
International
International, Dennis Eagle
None
International
International
International
International
International, Isuzu
International
Truck
Sales
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Parts
and
Service
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Collision
Center
No
Yes
No
No
No
No
No
No
No
Peterbilt
Peterbilt
Peterbilt
Peterbilt
International
International, Hino, Isuzu
International
International, IC Bus
International, IC Bus, Isuzu, Ford
International, IC Bus
International, IC Bus, Isuzu(1)
International, IC Bus, Isuzu
International, IC Bus
Peterbilt
Peterbilt, Hino, Ford, Isuzu
Peterbilt, Hino
None
International, Isuzu
None
Peterbilt
Peterbilt
Peterbilt
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino, Isuzu, Blue Bird, Micro
Bird, Elkhart
Peterbilt
Peterbilt
Peterbilt, Elkhart
Peterbilt
Peterbilt, Hino, Isuzu, Blue Bird,
Elkhart
Peterbilt
Peterbilt
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino,
Blue Bird, Micro Bird, Elkhart
Ford, Isuzu
Peterbilt
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
No
Yes
No
No
Yes
No
No
No
No
No
Yes
Yes
No
Yes
No
Yes
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
(1) Our Isuzu franchise is operated out of our Rush Truck Leasing - Columbus location.
7
Rush Truck Center Location
Commercial Vehicle Franchise(s)
Truck
Sales
Parts
and
Service
Collision
Center
El Paso
Fort Worth
Houston
Houston Medium-Duty
Laredo
Lubbock
Lufkin
Odessa
Pharr
Wichita Falls
San Antonio
Sealy
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Utah
Ogden
Salt Lake City
Springville
St. George
Virginia
Chester
Richmond
Peterbilt, Hino, Isuzu
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Hino, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Hino, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Isuzu, Blue Bird, Micro Bird,
Elkhart
Peterbilt, Hino, Isuzu,
Blue Bird, Micro Bird, Elkhart
Peterbilt, Blue Bird, Micro Bird,
Elkhart
Peterbilt
Peterbilt, Hino, Isuzu,
Blue Bird, Micro Bird, Elkhart
Peterbilt
International, IC Bus
International, IC Bus
International
International
International, Hino
International
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
No
No
No
No
No
No
Yes
No
No
No
Yes
Leasing and Rental Services. Through certain of our Rush Truck Centers and several stand-alone Rush
Truck Leasing locations, we provide a broad line of product selections for lease or rent, including Class 4 through
Class 8 commercial vehicles, heavy-duty cranes and refuse vehicles. Our lease and rental fleets are offered to
customers on a daily, monthly or long-term basis. Substantially all of our long-term leases also contain a service
provision, whereby we agree to service the vehicle through the life of the lease. The following chart reflects our
leasing brands by location:
Rush Truck Leasing
Location
Brand
Standalone or in a
Rush Truck Center
Alabama
Birmingham
Arizona
Phoenix
Arkansas
North Little Rock
Lowell
California
Fontana
Pico Rivera
San Diego
Sylmar
Colorado
Denver
PacLease
In RTC
PacLease
Standalone
Idealease
Idealease
PacLease
PacLease
PacLease
PacLease
PacLease
8
In RTC
Standalone
Standalone
Standalone
Standalone
In RTC
Standalone
Rush Truck Leasing
Location
Florida
Orlando
Tampa
Jacksonville
Georgia
Augusta
Macon
Idaho
Boise
Idaho Falls
Illinois
Carol Stream
Chicago
Effingham
Huntley
Joliet
Springfield
Indiana
Indianapolis
Gary
Kansas
Kansas City
Salina
Wichita
Missouri
Joplin
St. Louis
St. Peters
Springfield
New Mexico
Albuquerque
Nevada
Las Vegas
North Carolina
Asheville
Charlotte
Ohio
Cincinnati
Cleveland
Columbus
Dayton
Oklahoma
Oklahoma City
Tennessee
Memphis
Nashville
Texas
Austin
El Paso
Arlington
Houston
Houston NW
Odessa
San Antonio
Tyler
Virginia
Richmond
Norfolk
Utah
Salt Lake City
Franchise
Standalone or in a
Rush Truck Center
PacLease
PacLease
PacLease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
Standalone
In RTC
Standalone
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
Standalone
In RTC
In RTC
In RTC
In RTC
In RTC
In RTC
PacLease
Standalone
PacLease
Standalone
Idealease
Idealease
Idealease
Idealease
Idealease
Idealease
PacLease
Idealease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
PacLease
Idealease
Idealease
Standalone
Standalone
Standalone
Standalone
Standalone
In RTC
In RTC
Standalone
In RTC
Standalone
In RTC
In RTC
Standalone
Standalone
Standalone
In RTC
Standalone
Standalone
Standalone
Idealease
Standalone
9
In addition to the locations in the above table, Rush Truck Leasing also provides full-service maintenance
on customers’ vehicles at several of our customers’ facilities.
Financial and Insurance Products. At our Rush Truck Centers, we offer third-party financing to assist
customers in purchasing new and used commercial vehicles. Additionally, we sell, as agent through our insurance
agency, a complete line of property and casualty insurance, including collision and liability insurance on commercial
vehicles, cargo insurance and credit life insurance.
Other Businesses. Perfection Equipment offers installation of equipment, equipment repair, parts
installation, and paint and body repair at our location in Oklahoma City. Perfection Equipment specializes in up-
fitting trucks used by oilfield service providers and other specialized service providers.
Momentum Fuel Technologies manufactures compressed natural gas fuel systems and related component
parts for commercial vehicles at its facility in Roanoke, Texas. Effective January 2022, we sold 50% of our equity
interest in this entity to a subsidiary of Cummins, Inc. and now we are operating the business as a joint venture with
Cummins.
Custom Vehicle Solutions operates at locations in Denton, Texas and Greencastle, Pennsylvania. Custom
Vehicle Solutions provides new vehicle pre-delivery inspections, truck modifications, natural gas fuel system
installations, body and chassis upfitting and component installation.
The House of Trucks operates at locations in Miami, Florida, Dallas, Texas and Chicago, Illinois. The
House of Trucks sells used commercial vehicles, new and used trailers and offers third-party financing and insurance
products.
World Wide Tires stores operate in two locations in Texas. World Wide Tires primarily sells tires for use
on commercial vehicles.
Industry
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Industry” for a description of our industry and the markets in which we operate.
Our Business Strategy
Operating Strategy. Our strategy is to operate an integrated nationwide dealership network that provides
service solutions to the commercial vehicle industry. Our strategy includes the following key elements:
Management by Dealership Units. At each of our dealerships, we operate one or more of the following
departments: new commercial vehicle sales, used commercial vehicle sales, financial services, parts,
service or a collision center. Our general managers measure and manage the operations of each
dealership according to the specific departments operating at that location. We believe that this system
enhances the profitability of all aspects of a dealership and increases our overall operating margins.
Operating goals for each department at each of our dealerships are established annually and managers
are rewarded for performance relative to these goals.
One-Stop Centers. We have developed our larger commercial vehicle dealerships as “one-stop centers”
that offer an integrated approach to meeting customer needs. We provide service, including collision
repairs, parts, new and used commercial vehicles sales, leasing and rental, plus financial services
including finance and insurance. We believe that this full-service strategy helps to mitigate cyclical
economic fluctuations because our parts, service and collision center operations (referred to herein
collectively as “Aftermarket Products and Services”) at our dealerships generally tend to be less
volatile than our new and used commercial vehicle sales.
Aftermarket Products and Services. Our aftermarket capabilities include a wide range of services and
products, including a fleet of mobile service units, mobile technicians who work in our customers’
facilities, technology solutions, including vehicle telematics support, a proprietary line of parts and
accessories, and factory-certified service for assembly services for specialized bodies and equipment.
We believe that offering a variety of Aftermarket Products and Services at our dealerships and other
10
locations allows us to meet the expanding needs of our customers. We continually strive to leverage
our dealership network to offer more products and services to our customers.
Branding Program. We employ a branding program at all of our dealerships through distinctive signage
and uniform marketing programs to take advantage of our existing name recognition and to
communicate the standardized high quality of our products and reliability of our services throughout
our dealership network.
Growth Strategy. Through our strategic expansion and acquisition initiatives, we have grown to operate a
large, multistate, full-service network of commercial vehicle dealerships. We also own a 50% equity interest in RTC
Canada that owns and operates 15 International locations in Ontario, Canada. We have an option to purchase the
remaining 50% through February 24, 2024. As described below, we intend to continue to grow our business by
expanding our product and service offerings through acquisitions in new geographic areas and by opening new
locations to enable us to better serve our customers.
Expansion of Product and Service Offerings. We intend to continue to expand our product lines within
our existing locations by adding product categories and service capabilities that are both
complementary to our existing product lines and well suited to our operating model. We will continue
to take advantage of technological advances that will provide us with the opportunity to offer vehicle
owners more aftermarket options and the ability to maximize the performance of vehicles in their fleets
using telematics and other technologies.
Expansion Into New Geographic Areas. We plan to continue to expand our dealership network by
acquiring existing dealerships or opening new locations in areas where we do not already have
locations. We believe the geographic diversity of our Rush Truck Center network has significantly
expanded our customer base while reducing the effects of local economic cycles.
Open New Rush Truck Centers in Existing Areas of Operation. We continually evaluate opportunities
to increase our market presence by adding new Rush Truck Centers within our current franchises’ areas
of operation.
Management of Our Dealerships
Rush Truck Centers
Our Rush Truck Centers are responsible for sales of new and used commercial vehicles, as well as related
parts and services.
Aftermarket Products and Services. Revenues from Aftermarket Products and Services accounted for
approximately $1,793.4 million, or 35.0%, of our total revenues for 2021, and 62.7% of our gross profit. Rush Truck
Centers carry a wide variety of commercial vehicle parts in inventory. Certain Rush Truck Centers also feature fully
equipped service and collision center facilities, the combination and configuration of which varies by location,
capable of handling a broad range of repairs on most commercial vehicles. Each Rush Truck Center with a service
department is a warranty service center for the commercial vehicle manufacturers represented at that location, if any,
and most are also authorized service centers for other vehicle component manufacturers, including Cummins, Eaton,
Caterpillar and Allison. We also have mobile service technicians and technicians who staff our customers’ facilities
upon request.
Our service departments perform warranty and non-warranty repairs on commercial vehicles. The cost of
warranty work is generally reimbursed by the applicable manufacturer at retail commercial rates. Warranty-related
parts and service revenues accounted for approximately $111.8 million, or 2.2%, of our total revenues for 2021.
Additionally, we provide a wide array of services, including assembly services for specialized commercial vehicle
bodies and commercial vehicle mounted equipment. Our goal is to provide our customers with any service that they
need related to their commercial vehicles.
As part of our leasing and rental operations, we also enter into contracts to provide full-service maintenance
on certain customers’ vehicles. We had 1,524 vehicles under contract maintenance as of December 31, 2021. The
full-service maintenance revenues and retail service revenues are included as Aftermarket Products and Services
revenues on our Consolidated Statements of Income.
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New Commercial Vehicle Sales. New commercial vehicle sales represent the largest portion of our
revenues, accounting for approximately $2,609.6 million, or 50.9%, of our total revenues in 2021. Of this total, new
Class 8 heavy-duty truck sales accounted for approximately $1,661.9 million, or 32.4%, of our total revenues for
2021, and 63.7% of our new commercial vehicle revenues for 2021.
Our Rush Truck Centers that sell new and used Class 8 heavy-duty trucks manufactured by Peterbilt or
International may also sell medium-duty and light-duty commercial vehicles. Certain Rush Truck Centers sell
medium-duty commercial vehicles manufactured by Peterbilt, Hino, Isuzu, Ford, or International, buses
manufactured by Blue Bird, IC Bus or Elkhart and light-duty commercial vehicles manufactured by Ford (see Part
I, Item 1, “General – Rush Truck Centers” for information on which brands we sell at each Rush Truck Center).
New medium-duty commercial vehicle sales, excluding new bus sales, accounted for approximately $766.3 million,
or 14.9%, of our total revenues for 2021, and 29.4% of our new commercial vehicle revenues for 2021. New bus
sales accounted for approximately $90.8 million, or 1.8%, of our total revenues for 2021, and 3.5% of our new
commercial vehicle revenues for 2021. New light-duty commercial vehicle sales accounted for approximately
$79.4 million, or 1.5%, of our total revenues for 2021, and 3.0% of our new commercial vehicle revenues for 2021.
A significant portion of our new commercial vehicle sales are to customers with large fleets of commercial
vehicles. Because of the size and geographic scope of our Rush Truck Center network, our strong relationships with
our fleet customers and our ability to manage large quantities of used commercial vehicle trade-ins, we are able to
successfully market and sell to fleet customers nationwide. We believe that we have a competitive advantage over
many dealerships because we can absorb multi-unit trade-ins often associated with fleet sales and effectively disperse
the used commercial vehicles for resale throughout our dealership network. We believe that the broad range of
products and services we offer to purchasers of commercial vehicles at the time of purchase and post-purchase results
in a high level of customer loyalty.
Used Commercial Vehicle Sales. Used commercial vehicle sales accounted for approximately
$430.4 million, or 8.4%, of our total revenues for 2021. We sell used commercial vehicles at most of our Rush
Truck Centers and also at our non-franchised used commercial vehicle facilities. We believe that we are well
positioned to market used commercial vehicles due to our ability to recondition them for resale utilizing the service
and collision center departments of our Rush Truck Centers and our ability to move used commercial vehicles
between our dealerships as customer demand warrants. The majority of our used commercial vehicle inventory
consists of commercial vehicles taken as trade-ins from new commercial vehicle customers or retired from our lease
and rental fleet, but we also supplement our used commercial vehicle inventory by purchasing used commercial
vehicles from third parties for resale, as market conditions warrant.
Vehicle Leasing and Rental. Vehicle leasing and rental revenues accounted for approximately
$247.2 million, or 4.8%, of our total revenues for 2021. At our Rush Truck Leasing locations, we engage in full-
service commercial vehicle leasing and rental through PacLease and Idealease. At December 31, 2021, we had 8,914
commercial vehicles in our lease and rental fleet, including cranes. Generally, we sell commercial vehicles that have
been retired from our lease and rental fleet through our used commercial vehicles sales operations. Historically, we
have realized gains on the sale of used lease and rental fleet inventory.
New and Used Commercial Vehicle Financing and Insurance. The sale of financial and insurance products
accounted for approximately $28.0 million, or 0.5%, of our total revenues for 2021. Finance and insurance revenues
have minimal direct costs and therefore, contribute a disproportionate share to our operating profits.
Many of our Rush Truck Centers have personnel responsible for arranging third-party financing for our
product offerings. Generally, commercial vehicle finance contracts involve an installment contract, which is secured
by the commercial vehicle financed and requires a down payment, with the remaining balance generally financed
over a two-year to seven-year period. The majority of these finance contracts are sold to third parties without recourse
to us. We provide an allowance for repossession losses and early repayment penalties that we may incur under these
finance contracts.
We sell, as agent, a complete line of property and casualty insurance to commercial vehicle owners. Our
agency, which operates at locations around the United States outside of our Rush Truck Centers, is licensed to sell
commercial vehicle liability, collision and comprehensive, workers’ compensation, cargo, and credit life insurance
coverage offered by a number of leading insurance companies. Our renewal rate in 2021 was approximately 82%.
We also have licensed insurance agents at several Rush Truck Centers.
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Human Capital Management
On December 31, 2021, we employed 7,166 people. Of these employees, less than 0.7% of the workforce
was classified as part-time. We do not regularly use independent contractors in our business operations. We strive
to provide our employees with the security of long-term employment, competitive compensation and benefits, a
consistent work schedule and opportunities to improve their skills and advance within the Company.
Core Values. Our core values define our culture and reflect who we are and the way we interact with our
customers, suppliers, co-workers and shareholders. Our core values are productivity, fairness, excellence and
positive attitude and are described below.
Productivity means constantly striving toward efficiency and success in all interactions and activities while
working with a common purpose and sense of urgency.
Fairness characterizes our honesty, integrity, truthfulness, dependability and reliability in everything we
do.
Excellence means doing it better than everyone else does. Excellence is reflected in our first-class facilities,
quality products and services, motivated and talented employees, superior results for the customer and
consistency throughout our organization.
Positive Attitude means approaching every day with excitement and passion for the work and dedication to
our customers with positive intensity.
Each of these core values is embodied in our code of conduct, which we call our Rush Driving Principles.
Employees are required to attend training on the Rush Driving Principles and certify that they have read and
understand such principles on an annual basis. We believe that our core values are the foundation of a strong culture
that is a strength for us, and we intend to continue building upon that culture to improve performance across our
business.
Employee Recruitment. We strive to attract the best talent from a variety of sources to meet the current and
future needs of our business. We have established relationships with multiple trade schools and universities across
the country, which we utilize as a source for entry-level talent. Additionally, we believe it is incumbent upon all our
managers to continuously monitor their local markets for experienced individuals who might be successful additions
to our organization.
Compensation Programs and Employee Benefits. Our compensation programs are designed to provide a
compensation package that will attract, retain, motivate and reward employees who must operate in a highly
competitive, fast-paced environment. In general, our compensation programs consist of a base salary or hourly rate,
commissions for employees in front-line customer facing roles, cash performance bonuses for certain employees,
equity incentive awards for senior leaders, vacation leave, sick leave and other forms of paid time off.
We are committed to fair pay. In 2020, the Company established a minimum hourly wage of $15.00 an
hour. Our employees receive a base level of monthly or hourly compensation that we believe is commensurate with
their expertise, skills, knowledge and experience.
We provide our full-time employees with comprehensive benefit options that allow our employees and their
families to live healthier and more secure lives. Some examples of our wide-ranging benefits offered are: Medical
insurance, prescription drug benefits, dental insurance, vision insurance, hospital indemnity insurance, accident
insurance, critical illness insurance, smoking cessation assistance program, life insurance, disability insurance, health
savings accounts and flexible spending accounts.
Training and Development. Our training and development programs are designed to facilitate the
development and advancement of talent from within our organization to ensure we continuously fill our ranks with
qualified employees for critical positions in the organization. Members of our Learning and Development team
collaborate with employees from our various operations teams to identify our strategic training needs and prioritize
the development of appropriate training content.
Our Rush Foundational Leader Program is focused on developing key management and leadership skills.
The Rush Foundational Leader Program consists of a series of courses ranging from basic management skills to
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more advanced leadership concepts and skills that are designed for managers throughout our organization. We also
have a New Graduate Management Trainee Program that identifies and recruits new talent from universities across
the country and provides on-the-job training for them to fill various roles within our dealership network.
To enhance and develop the technical skills of entry-level service and body shop technicians, we established
a formal mentorship program lead by experienced service and body shop technicians who serve as mentors to newly
hired, entry level service and body shop technicians. We believe that this program increases the technicians’
likelihood of career success. This formal mentorship program also helps us identify top performers and we believe
it improves employee performance and retention for participants in the program.
Ethics and Compliance. We are committed to the highest standards of corporate conduct. We maintain an
Ethics and Compliance Program that is designed to meet external requirements, as well as our core values and code
of conduct embodied in the Rush Driving Principles. A central component of our Ethics and Compliance Program
is the continuous training and education of our employees on general ethics and compliance training topics. We also
regularly reinforce our commitment to ethics and integrity in communications with our employees.
Employee Engagement and Retention. We conduct an annual comprehensive employee engagement survey
designed to measure organizational culture and engagement. The purpose of the survey is to monitor overall
employee engagement with the goal of identifying actions that can be taken to continuously improve our employee
engagement and lead to increased employee retention. Data collected in each annual employee engagement survey
is maintained and used to track our progress against our internal goals.
Management continually monitors employee turnover data, which is supplemented with additional data
from exit surveys to assist in determining the reasons for voluntary employee terminations. In 2021, our overall
turnover rate was 27.49%, compared to 42.62% in 2020. Our turnover in 2020 was significantly higher than normal
because of involuntary reductions in our workforce that were made at the onset of the COVID-19 pandemic. The
turnover rate of our service and body shop technicians is also monitored closely by management, as the retention of
skilled service and body shop technicians is critical to the success of the Company. Demand for service and body
shop technicians across the country is very high, and turnover in this role is also traditionally high for commercial
vehicle dealers. In 2021, our turnover rate for service and body shop technicians was 36.67%, compared to 39.24%
in 2020.
Health and Safety. Promoting a safe and healthy workplace is our highest priority and is embodied in our
core values. We utilize a mixture of leading and lagging indicators to assess the health and safety performance of
our operations. Lagging indicators include the OSHA Total Recordable Incident Rate ("TRIR") and the Lost Time
(or Lost Workday) Incident Rate ("LTIR") based upon the number of incidents per 100 employees (or per 200,000
work hours). Leading indicators include training completion rates, tracking of local safety committee meeting
minutes, and recording of near misses, as well as other proactive actions taken to ensure employee safety. In 2021,
we had a TRIR of 3.87, compared to 4.17 in 2020 and a LTIR of 0.71 in 2021, compared to 0.81 in 2020.
Labor Relations. We have entered into collective bargaining agreements covering certain employees in
Chicago, Illinois, which will expire on May 10, 2025, Joliet, Illinois, which will expire on May 7, 2022 and Carol
Stream, Illinois, which will expire on May 6, 2023. There have been no strikes, work stoppages or slowdowns during
the negotiations of the foregoing collective bargaining agreements or at any time in the Company’s history, although
no assurances can be given that such actions will not occur. We believe that our relations with the labor unions that
represent these employees are generally good.
Sales and Marketing
Our established history of operations in the commercial vehicle business has resulted in a strong customer
base that is diverse in terms of geography, industry and scale of operations. Our customers include national and
regional truck fleets, corporations, local and state governments and owner-operators. During 2021, no single
customer accounted for more than 10% of our sales by dollar volume. We generally promote our products and
related services through direct customer contact by our sales personnel and advertising.
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Facility Management
Personnel. Each of our facilities is typically managed by a general manager who oversees the operations,
personnel and the financial performance of the location, subject to the direction of a regional manager and personnel
at our corporate headquarters. Additionally, each full-service Rush Truck Center is typically staffed by department
managers, sales representatives and other employees, as appropriate, given the services offered. The sales staff of
each Rush Truck Center is compensated on a salary plus commission, or a commission only basis, while department
managers receive a combination of salary and performance bonus. We believe that our employees are among the
highest paid in the industry, which enables us to attract and retain qualified personnel.
Compliance with Policies and Procedures. Each Rush Truck Center is audited regularly for compliance
with corporate policies and procedures. These internal audits objectively measure dealership performance with
respect to corporate expectations in the management and administration of sales, commercial vehicle inventory, parts
inventory, parts sales, service sales, collision center sales, corporate policy compliance and environmental and safety
compliance matters.
Purchasing and Suppliers. Because of our size, we benefit from volume purchases at favorable prices that
permit us to achieve a competitive pricing position in the industry. We purchase our commercial vehicle inventory
and proprietary parts and accessories directly from the applicable vehicle manufacturer, wholesale distributors, or
other sources that provide the most favorable pricing. Most purchasing commitments are negotiated by personnel
at our corporate headquarters. Historically, we have been able to negotiate favorable pricing levels and terms, which
enable us to offer competitive prices for our products.
Commercial Vehicle Inventory Management. We utilize our management information systems to monitor
the inventory level of commercial vehicles at each of our dealerships and transfer new and used commercial vehicle
inventory among Rush Truck Centers as needed.
Parts Distribution and Inventory Management. We utilize a parts inventory distribution and management
system that allows for the prompt transfer of parts inventory among various Rush Truck Centers. The transfer of
inventory reduces delays in delivery, helps maximize inventory turns and assists in controlling problems created by
overstock and understock situations. Our network is linked to our major suppliers for purposes of ordering parts and
managing parts inventory levels. Automated reordering and communication systems allow us to maintain proper
parts inventory levels and permit us to have parts inventory delivered to our locations, or directly to customers,
typically within 24 hours of an order being placed.
Recent Acquisitions
On December 13, 2021, we completed the acquisition of certain of the assets of Summit Truck Group,
LLC and certain of its subsidiaries and affiliates (collectively, “Summit”), which included full-service commercial
vehicle dealerships and Idealease franchises in Arkansas, Kansas, Missouri, Tennessee and Texas. The acquisition
included Summit’s dealerships representing International, IC Bus, Idealease, Isuzu and other commercial vehicle
manufacturers for a purchase price of approximately $205.3 million, excluding the real property associated with the
transaction. We financed approximately $102.0 million of the purchase price under our floor plan and lease and
rental truck financing arrangements and the remainder was paid in cash. In addition, we purchased certain real
estate owned by Summit for a purchase price of approximately $57.0 million, which was paid in cash.
On November 1, 2021, we acquired certain assets of Illinois Truck Centre, Inc., which included real estate
in Elk Grove, Illinois, along with commercial vehicle parts inventory. The transaction was valued at approximately
$2.7 million, with the purchase price paid in cash. This location is operating as a full-service commercial vehicle
dealership representing Hino and Isuzu.
On October 18, 2021, we acquired certain assets of Commercial Engine Service, Inc. located in Victorville,
California, which included commercial vehicle parts inventory and a long-term lease of the facility. The transaction
was valued at approximately $4.3 million, with the purchase price paid in cash. This location is operating as a full-
service commercial vehicle dealership representing Peterbilt.
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Competition
There is, and will continue to be, significant competition both within our current markets and in new
markets we may enter. We anticipate that competition between us and other dealership groups will continue to
increase in our current markets and on a national level based on the following:
the ability to keep customers’ vehicles operational, which is dependent on the accessibility of
dealership locations and the ability to attract and retain service technicians;
the number of dealership locations representing the manufacturers that we represent and other
manufacturers, which impacts manufacturers’ ability to provide more consistent, higher quality service
in a timely manner across their dealership networks;
price, value, quality and design of the products sold; and
our attention to customer service (including technical service).
Our dealerships compete with dealerships representing other manufacturers, including commercial vehicles
manufactured by Mack, Freightliner, Kenworth and Volvo. We believe that our dealerships are able to compete
with other franchised dealerships, independent service centers, parts wholesalers, commercial vehicle wholesalers,
rental service companies and industrial auctioneers in distributing our products and providing service because of the
following: the overall quality and reputation of the products we sell; the “Rush” brand name recognition and
reputation for quality service; the geographic scope of our dealership network; the breadth of commercial vehicles
offered in our dealership network; and our ability to provide comprehensive Aftermarket Products and Services, as
well as financing, insurance and other customer services.
Dealership Agreements
Peterbilt. We have entered into nonexclusive dealership agreements with Peterbilt that authorize us to act
as a dealer of Peterbilt heavy- and medium-duty trucks. Our Peterbilt areas of responsibility currently encompass
areas in the states of Alabama, Arizona, California, Colorado, Florida, Kentucky, Nevada, New Mexico, Oklahoma,
Tennessee and Texas. These dealership agreements currently have terms expiring between March 2022 and
September 2022. Our dealership agreements with Peterbilt may be terminated by Peterbilt in the event that the
aggregate voting power of the estate of W. Marvin Rush, W.M. “Rusty” Rush, other members of the Rush family
and certain executives of the Company decreases below 22%. Sales of new Peterbilt commercial vehicles accounted
for approximately 31.8% of our total revenues for 2021.
International. We have entered into nonexclusive dealership agreements with Navistar that authorize us to
act as a dealer of International heavy- and medium-duty trucks and, in certain markets, IC buses. Our Navistar areas
of responsibility currently encompass areas in the states of Arkansas, Georgia, Idaho, Illinois, Indiana, Kansas,
Missouri, North Carolina, Ohio, Tennessee, Utah and Virginia. These dealership agreements currently have terms
expiring between December 2022 and December 2026. Sales of new International commercial vehicles accounted
for approximately 10.3% of our total revenues for 2021.
Other Commercial Vehicle Suppliers. In addition to our dealership agreements with Peterbilt and Navistar,
various Rush Truck Centers have entered into dealership agreements with other commercial vehicle manufacturers,
including Blue Bird, and Micro Bird, which currently have terms expiring between August 2022 and August 2024
and Ford, Hino and Isuzu, which have perpetual terms. Sales of new non-Peterbilt and non-International commercial
vehicles accounted for approximately 8.8% of our total revenues for 2021.
All of our dealership agreements impose certain operational obligations and financial requirements upon us
and the relevant dealerships. In addition, each of our dealership agreements requires the consent of the relevant
manufacturer for the sale or transfer of a franchise.
Any termination or nonrenewal of our dealership agreements must follow certain guidelines established by
both state and federal legislation designed to protect motor vehicle dealers from arbitrary termination or nonrenewal
of franchise agreements. The federal Automobile Dealers Day in Court Act and certain other similar state laws
generally provide that the termination or nonrenewal of a motor vehicle dealership agreement must be done in “good
faith” and upon a showing of “good cause” by the manufacturer for such termination or nonrenewal, as such terms
have been defined by statute and interpreted in case law.
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Floor Plan Financing
Most of our commercial vehicle inventory purchases are made on terms requiring payment to the
manufacturer within 15 days or less from the date the commercial vehicles are invoiced from the factory. We finance
the majority of all new commercial vehicle inventory and the loan value of our used commercial vehicle inventory
under our Fifth Amended and Restated credit agreement with BMO Harris Bank N.A. (“BMO Harris”) (the “Floor
Plan Credit Agreement”). The Floor Plan Credit Agreement includes an aggregate loan commitment of $1.0 billion.
Borrowings under the Floor Plan Credit Agreement bear interest at an annual rate equal to (A) the greater of (i) zero
and (ii) one month London Interbank Offered Rate (“LIBOR rate”), determined on the last day of the prior month,
plus (B) 1.10% and are payable monthly. Loans under the Floor Plan Credit Agreement for the purchase of used
inventory are limited to $150.0 million and loans for working capital purposes are limited to $200.0 million. The
Floor Plan Credit Agreement expires on September 14, 2026, although BMO Harris has the right to terminate at any
time upon 360 days written notice and we may terminate at any time, subject to specified limited exceptions. On
December 31, 2021, we had approximately $549.0 million outstanding under the Floor Plan Credit Agreement. The
average daily outstanding borrowings under the Floor Plan Credit Agreement were $381.0 million during the twelve
months ended December 31, 2021. We utilize our excess cash on hand to pay down our outstanding borrowings
under the Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to our gross
interest expense under the Floor Plan Credit Agreement.
Lease and Rental Fleet Financing
On September 14, 2021, we entered into the WF Credit Agreement with the Lenders signatory thereto (the
“WF Lenders”) and Wells Fargo Bank, National Association (“WF”), as Administrative Agent (in such capacity, the
“WF Agent”). Pursuant to the terms of the WF Credit Agreement, the WF Lenders have agreed to make up to
$250.0 million of revolving credit loans for certain of our capital expenditures, including commercial vehicle
purchases for our Idealease leasing and rental fleet, and general working capital needs. We expect to use the revolving
credit loans available under the WF Credit Agreement primarily for the purpose of purchasing commercial vehicles
for our Idealease lease and rental fleet. We may borrow, repay and reborrow amounts pursuant to the WF Credit
Agreement from time to time until the maturity date. Borrowings under the WF Credit Agreement bear interest per
annum, payable on each interest payment date, as defined in the WF Credit Agreement, at (A) the daily simple secured
overnight financing rate (“SOFR”) rate plus (i) 1.25% or (ii) 1.5%, depending on our consolidated leverage ratio or
(B) on or after the term SOFR transition date, the term SOFR rate plus (i) 1.25% or (ii) 1.5%, depending on our
consolidated leverage ratio. The WF Credit Agreement expires on September 14, 2024, although, upon the occurrence
and during the continuance of an event of default, the WF Agent has the right to, or upon the request of the required
lenders must, terminate the commitments and declare all outstanding principal and interest due and payable. We may
terminate the commitments at any time. On December 31, 2021, we had approximately $149.9 million outstanding
under the WF Credit Agreement.
On October 1, 2021, the Company entered into that certain Amended and Restated Inventory Financing and
Purchase Money Security Agreement with PACCAR Leasing Company (“PLC”), a division of PACCAR Financial
Corp. (the “PLC Agreement”). Pursuant to the terms of the PLC Agreement, PLC agreed to make up to $300.0 million
of revolving credit loans to finance certain of our capital expenditures, including commercial vehicle purchases and
other equipment to be leased or rented through our PacLease franchises. We may borrow, repay and reborrow
amounts pursuant to the PLC Agreement from time to time until the maturity date, provided, however, that the
outstanding principal amount on any date shall not exceed the borrowing base. Advances under the PLC Agreement
bear interest per annum, payable on the fifth day of the following month, at our option, at either (A) the prime rate,
minus 1.55%, provided that the floating rate of interest is subject to a floor of 0%, or (B) a fixed rate, to be determined
between us and PLC in each instance of borrowing at a fixed rate. The PLC Agreement expires on October 1, 2025,
although either party has the right to terminate the PLC Agreement at any time upon 180 days written notice. If we
terminate the PLC Agreement prior to October 1, 2025, then all payments will be deemed to be voluntary prepayments
subject to a potential prepayment premium. On December 31, 2021, we had approximately $185.0 million
outstanding under the PLC Agreement.
Product Warranties
The manufacturers we represent provide retail purchasers of their products with a limited warranty against
defects in materials and workmanship, excluding certain specified components that are separately warranted by the
suppliers of such components. We provide a warranty on our proprietary line of parts and related service and the
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fuel systems manufactured by Momentum Fuel Technologies. We also provide an extended warranty beyond the
manufacturer’s warranty on new Blue Bird school buses that we sell in Texas, as required by state law.
We generally sell used commercial vehicles in “as is” condition without a manufacturer’s warranty,
although manufacturers sometimes will provide a limited warranty on their used products if such products have been
properly reconditioned prior to resale or if the manufacturer’s warranty on such product is transferable and has not
expired. Although we do not provide any warranty on used commercial vehicles, we offer for sale third-party
warranties.
Trademarks
The trademarks and trade names of the manufacturers we represent, which are used in connection with our
marketing and sales efforts, are subject to limited licenses included in our dealership agreements with each
manufacturer. The licenses are for the same periods as our dealership agreements. These trademarks and trade names
are widely recognized and are important in the marketing of our products. Each licensor engages in a continuous
program of trademark and trade name protection. We hold registered trademarks from the U.S. Patent and
Trademark Office for the following names used in this document: “Rush Enterprises,” “Rush Truck Center” and
“Momentum Fuel Technologies.”
Seasonality
Our Truck Segment is moderately seasonal. Seasonal effects on new commercial vehicle sales related to
the seasonal purchasing patterns of any single customer type are mitigated by the diverse geographic locations of
our dealerships and our diverse customer base, including regional and national fleets, local and state governments,
corporations and owner-operators. However, Aftermarket Products and Services operations historically have
experienced higher sales volumes in the second and third quarters.
Backlog
On December 31, 2021, our backlog of commercial vehicle orders was approximately $3,267.0 million,
compared to a backlog of commercial vehicle orders of approximately $1,247.2 million on December 31, 2020. This
increase in our backlog is primarily due to production constraints experienced by the manufacturers we represent
during 2021. Our backlog is determined quarterly by multiplying the number of new commercial vehicles for each
particular type of commercial vehicle ordered by a customer at our Rush Truck Centers by the recent average selling
price for that type of commercial vehicle. We include only confirmed orders in our backlog. However, such orders
are subject to cancellation. In the event of order cancellation, we have no contractual right to the total revenues
reflected in our backlog. The delivery time for a custom-ordered commercial vehicle varies depending on the truck
specifications and demand for the particular model ordered. We sell the majority of our new heavy-duty commercial
vehicles by customer special order and we sell the majority of our medium- and light-duty commercial vehicles out
of inventory. Orders from a number of our major fleet customers are included in our backlog as of December 31,
2021, and we expect to fill the majority of our backlog orders during 2022.
Environmental Standards and Other Governmental Regulations
We are subject to federal, state and local environmental laws and regulations governing the following:
discharges into the air and water; the operation and removal of underground and aboveground storage tanks; the use,
handling, storage and disposal of hazardous substances, petroleum and other materials; and the investigation and
remediation of environmental impacts. As with commercial vehicle dealerships generally, and vehicle service, parts
and collision center operations in particular, our business involves the generation, use, storage, handling and
contracting for recycling or disposal of hazardous materials or wastes and other environmentally sensitive materials.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in complying with
such laws and regulations.
Our operations involving the use, handling, storage and disposal of hazardous and nonhazardous materials
are subject to the requirements of the federal Resource Conservation and Recovery Act, or RCRA, and comparable
state statutes. Pursuant to these laws, federal and state environmental agencies have established approved methods
for handling, storage, treatment, transportation and disposal of regulated substances with which we must comply.
Our business also involves the operation and use of aboveground and underground storage tanks. These storage
tanks are subject to periodic testing, containment, upgrading and removal under RCRA and comparable state statutes.
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Furthermore, investigation or remediation may be necessary in the event of leaks or other discharges from current
or former underground or aboveground storage tanks.
We may also have liability in connection with materials that were sent to third-party recycling, treatment,
or disposal facilities under the federal Comprehensive Environmental Response, Compensation and Liability Act,
or CERCLA, and comparable state statutes. These statutes impose liability for investigation and remediation of
environmental impacts without regard to fault or the legality of the conduct that contributed to the impacts.
Responsible parties under these statutes may include the owner or operator of the site where impacts occurred and
companies that disposed, or arranged for the disposal, of the hazardous substances released at these sites. These
responsible parties also may be liable for damages to natural resources. In addition, it is not uncommon for
neighboring landowners and other third parties to file claims for personal injury and property damage allegedly
caused by the release of hazardous substances or other materials into the environment.
The federal Clean Water Act and comparable state statutes require containment of potential discharges of
oil or hazardous substances, and require preparation of spill contingency plans. Water quality protection programs
govern certain discharges from some of our operations. Similarly, the federal Clean Air Act and comparable state
statutes regulate emissions of various air emissions through permitting programs and the imposition of standards and
other requirements.
The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration
(“NHTSA”), on behalf of the U.S. Department of Transportation, issued rules associated with reducing greenhouse gas
(“GHG”) emissions and improving the fuel efficiency of medium and heavy-duty trucks and buses for current model
years through 2027. In addition, in August 2021, the President of the United States issued an executive order intended to
increase fuel efficiency, further reduce GHG emissions and speed up the development of “zero-emission” vehicles. The
executive order calls for the EPA and the Secretary of Transportation to adopt new rules and regulations for commercial
vehicles starting as early as model year 2027. Similarly, in June 2020, the California Air Resources Board adopted a final
rule that is intended to phase out the sale of diesel-powered commercial vehicles over time by requiring a certain
percentage of each manufacturer’s commercial vehicles sold within the state to be “zero-emission vehicles,” or “near-
zero emission vehicles,” starting in model year 2024. In addition, in July 2020, a group of fifteen U.S. states and the
District of Columbia entered into a joint memorandum of understanding that commits each of them to work together to
advance and accelerate the market for electric Class 3 through 8 commercial vehicles; one additional state signed in 2021.
Four of the states that signed are states where we operate new commercial vehicle dealerships: California, Colorado,
North Carolina and Virginia. The signatories to the memorandum all agreed on a goal of ensuring that 100% of new Class
3 through 8 commercial vehicles are zero emission by 2050, with an interim target of 30% zero emission by 2030.
Attaining these goals would likely require the adoption of new laws and regulations and we cannot predict at this time
whether such laws and regulations would have an adverse impact on our business. Additional regulations could result in
increased compliance costs, additional operating restrictions or changes in demand for our products and services, which
could have a material adverse effect on our business, financial condition and results of operations.
We do not believe that we currently have any material environmental liabilities or that compliance with
environmental laws and regulations will have a material adverse effect on our results of operations, financial
condition or cash flows. However, soil and groundwater impacts are known to exist at some of our dealerships.
Further, environmental laws and regulations are complex and subject to change. In addition, in connection with
acquisitions, it is possible that we will assume or become subject to new or unforeseen environmental costs or
liabilities, some of which may be material. In connection with our dispositions, or prior dispositions made by
companies we acquire, we may retain exposure for environmental costs and liabilities, some of which may be
material. Compliance with current or amended, or new or more stringent, laws or regulations, stricter interpretations
of existing laws or the future discovery of environmental conditions could require additional expenditures by us, and
those expenditures could be material.
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Item 1A. Risk Factors
An investment in our common stock is subject to certain risks inherent to our business. In addition to the
other information contained in this Form 10-K, we recommend that you carefully consider the following risk factors
in evaluating our business. If any of the following risks actually occur, our financial condition and results of
operations could be materially adversely affected. If this were to happen, the value of our common stock could
decline significantly, and you could lose all or part of your investment. This report is qualified in its entirety by
these risk factors.
Risks Related to Our Business Operations
We are dependent upon PACCAR for the supply of Peterbilt trucks and parts, the sale of which generates the majority
of our revenues.
At certain Rush Truck Centers, we operate as a dealer of Peterbilt trucks and parts pursuant to dealership
agreements with Peterbilt, a division of PACCAR. We have no control over the management or operation of Peterbilt
or PACCAR. During 2021, the majority of our revenues resulted from sales of trucks purchased from Peterbilt and
parts purchased from PACCAR Parts. Due to our dependence on PACCAR and Peterbilt, we believe that our long-
term success depends, in large part, on the following:
● our ability to maintain our dealership agreements with Peterbilt;
●
the manufacture and delivery of competitively-priced, technologically current, high-quality Peterbilt
trucks in quantities sufficient to meet our requirements;
●
the overall success of PACCAR and Peterbilt;
● PACCAR’s continuation of its Peterbilt division; and
●
the maintenance of goodwill associated with the Peterbilt brand, which can be adversely affected by
decisions made by PACCAR, Peterbilt and the owners of other Peterbilt dealerships.
A negative change in any of the preceding, or a change in control of PACCAR, could have a material
adverse effect on our operations, revenues and profitability.
We are dependent upon Navistar for the supply of International trucks and parts and IC buses and parts, the sale of
which generate a significant portion of our revenues.
At certain Rush Truck Centers, we operate as a dealer of International trucks and parts and IC buses and
parts pursuant to dealership agreements with International and IC Bus, each of which are divisions of Navistar. We
have no control over the management or operation of International, IC Bus or Navistar. During 2021, a significant
portion of our revenues resulted from sales of trucks purchased from International, buses purchased from IC Bus
and parts purchased from Navistar. Due to our dependence on Navistar, International and IC Bus, we believe that
our long-term success depends, in large part, on the following:
● our ability to maintain our dealership agreements with International and IC Bus;
●
the manufacture and delivery of competitively-priced, technologically current, high-quality
International trucks and IC buses in quantities sufficient to meet our requirements;
●
the overall success of Navistar; and
●
the maintenance of goodwill associated with the International and IC Bus brands, which can be
adversely affected by decisions made by Navistar and the owners of other International and IC Bus
dealerships.
A negative change in any of the preceding, or a change in control of Navistar, could have a material adverse
effect on our operations, revenues and profitability. On July 1, 2021, Navistar and Traton Group (“Traton”), a
subsidiary of Volkswagen AG, closed on their previously announced merger agreement pursuant to which Traton
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purchased all of Navistar’s outstanding stock. We cannot predict how new ownership of Navistar might affect our
business; provided, however, that at this time, our senior management is not aware of any circumstances associated
with the change in ownership of Navistar that would result in a material adverse effect on our operations, revenues
or profitability.
COVID-19 has disrupted, and may continue to disrupt, our business, which could adversely affect our financial
performance.
In March 2020, the World Health Organization made the assessment that COVID-19 could be characterized
as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. While
our Rush Truck Centers have remained operational throughout the COVID-19 pandemic, the pandemic remains a
fluid and evolving situation, and we cannot anticipate whether we may be forced to close any of our locations due
to potential restrictions imposed by a governmental authority or due to a COVID-19 outbreak.
Some of the potential impacts to our business that we believe are directly related to the COVID-19
pandemic and that we are currently monitoring include, but are not limited to:
The impact that the pandemic will have on our workforce availability. For example, in January 2022, as
the number of COVID-19 cases increased throughout the country, we experienced our highest levels of
pandemic-related employee absenteeism since the beginning of the pandemic, which directly impacted our
ability to serve customers;
The impact that the pandemic will have on the supply chains of the commercial vehicle manufacturers and
parts manufacturers that we represent. For example, production shutdowns in 2021 for some of the
manufacturers we represent led to supply constraints, which negatively impacted our results for 2021. We
have been informed by the commercial vehicle manufacturers that we represent that production of
commercial vehicles in 2022 will be allocated to all of their dealers based on historical purchases. While
we do not expect our allocation of commercial vehicles to be less than the number of commercial vehicles
we sold in 2021, there is still concern that component manufacturers’ supply chain issues may limit certain
of our commercial vehicle manufacturers’ ability to meet demand throughout the year; and
The impact of the pandemic on global capital markets, which depending on future developments, could
impact our capital resources and liquidity in the future.
The potential impacts that we list above, and other impacts of the COVID-19 pandemic, are likely to also have the
effect of heightening many of the other risk factors described herein.
Our dealership agreements may be terminable upon a change of control and we cannot control whether our
controlling shareholder and management maintain their current ownership positions.
We have entered into nonexclusive dealership agreements with Peterbilt that authorize us to act as a dealer
of Peterbilt trucks. Peterbilt may terminate our dealership agreements in the event of a change of control of the
Company or if we violate any number of provisions in the dealership agreements. Under our Peterbilt dealership
agreements, the following constitute a change of control: (i) with respect to the election of directors, the aggregate
voting power held by the estate of W. Marvin Rush, W. M. “Rusty” Rush, Scott Anderson, Derrek Weaver, Steven
Keller and Corey Lowe, along with certain other persons who no longer work for the Company (collectively, the
“Dealer Principals”) decreases below 22% (the estate of W. Marvin Rush and such persons, excluding those who no
longer work for the Company, controlled 42.5% of the aggregate voting power with respect to the election of
directors as of December 31, 2021); or (ii) any person or entity other than the Dealer Principals and their respective
associates, or any person or entity who has been approved in writing by PACCAR, owns common stock with a
greater percentage of the voting power with respect to the election of our directors than the Dealer Principals and
their respective associates, in the aggregate, or any person other than W. M. “Rusty” Rush, Robin M. Rush or any
person who has been approved in writing by PACCAR holds the office of Chairman of the Board, President or Chief
Executive Officer of the Company. We have no control over the transfer or disposition by the estate of W. Marvin
Rush or W.M. “Rusty” Rush, or his estate, of their common stock. If the estate of W. Marvin Rush or W.M. “Rusty”
Rush were to sell their Class B Common Stock or bequest their Class B Common Stock to a person or entity other
than the Dealer Principals, or if their estates are required to liquidate their Class B Common Stock that they own,
directly or indirectly, to pay estate taxes or otherwise, the change of control provisions of the Peterbilt dealership
agreements may be triggered, which would give Peterbilt the right to terminate our dealership agreements. If our
dealership agreements with Peterbilt are terminated, we will lose the right to purchase Peterbilt products and operate
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as an authorized Peterbilt dealer, which would have a material adverse effect on our operations, revenues and
profitability.
Our dealership agreements are non-exclusive and have relatively short terms, which could result in nonrenewal or
imposition of less favorable terms upon renewal.
Our dealership agreements generally do not provide us with exclusive dealerships in any of the areas of
responsibility assigned in each dealer agreement. The manufacturers we represent could elect to create additional
dealers in our areas of responsibility in the future, subject to restrictions imposed by state laws. While dealership
agreements typically restrict dealers from operating franchised sales or service facilities outside their areas of
responsibility, such agreements do not restrict sales or marketing activity outside the areas of responsibility.
Accordingly, we engage in sales and other marketing activities outside our assigned areas of responsibility and other
dealers engage in similar activities within our areas of responsibility.
Our dealership agreements with the manufacturers we represent have current terms expiring between March
2022 and December 2026. Upon expiration of each agreement, we must negotiate a renewal. Management expects
that, consistent with in some cases decades of past practice, each of our dealership agreements will be renewed or
otherwise extended before its termination date, provided that we do not breach any of the material terms of such
agreement.
Management attempts to mitigate the risk that any manufacturer would not renew a dealership agreement
by providing superior representation of each brand that we represent in each of our areas of responsibility. We deliver
superior representation to our manufacturers by continuously investing substantial capital into our dealership
locations, marketing and personnel. Senior members of our management team also communicate with management
of the manufacturers that we represent on a regular basis, which we believe allows us to identify any potentially
problematic issues as early as possible so that we can begin working on mutually agreeable solutions. In addition to
the proactive steps that management takes, the risks that our dealership agreements will not be renewed are also
mitigated by dealer protection laws that exist in each of the states that our dealerships are located. Many of these
state dealer franchise laws restrict manufacturers’ ability to refuse to renew dealership agreements or to impose new
terms upon renewal. However, to the extent such laws did allow for nonrenewal or the imposition of new terms, the
relatively short terms would give manufacturers the opportunity to exercise such rights. Any nonrenewal or
imposition of less favorable terms upon renewal could have an adverse impact on our business and in the case of the
Peterbilt or Navistar dealership agreements, would have an adverse impact on our business.
Our growth strategies may be unsuccessful if we are unable to successfully execute our strategic initiatives
or identify and complete future acquisitions.
Over the past few years, we have spent significant resources and efforts attempting to grow and enhance
our Aftermarket Products and Services business and increase profitability through new business process management
initiatives. These efforts require timely and continued investment in technology, facilities, personnel and financial
and management systems and controls. We may not be successful in implementing all of the processes that are
necessary to support any of our growth initiatives, which could result in our expenses increasing disproportionately
to our incremental revenues, causing our operating margins and profitability to be adversely affected.
Historically, we have achieved a significant portion of our growth through acquisitions and we will continue
to consider potential acquisitions on a selective basis. There can be no assurance that we will be able to identify
suitable acquisition opportunities in the future or that we will be able to consummate any such transactions on terms
and conditions acceptable to us. Moreover, there can be no assurance that we will obtain manufacturers’ consents
to acquisitions of additional franchises.
In the long-term, technological advances in the commercial vehicle industry, including drivetrain electrification or
other alternative fuel technologies, could have a material adverse effect on our business.
The commercial vehicle industry is predicted to experience change over the long-term. We see these
changes beginning to occur, as certain of the manufacturers we represent now have vehicles with electric drivetrains
available for purchase. Technological advances, including with respect to drivetrain electrification or other
alternative fuel technologies, could potentially have a material adverse effect on our parts and service business, as
such vehicles are currently being described as potentially requiring less service and having fewer parts. The effect
of these technological advances on our business is still uncertain, as there are many factors that are unknowable at
this time, including when the infrastructure to support widespread adoption of such vehicles will be in place and
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when such vehicles may be commercially available at price points that would lead to their widespread
adoption. Regardless of where the industry goes with respect to alternative fuel vehicles, we believe that, due to the
geographic reach of our dealership network, relationships with both the manufacturers we represent and our
customers and our access to capital, we are well-positioned to serve our customers’ evolving needs.
Similarly, although we are aware of ongoing efforts to facilitate the development of autonomous
commercial vehicles, the eventual timing of the availability of autonomous commercial vehicles is uncertain due to
regulatory requirements and additional technological requirements. The effect of autonomous commercial vehicles
on the commercial vehicle industry is uncertain and could include changes in the level of new and used commercial
vehicles sales, the price of new commercial vehicles, and the role of franchised dealers, any of which could materially
adversely affect our business, financial condition and results of operations.
Climate change concerns may impact our business in the future; natural disasters and adverse weather events can
disrupt our business.
The concerns over climate change may impact our business in the future. Our current business model
depends on our ability to sell, and provide services to, commercial vehicles primarily powered by diesel and gasoline
internal combustion engines, which result in greenhouse gas emissions. While the manufacturers we represent have
made substantial progress in reducing the amount of greenhouse gas emissions that result from internal combustion
engines, it is widely accepted that alternative fuel vehicles are necessary to address climate change. Reductions in
the sale and use of commercial vehicles powered by internal combustion engines creates risks to our historical
business operations and we cannot predict the future costs to our business resulting from these developments.
However, we also believe that an industry transition away from internal combustion engines presents significant
opportunities for us. Due in large part to the geographic reach of our dealership network, relationships with both the
manufacturers we represent and our customers and our access to capital, we believe we are well-positioned to serve
our customers’ evolving needs and help them reduce their greenhouse gas emissions by helping them integrate more
alternative fuel vehicles into their fleets and providing various services related thereto.
Scientific evidence suggests that a warming climate potentially results in an environment more prone to
natural disasters, such as hurricanes and flooding. To date, we have seen increases in our cost to insure against such
risks, which costs could continue to increase should this trend continue. Some of our dealerships are located in
regions of the United States where natural disasters and severe weather events (such as hurricanes, earthquakes,
fires, floods, tornadoes and hail storms) may disrupt our operations, which may adversely impact our business,
results of operations, financial condition and cash flows. In addition to business interruption, our business is subject
to substantial risk of property loss due to the significant concentration of property at dealership locations. Although
we have substantial insurance to cover this risk, we may be exposed to uninsured or underinsured losses that could
have a material adverse effect on our business, financial condition, results of operations or cash flows.
Risks Related to Financial and Economic Matters
We may be required to obtain additional financing to maintain adequate inventory levels.
Our business requires new and used commercial vehicle inventories held for sale to be maintained at dealer
locations in order to facilitate immediate sales to customers on demand. We generally purchase new and used
commercial vehicle inventories with the assistance of floor plan financing agreements. Our primary floor plan
financing agreement, the Floor Plan Credit Agreement, expires on September 14, 2026, and may be terminated
without cause upon 360 days’ notice. In the event that our floor plan financing becomes insufficient to satisfy our
future requirements or our floor plan providers are unable to continue to extend credit under our floor plan
agreements, we would need to obtain similar financing from other sources. There is no assurance that such additional
floor plan financing or alternate financing could be obtained on commercially reasonable terms.
Changes in interest rates could have a negative adverse effect on our profitability.
Our Floor Plan Credit Agreement and some of our other debt are subject to variable interest rates. Therefore,
our interest expense would rise with any increase in interest rates. Currently, our outstanding borrowings under our
Floor Plan Credit Agreement and certain other loan agreements are borrowed at LIBOR plus an applicable margin.
Although LIBOR is no longer being used to price new loans, it is anticipated at this time that LIBOR quotes will be
available for existing credit agreements until at least mid-2023. In the event that LIBOR quotes are no longer
available, SOFR will replace LIBOR in certain of our credit agreements which currently use LIBOR, including our
Floor Plan Credit Agreement. It is unclear how increased regulatory oversight and changes in the method for
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determining benchmark interest rates may affect our results of operations or financial conditions. However, any rise
in interest rates generally may also have the effect of depressing demand in the interest rate sensitive aspects of our
business, particularly new and used commercial vehicle sales, because many of our customers finance such
purchases. As a result, a rise in interest rates may have the effect of simultaneously increasing our costs and reducing
our revenues, which could negatively affect our business, financial condition and results of operations. See
“Quantitative and Qualitative Disclosures about Market Risk” for a discussion regarding our interest rate sensitivity.
Impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect
our operating results.
We have a substantial amount of goodwill on our balance sheet as a result of acquisitions we have
completed. Approximately 99% of this goodwill is concentrated in our Truck Segment. The carrying value of
goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the
acquisition date. Goodwill is not amortized, but instead is evaluated for impairment at least annually, or more
frequently if potential interim indicators exist that could result in impairment. In testing for impairment, if the
carrying value of a reporting unit exceeds its current fair value as determined based on the discounted future cash
flows of the reporting unit, the goodwill is considered impaired and is reduced to fair value via a non-cash charge to
earnings. Events and conditions that could result in impairment include weak economic activity, adverse changes in
the regulatory environment, any matters that impact the ability of the manufacturers we represent to provide us with
commercial vehicles or parts, issues with our franchise rights, or other factors leading to reductions in expected long-
term sales or profitability. Determination of the fair value of a reporting unit includes developing estimates that are
highly subjective and incorporate calculations that are sensitive to minor changes in underlying assumptions.
Changes in these assumptions or a change in the Company’s reportable segments could result in an impairment
charge in the future, which could have a significant adverse impact on our reported earnings. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and
Estimates — Goodwill” for more information regarding the potential impact of changes in assumptions.
Our business is subject to a number of economic risks.
New and used commercial vehicle retail sales tend to experience periods of decline when general economic
conditions worsen. We may experience sustained periods of decreased commercial vehicle sales in the future. Any
decline or change of this type could materially affect our business, financial condition and results of operations. In
addition, adverse regional economic and competitive conditions in the geographic markets in which we operate could
materially adversely affect our business, financial condition and results of operations. Our commercial vehicle sales
volume therefore may differ from industry sales fluctuations.
Economic conditions and the other factors described above also may materially adversely impact our sales
of parts and repair services, and finance and insurance products.
We depend on relationships with the manufacturers we represent and component suppliers for sales incentives,
discounts and similar programs which are material to our operations.
We depend on the manufacturers we represent and component suppliers for sales incentives, discounts,
warranties and other programs that are intended to promote the sales of their commercial vehicles or our use of their
components in the vehicles we sell. Most of the incentives and discounts are individually negotiated and not always
the same as those made available to commercial vehicle manufacturers or our competitors. These incentives and
discounts are material to our operations. A reduction or discontinuation of a commercial vehicle manufacturer’s or
component supplier’s incentive program could have a material adverse effect on our profitability.
We are dependent on the ongoing success of the manufacturers we represent and adverse conditions affecting the
manufacturers we represent may negatively impact our revenues and profitability.
The success of each of our dealerships is dependent on the manufacturers represented at each dealership.
Our ability to sell new vehicles that satisfy our customers’ demands and replacement parts is dependent on the ability
of the manufacturers we represent to produce and deliver new vehicles and replacement parts to our dealerships.
Additionally, our dealerships perform warranty work for vehicles under manufacturer product warranties, which are
billed to the appropriate vehicle manufacturer or component supplier as opposed to invoicing our customer. We
generally have significant receivables from vehicle manufacturers and component suppliers for warranty and service
work performed for our customers. In addition, we rely on vehicle manufacturers and component suppliers to varying
extents for product training, marketing materials, and other items for our stores. Our business, results of operations,
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and financial condition could be materially adversely affected as a result of any event that has a material adverse
effect on the vehicle manufacturers or component suppliers we represent.
The manufacturers we represent may be adversely impacted by economic downturns, significant declines
in the sales of their new vehicles, labor strikes or similar disruptions (including within their major suppliers), rising
raw materials costs, rising employee benefit costs, adverse publicity that may reduce consumer demand for their
products (including due to bankruptcy), product defects, vehicle recall campaigns, litigation, poor product mix or
unappealing vehicle design, governmental laws and regulations, or other adverse events. Our results of operations,
financial condition or cash flows could be adversely affected if one or more of the manufacturers we represent are
impacted by any of the foregoing adverse events.
Actions taken in response to continued operational losses by manufacturers we represent, including
bankruptcy or reorganizations, could have a material adverse effect on our sales volumes and profitability. In
addition, such actions could lead to the impairment of one or more of our franchise rights, inventories, fixed assets
and other related assets, which in turn could have a material adverse effect on our financial condition and results of
operations. Actions taken in response to continued operational losses by manufacturers we represent, including
bankruptcy or reorganizations, could also eliminate or reduce such manufacturers’ indemnification obligations to
our dealerships, which could increase our risk in products liability actions.
The dollar amount of our backlog, as stated at any given time, is not necessarily indicative of our future earnings.
As of December 31, 2021, our backlog of new commercial vehicle orders was approximately
$3,267.0 million. Our backlog is determined quarterly by multiplying the number of new commercial vehicles for
each particular type of commercial vehicle ordered by a customer at our Rush Truck Centers by the recent average
selling price for that type of commercial vehicle. We only include confirmed orders in our backlog. However, such
orders are subject to cancellation. In the event of order cancellation, we have no contractual right to the total revenues
reflected in our backlog.
Reductions in backlog due to cancellation by a customer or for other reasons will adversely affect,
potentially to a material extent, the revenue and profit we actually receive from orders projected in our backlog. If
we were to experience significant cancellations of orders in our backlog, our financial condition could be adversely
affected.
Risks Related to Legal and Regulatory Matters
If state dealer laws are repealed or weakened, our dealerships will be more susceptible to termination, nonrenewal
or renegotiation of their dealership agreements.
We depend on our vehicle dealership agreements for a substantial portion of our revenues and profitability.
State dealer laws generally provide that a manufacturer may not terminate or refuse to renew a dealership agreement
unless it has first provided the dealer with written notice setting forth good cause and stating the grounds for
termination or nonrenewal. Vehicle manufacturers’ lobbying efforts may lead to the repeal or revision of state motor
vehicle dealer laws. If motor vehicle dealer laws are repealed or amended in the states in which we operate
dealerships, the manufacturers we represent may be able to terminate our vehicle dealership agreements without
providing advance notice, an opportunity to cure or a showing of good cause. Without the protection of state dealer
laws, or if such laws are weakened, we will be subject to higher risk of termination or nonrenewal of our vehicle
dealership agreements. Termination or nonrenewal of our vehicle dealership agreements would have a material
adverse effect on our operations, revenues and profitability.
Our dealerships are subject to federal, state and local environmental regulations that may result in claims and
liabilities, which could be material.
We are subject to federal, state and local environmental laws and regulations governing the following:
discharges into the air and water; the operation and removal of underground and aboveground storage tanks; the use,
handling, storage and disposal of hazardous substances, petroleum and other materials; and the investigation and
remediation of contamination. As with commercial vehicle dealerships generally, and service, parts and collision
center operations in particular, our business involves the generation, use, storage, handling and contracting for
recycling or disposal of hazardous materials or wastes and other environmentally sensitive materials. Any non-
compliance with these laws and regulations could result in significant fines, penalties and remediation costs which
could adversely affect our results of operations, financial condition or cash flows.
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We may also have liability in connection with materials that were sent to third party recycling, treatment,
or disposal facilities under federal and state statutes. Applicable laws may make us responsible for liability relating
to the investigation and remediation of contamination without regard to fault or the legality of the conduct that
contributed to the contamination. In connection with our acquisitions, it is possible that we will assume or become
subject to new or unforeseen environmental costs or liabilities, some of which may be material. In connection with
dispositions of businesses, or dispositions previously made by companies we acquire, we may retain exposure for
environmental costs and liabilities, some of which may be material.
Further, environmental laws and regulations are complex and subject to change. For example, in August
2021, the President of the United States issued an executive order intended to increase fuel efficiency, further reduce
GHG emissions and speed up the development of “zero-emission” vehicles. The executive order calls for the EPA
and the Secretary of Transportation to adopt new rules and regulations for commercial vehicles starting as early as
model year 2027. Similarly, in July 2020, a group of fifteen U.S. states and the District of Columbia entered into a
joint memorandum of understanding that commits each of them to work together to advance and accelerate the
market for electric Class 3 through 8 commercial vehicles; one additional state signed in 2021. Four of the states
that signed are states where we sell new commercial vehicles: California, Colorado, North Carolina and Virginia.
The signatories to the memorandum all agreed on a goal of ensuring that 100% of new Class 3 through 8 commercial
vehicles are zero emission by 2050, with an interim target of 30% zero emission by 2030. Attaining these goals
would likely require the adoption of new laws and regulations and we cannot predict at this time whether such laws
and regulations would have an adverse impact on our business. Compliance with current or amended, or new or
more stringent, laws or regulations, stricter interpretations of existing laws or the future discovery of environmental
conditions could require additional expenditures by us which could materially adversely affect our results of
operations, financial condition or cash flows. In addition, such laws could affect demand for the products that we
sell.
Disruptions to our information technology systems and breaches in data or system security could adversely affect
our business.
We rely upon our information technology systems to manage all aspects of our business, including
processing and recording sales to, and payments from, customers, managing inventory, communicating with
manufacturers and vendors, processing employee payroll and benefits and financial reporting. Any inability to
manage these systems, including with respect to matters related to system and data security, privacy, reliability,
compliance, performance and access, as well as any inability of these systems to fulfill their intended purpose within
our business, could have an adverse effect on our business. In addition, in the ordinary course of business, we collect
and store sensitive data and information, including our proprietary business information and that of our customers,
suppliers and business partners, as well as personally identifiable information about our employees and customers.
Despite the security measures we have in place, our facilities and systems, and those of our third-party service
providers, could be vulnerable to cyberattacks and other security breaches, computer viruses, lost or misplaced data,
programming errors, human errors or other events, and such incidents can remain undetected for a period of time
despite our best efforts to detect and respond to them in a timely manner. We routinely monitor our systems for
cyber threats and have processes in place to detect and remediate vulnerabilities. Nevertheless, we have experienced
occasional cyberattacks and attempted breaches, including phishing emails and ransomware infections. We detected
and remediated all of these incidents, all of which we categorized as “commodity threats,” or general attacks common
to companies connected to the internet and communicating via email. No known leakage of financial, technical or
customer data occurred and none of the incidents had a material adverse effect on our business, operations,
reputation, or consolidated results of operations or consolidated financial condition.
Any cyberattack, security breach or other event resulting in the misappropriation, loss, or other
unauthorized disclosure of confidential information of personal identifiable information of employees or customers,
whether by us directly or our third-party service providers, could adversely affect our business operations, sales,
reputation with current and potential customers, associates or vendors and employees and result in litigation or
regulatory actions, all of which could have a material adverse effect on our business and reputation.
We are exposed to a variety of claims relating to our business and the liability associated with such claims may
exceed the level of our insurance coverage.
In the course of our business, we are exposed to claims for personal injury, death or property damage
resulting from: (i) our customers’ use of commercial vehicles that we sell, service, lease or rent; (ii) our customers’
purchase of other products that we design, manufacture, sell or install, such as commercial vehicle parts, custom
26
vehicle modifications and CNG fuel systems; and (iii) injuries caused by motor vehicle accidents that our service or
delivery personnel are involved in. In addition, we have employees who work remotely from time to time at certain
customers’ locations that are considered inherently dangerous, such as oil or gas well drilling sites, commercial
construction sites and manufacturing facilities. We could also be subject to potential litigation associated with
compliance with various laws and governmental regulations at the federal, state or local levels, such as those relating
to vehicle and highway safety, health and workplace safety, security and employment-related claims.
We carry comprehensive liability insurance, subject to deductibles, at levels we believe are sufficient to
cover existing and future claims. However, we may be exposed to claims for which coverage is not afforded or the
damages exceed the limits of our insurance coverage or multiple claims causing us to incur significant out-of-pocket
costs before reaching the deductible amount, all of which could adversely affect our financial condition and results
of operations. In addition, the cost of such insurance policies may increase significantly upon renewal of those
policies as a result of general rate increases for the type of insurance we carry as well as our historical experience
and experience in our industry. Although we have not experienced any material losses that were not covered by
insurance, our existing or future claims may exceed the coverage level of our insurance, and such insurance may not
continue to be available on economically reasonable terms, or at all. If we are required to pay significantly higher
premiums for insurance, are not able to maintain insurance coverage at affordable rates or if we must pay amounts
in excess of claims covered by our insurance, we could experience higher costs that could adversely affect our
financial condition and results of operations.
Risks Related to Our Common Stock
We are controlled by two shareholders and their affiliates.
Collectively, the estate of W. Marvin Rush and W. M. “Rusty” Rush and their affiliates own approximately
0.5% of our issued and outstanding shares of Class A Common Stock and 50.0% of our issued and outstanding
Class B Common Stock. The estate of W. Marvin Rush and W.M. “Rusty” Rush collectively control approximately
39.0% of the aggregate voting power of our outstanding shares, which is substantially more than any other person
or group. The interests of the estate of W. Marvin Rush and W.M. “Rusty” Rush may not be consistent with the
interests of all shareholders, or each other. As a result of such ownership, the estate of W. Marvin Rush and W.M.
“Rusty” Rush have the ability to exercise substantial control over the Company, including with respect to the election
of directors, the determination of matters requiring shareholder approval and other matters pertaining to corporate
governance.
Our dealership agreements could discourage another company from acquiring us.
Our dealership agreements with Peterbilt impose ownership requirements on certain officers of the
Company. All of our dealership agreements include restrictions on the sale or transfer of the underlying franchises.
These ownership requirements and restrictions may prevent or deter prospective acquirers from acquiring control of
us and, therefore, may adversely impact the value of our common stock.
Additionally, W. Marvin Rush and W.M. “Rusty” Rush granted Peterbilt a right of first refusal to purchase
their respective shares of common stock in the event that they desire to transfer in excess of 100,000 shares in any
12-month period to any person other than an immediate family member, an associate or another Dealer Principal.
However, in the case of the estate of W. Marvin Rush, certain shares of his Class B Common Stock of the Company
are exempt from his rights of first refusal agreement. These rights of first refusal, the number of shares owned by
the estate of W. Marvin Rush and W.M. “Rusty” Rush and their affiliates, the requirement in our dealership
agreements that the Dealer Principals retain a controlling interest in us and the restrictions on the sale or transfer of
our franchises contained in our dealer agreements, combined with the ability of the Board of Directors to issue shares
of preferred stock without further vote or action by the shareholders, may discourage, delay or prevent a change in
control without further action by our shareholders, which could adversely affect the market price of our common
stock or prevent or delay a merger or acquisition that our shareholders may consider favorable.
Actions by our shareholders or prospective shareholders that would violate any of the above restrictions on
our dealership agreements are generally outside of our control. If we are unable to renegotiate these restrictions, we
may be forced to terminate or sell one or more of our dealerships, which could have a material adverse effect on us.
These restrictions may also inhibit our ability to raise required capital or to issue our stock as consideration for future
acquisitions.
27
Our Class A Common Stock has limited voting power.
Each share of Class A Common Stock ranks substantially equal to each share of Class B Common Stock
with respect to receipt of any dividends or distributions declared on shares of common stock and the right to receive
proceeds on liquidation or dissolution of us after payment of our indebtedness and liquidation preference payments
to holders of any preferred shares. However, holders of Class A Common Stock have 1/20th of one vote per share
on all matters requiring a shareholder vote, while holders of Class B Common Stock have one full vote per share.
Our Class B Common Stock has a low average daily trading volume. As a result, sales of our Class B Common
Stock could cause the market price of our Class B Common Stock to drop, and it may be difficult for a stockholder
to liquidate its position in our Class B Common Stock quickly without adversely affecting the market price of such
shares.
The volume of trading in our Class B Common Stock varies greatly and may often be light. As of December
31, 2021, the three-month average daily trading volume of our Class B Common Stock was approximately 14,600
shares, with thirty days having a trading volume below 10,000 shares. If any large shareholder were to begin selling
shares in the market, the added available supply of shares could cause the market price of our Class B Common
Stock to drop. In addition, the lack of a robust resale market may require a shareholder to sell a large number of
shares of our Class B Common Stock in increments over time to mitigate any adverse impact of the sales on the
market price of our Class B Common Stock.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our corporate headquarters are located in New Braunfels, Texas. As of December 2021, we also own or
lease numerous facilities used in our operations in the following states: Alabama, Arizona, Arkansas, California,
Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, New Mexico, Nebraska, Nevada,
North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah and Virginia.
We lease a hangar in New Braunfels, Texas for the corporate aircraft. We also own and operate a guest
ranch of approximately 10,500 acres near Cotulla, Texas, which is used for client development purposes.
Item 3. Legal Proceedings
From time to time, we are involved in litigation arising out of our operations in the ordinary course of
business. We maintain liability insurance, including product liability coverage, in amounts deemed adequate by
management. To date, aggregate costs to us for claims, including product liability actions, have not been material.
However, an uninsured or partially insured claim, or claim for which indemnification is not available, could have a
material adverse effect on our financial condition or results of operations. We believe that there are no claims or
litigation pending, the outcome of which could have a material adverse effect on our financial position or results of
operations. However, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of
any particular claim or proceeding would not have a material adverse effect on our financial condition or results of
operations for the fiscal period in which such resolution occurred.
Item 4. Mine Safety Disclosures
Not applicable.
28
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of
Equity Securities
Our common stock trades on The NASDAQ Global Select MarketSM under the symbols RUSHA and
RUSHB. During 2021, our Board of Directors approved four quarterly cash dividends on all outstanding shares of
common stock totaling $0.74 per share. We expect to continue paying cash dividends on a quarterly basis. However,
there is no assurance as to the payment of future dividends because the declaration and payment of such dividends
is subject to the business judgment of our Board of Directors and will depend on historic and projected earnings,
capital requirements, covenant compliance, financial conditions and such other factors as the Board of Directors
deems relevant.
The following table sets forth the high and low sales prices for our Class A Common Stock and Class B
Common Stock for the fiscal periods indicated and as quoted on The NASDAQ Global Select MarketSM and dividends
declared.
2021
2020
Dividends
Declared
High
Low
Dividends
Declared
High
Low
Class A Common Stock
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Class B Common Stock
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
$
$
$
$
.18
.18
.19
.19
.18
.18
.19
.19
51.92 $
51.98
48.76
57.66
39.21 $
41.06
40.95
45.00
.09 $
.09
.09
.14
31.22 $
31.23
34.65
43.08
18.17
18.85
26.45
33.37
47.10 $
46.81
47.40
57.40
36.40 $
36.20
36.21
45.78
.09 $
.09
.09
.14
32.11 $
27.30
29.90
38.38
14.43
17.40
22.09
28.67
As of February 4, 2022, there were approximately 20 record holders of Class A Common Stock and
approximately 28 record holders of Class B Common Stock. On October 12, 2020, we effected a three-for-two stock
split with respect to both our Class A and Class B Common Stock in the form of a stock dividend. The foregoing
stock prices and the following share amounts have been adjusted to give retroactive effect to the stock split for all
periods presented.
As of December 31, 2021, we have not sold any securities in the last three years that were not registered
under the Securities Act.
A summary of our stock repurchase activity for the fourth quarter of 2021 is as follows:
Total
Number of
Shares
Purchased
(1)(2)(3)
76,606
63,273
92,125
232,004
Average
Price Paid
Per Share
(1)
$ 49.17 (4)
54.02 (5)
53.48 (6)
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (2)
76,606
63,273
92,125
232,004
Approximate
Dollar Value of
Shares that May
Yet be
Purchased Under
the Plans or
Programs (3)
$ 72,464,620
69,044,644
95,070,232
Period
October 1 – October 31, 2021
November 1 – November 30, 2021
December 1 – December 31, 2021
Total
(1)
(2)
The calculation of the average price paid per share does not give effect to any fees, commissions or other
costs associated with the repurchase of such shares.
The shares represent Class A and Class B Common Stock repurchased by us.
29
(3)
We repurchased shares in 2021 under a stock repurchase program announced on December 8, 2020,
which authorized the repurchase of up to $100.0 million of our shares of Class A Common Stock and/or
Class B Common Stock. This plan was terminated effective December 1, 2021; we repurchased $31.0
million shares of our Class A and Class B Common Stock under the plan prior to its termination. On
November 30, 2021, we announced the approval of a new stock repurchase program, effective December
2, 2021, authorizing management to repurchase, from time to time, up to an aggregate of $100.0 million
of our shares of Class A Common Stock and/or Class B Common Stock.
Represents 43,331 shares of Class A Common Stock at an average price paid per share of $49.20 and
33,275 shares of Class B Common Stock at an average price paid per share of $49.14.
(4)
(5)
Represents 60,500 shares of Class A Common Stock at an average price paid per share of $54.16 and 2,773
shares of Class B Common Stock at an average price paid per share of $50.97.
(6)
Represents 52,190 shares of Class A Common Stock at an average price paid per share of $54.09 and
39,935 shares of Class B Common Stock at an average price paid per share of $52.69.
Information regarding our equity compensation plans is incorporated by reference from Item 12, “Security
Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters,” of this annual report
on Form 10-K and should be considered an integral part of this Item 5.
Performance Graph
The following graph shows the cumulative 5-Year total return as of December 31, 2021, of a $100
investment in the Company’s common stock made on December 31, 2016 (with dividends reinvested), as compared
with similar investments based on (i) the cumulative total returns of the S&P 500 Index (with dividends reinvested)
and (ii) the cumulative total returns of a market-weighted Peer Group Index composed of the common stock of
PACCAR, Inc., Werner Enterprises, Inc., Penske Automotive Group, Inc. and Lithia Motors, Inc., assuming
reinvestment of dividends. The market-weighted Peer Group Index values were calculated from the beginning of the
performance period. The historical stock price performance shown below is not necessarily indicative of future stock
price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Rush Enterprises, Inc., the S&P 500 Index,
and a Peer Group
$300
$250
$200
$150
$100
$50
$0
12/16
12/17
12/18
12/19
12/20
12/21
Rush Enterprises, Inc.
S&P 500
Peer Group
*$100 invested on 12/31/16 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved.
30
Rush Enterprises, Inc.
S&P 500
Peer Group
2016
$ 100.00
100.00
100.00
2017
$ 156.17
121.83
115.49
2018
$ 116.01
116.49
98.40
2019
$ 150.73
153.17
147.82
2020
$ 190.24
181.35
179.35
2021
$ 275.47
233.41
205.05
December 31,
The foregoing performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC
for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall
not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the
Exchange Act. The stock price performance included in this graph is not necessarily indicative of future stock price
performance.
Item 6. Selected Financial Data
The information below was derived from the audited consolidated financial statements included in this
report and reports we have previously filed with the SEC. This information should be read together with those
consolidated financial statements and the notes to those consolidated financial statements. These historical results
are not necessarily indicative of the results to be expected in the future. The selected financial data presented below
may not be comparable between periods in all material respects or indicative of our future financial position or results
of operations due primarily to acquisitions which occurred during the periods presented. See Note 15 to the
Company’s Consolidated Financial Statements for a discussion of such acquisitions. The selected financial data
presented below should be read in conjunction with our other financial information included elsewhere herein.
SUMMARY OF INCOME STATEMENT DATA
Revenues
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Finance and insurance
Other
Total revenues
Cost of products sold
Gross profit
Selling, general and administrative
Depreciation and amortization
Gain (loss) on sale of assets
Operating income
Other income
Interest expense, net
Income before income taxes
Provision (benefit) for income taxes
Net income
Net income per common share:
Basic
Diluted
Year Ended December 31,
2020
2021
2019
(in thousands, except per share amounts)
$ 3,039,953
1,793,363
247,234
27,964
17,628
5,126,142
4,033,844
1,092,298
731,340
53,354
1,432
309,036
6,417
1,770
313,683
72,268
$ 241,415
$ 2,863,309
1,600,445
236,223
21,949
14,014
4,735,940
3,860,473
875,467
665,258
57,456
1,852
154,605
6,132
9,014
151,723
36,836
$ 114,887
$ 3,757,584
1,762,510
247,549
24,443
17,761
5,809,847
4,784,219
1,025,628
753,749
55,372
(102)
216,405
1,925
28,807
189,523
47,940
$ 141,583
$ 4.32
$ 4.17
$ 2.09
$ 2.04
$ 2.57
$ 2.51
Cash dividends declared per share
$ 0.74
$ 0.41
$ 0.34
Weighted average shares outstanding:
Basic
Diluted
55,892
57,878
54,866
56,242
54,988
56,356
31
OPERATING DATA
Unit vehicle sales −
New vehicles
Used vehicles
Total unit vehicles sales
Commercial vehicle lease and rental units
Year Ended December 31,
2020
2021
2019
23,259
7,527
30,786
8,914
23,113
7,400
30,513
8,104
31,675
7,741
39,416
8,506
Year Ended December 31,
2020
2021
2019
BALANCE SHEET DATA
Working capital
Inventories
Total assets
(in thousands)
$ 320,950
1,020,136
3,119,977
$ 330,932
858,291
2,985,393
$ 205,162
1,326,080
3,407,329
Floor plan notes payable
Long-term debt, including current portion
Finance lease obligations, including current portion
Total shareholders’ equity
630,731
334,926
116,530
1,466,749
511,786
529,654
117,113
1,268,037
996,336
627,678
92,370
1,159,493
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a full-service, integrated retailer of commercial vehicles and related services. We operate one
segment - the Truck Segment. The Truck Segment operates a network of commercial vehicle dealerships primarily
under the name “Rush Truck Centers.” Most Rush Truck Centers are a franchised dealer for commercial vehicles
manufactured by Peterbilt, International, Hino, Ford, Isuzu, IC Bus or Blue Bird. Through our strategically located
network of Rush Truck Centers, we provide one-stop service for the needs of our commercial vehicle customers.
We offer an integrated approach to meeting customer needs by providing service, parts and collision repair
(collectively, “Aftermarket Products and Services”) in addition to new and used commercial vehicle sales and
leasing, insurance and financial services, vehicle upfitting, CNG fuel systems and vehicle telematics products.
Our goal is to continue to serve as the premier service solutions provider to the end-users of commercial
vehicles. Our strategic efforts to achieve this goal include continuously expanding our portfolio of Aftermarket
Products and Services, broadening the diversity of our commercial vehicle product offerings and extending our
network of Rush Truck Centers. Our commitment to provide innovative solutions to service our customers’ needs
continues to drive our strong Aftermarket Products and Services revenues.
Our Aftermarket Products and Services include a wide range of capabilities and products such as providing
parts, service and collision repairs at certain of our Rush Truck Centers, a fleet of mobile service units, technicians
who work in our customers’ facilities, a proprietary line of commercial vehicle parts and accessories, vehicle
upfitting, a broad range of diagnostic and analysis capabilities, a suite of telematics products and assembly services
for specialized bodies and equipment. Aftermarket Products and Services accounted for 62.7% of our total gross
profits in 2021.
Stock Split
On September 15, 2020, our Board of Directors declared a 3-for-2 stock split of our Class A common stock
and Class B common stock, which was effected in the form of a stock dividend. On October 12, 2020, we distributed
one additional share of stock for every two shares of Class A common stock, par value $0.01 per share, and Class
B common stock, par value $0.01 per share, held by shareholders of record as of September 28, 2020. All share and
per share data in this Form 10-K have been adjusted and restated to reflect the stock split as if it occurred on the first
day of the earliest period presented.
32
The COVID-19 Pandemic and Its Impact on Our Business
Our dealership network has remained operational since the beginning of the COVID-19 pandemic. While
the COVID-19 pandemic is not over, business conditions have improved significantly since the second quarter of
2020. However, our industry continues to be impacted by supply chain issues generally believed to be attributable
to the COVID-19 pandemic that are negatively affecting new commercial vehicle production and the availability of
aftermarket parts.
Commercial Vehicle Sales
All of the commercial vehicle manufacturers that we represent resumed operations following any COVID-
19 related shutdowns in 2020. However, supply chain delays related to commercial vehicle components have forced
some of the manufacturers we represent to temporarily cease production at times and will limit the commercial
vehicle industry’s ability to meet demand for commercial vehicles throughout 2022. The decrease in the supply of
new commercial vehicles has resulted in increased demand for used commercial vehicles.
Aftermarket Products and Services
With respect to our Aftermarket Products and Services departments, with some minor exceptions, our parts
supply chain remained relatively uninterrupted during 2021 and our parts sales are back to pre-pandemic levels. We
believe that the investments we made over the years with respect to our aftermarket strategic initiatives enabled us
to mitigate some of the impact of the COVID-19 pandemic on our Aftermarket Products and Service business.
However, with respect to parts availability going forward, we are dependent on our manufacturers and future
production levels of certain parts and components are uncertain at this time. Although the supply chain disruptions
are only impacting a small percentage of the parts we sell, any delay we experience in receiving a part has a
corresponding delay in our completion of services on the commercial vehicle for which the part was ordered.
Rental and Leasing Operations
With respect to our rental and leasing operations, in 2020, we allowed certain credit-worthy customers
serving industries that were dramatically impacted by the COVID-19 pandemic to skip up to three months of lease
payments and either extend the lease term by three months or increase the remaining payments to keep the same
lease term. These customers have resumed payments. Revenues from our rental and leasing operations are back to
pre-pandemic levels.
Liquidity
As of December 31, 2021, we had $148.1 million in cash. For further discussion of our liquidity, see
the Liquidity and Capital Resources discussion set forth herein.
Summary of 2021
Our results of operations for the year ended December 31, 2021 are summarized below as follows:
Our gross revenues totaled $5,126.1 million, an 8.2% increase from gross revenues of $4,735.9
million in 2020.
Gross profit increased $216.8 million, or 24.8%, compared to 2020. Gross profit as a percentage of
sales increased to 21.3% in 2021, from 18.5% in 2020.
Our new Class 8 heavy-duty unit sales, which accounted for 4.9% of the total U.S. market, increased
3.6%, compared to 2020.
Our new Class 4-7 medium-duty unit sales, including buses, which accounted for 4.2% of the total
U.S. market, decreased 7.3%, compared to 2020.
New light-duty truck unit sales increased 52.1% in 2021, compared to 2020.
33
Used truck unit sales increased 1.7%, compared to 2020, however, used truck revenue increased
47.7%, compared to 2020 due to a sharp increase in used truck values.
Aftermarket Products and Services revenues increased $192.9 million, or 12.1%, to $1,793.4 million,
compared to $1,600.4 million in 2020.
Lease and rental revenues increased $11.0 million, or 4.7%, to $247.2 million, compared to 2020.
Selling, General and Administrative (“SG&A”) expenses increased $66.1 million, or 9.9%, to 731.3
million, compared to $665.3 million in 2020.
In October 2021, we acquired an independent parts and service facility in Victorville, California that
has been converted into a full service Peterbilt dealership.
In November 2021, we acquired a full-service Hino and Isuzu dealership in Elk Grove, Illinois.
In December 2021, we acquired certain assets of The Summit Truck Group (“Summit”). The
acquisition included full-service commercial vehicle dealerships and Idealease franchises in
Arkansas, Kansas, Missouri, Tennessee and Texas. The acquisition included Summit’s dealerships
representing International, IC Bus, Idealease, Isuzu and certain other commercial vehicle
manufacturers.
2022 Outlook
According to A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and
forecasting service provider, new U. S. Class 8 truck retail sales are estimated to total 247,500 truck units in 2022,
an 8.9% increase compared to 227,374 units sold in 2021. While demand for new commercial vehicles is currently
strong, we believe that component supply chain issues will continue to delay production. In addition, we have been
informed by the Class 8 manufacturers we represent that production of commercial vehicles in 2022 will be allocated
to all of their dealers based on historical purchases. We believe that our allocation of commercial vehicles in 2022
will not be less than the number of commercial vehicles we sold in 2021.
We expect our market share of new Class 8 truck sales to range between 5.5% and 5.9% in 2022. This
market share percentage would result in the sale of approximately 13,500 to 14,500 of new Class 8 trucks in 2022,
based on A.C.T. Research’s current U.S. retail sales estimate of 247,500 units. This projected increase in market
share in 2022, compared to 2021, is partially related to the December 2021 Summit acquisition.
According to A.C.T. Research, new U. S. Class 4 through 7 commercial vehicle retail sales are estimated
to total 263,700 units in 2022, a 5.6% increase compared to 249,753 units sold in 2021. We expect our market share
of new Class 4 through 7 commercial vehicle sales to range between 4.6% and 4.9% in 2022. This market share
percentage would result in the sale of approximately 12,000 to 13,000 of new Class 4 through 7 commercial vehicles
in 2022, based on A.C.T. Research’s current U.S. retail sales estimates of 263,700 units. This projected increase in
market share in 2022, compared to 2021, is partially related to the December 2021 Summit acquisition.
We expect to sell approximately 1,700 light-duty vehicles and approximately 7,100 to 7,400 used
commercial vehicles in 2022.
We expect lease and rental revenue to increase 25% to 30% during 2022, compared to 2021. This projected
increase in lease and rental revenue in 2022, compared to 2021, is primarily related to the acquisition of the Summit
Idealease locations in December 2021.
We continue to make progress on our strategic initiatives to increase our Aftermarket Products and Services
revenues. We believe our Aftermarket Products and Services revenues will increase 15% to 20% in 2022, compared
to 2021. This projected increase in Aftermarket Products and Services revenues in 2022, compared to 2021, is
related to price increases by the manufacturers of parts we sell and the December 2021 Summit acquisition.
34
Key Performance Indicator
Absorption Ratio. Management uses several performance metrics to evaluate the performance of our
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 our Aftermarket Products and Services 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 100%
absorption is achieved, all of the gross profit from the sale of a commercial vehicle, after sales commissions and
inventory carrying costs, directly impacts operating profit. Our commercial vehicle dealerships achieved a 129.8%
absorption ratio for the year ended December 31, 2021 and 118.7% absorption ratio for the year ended December
31, 2020.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our
consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. There can be no assurance that actual results
will not differ from those estimates. We believe the following accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial statements.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific
identification of new and used commercial vehicle inventory and by the first-in, first-out method for tires, parts and
accessories. As the market value of our inventory typically declines over time, reserves are established based on
historical loss experience and market trends. These reserves are charged to cost of sales and reduce the carrying
value of our inventory on hand. An allowance is provided when it is anticipated that cost will exceed net realizable
value less a reasonable profit margin.
Purchase Price Allocation, Intangible Assets and Goodwill
The purchase price allocation for business combinations and asset acquisitions requires the use of
accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets
acquired and liabilities assumed based on their respective fair values. We determine whether substantially all the fair
value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.
If this threshold is met, the single asset or group of assets, as applicable, is not a business. If it is not met, we determine
whether the single asset or group of assets, as applicable, meets the definition of a business.
In connection with our business combinations, we recorded certain intangible assets, including franchise
rights. We periodically review the estimated useful lives and fair values of our identifiable intangible assets, taking
into consideration any events or circumstances that might result in a diminished fair value or revised useful life.
The excess purchase price over the fair value of assets acquired is recorded as goodwill. We test goodwill
for impairment annually in the fourth quarter, or whenever events or changes in circumstances indicate an impairment
may have occurred. Because we operate a single reporting unit, the Truck Segment, the impairment test is performed
at that level by comparing the estimated fair value of the reporting unit to the carrying value of the reporting unit.
We estimate the fair value of the reporting unit using a "step one" analysis using a fair-value-based approach based
on a discounted cash flow analysis of projected future results to determine if it is more likely than not that the fair
value of a reporting unit is less than its carrying amount. Determining the fair value of goodwill is subjective in nature
and often involves the use of estimates and assumptions including, without limitation, use of estimates of future
prices and volumes for our products, capital needs, economic trends and other factors which are inherently difficult
to forecast. If actual results, or the plans and estimates used in future impairment analyses are lower than the original
estimates used to assess the recoverability of these assets, we could incur impairment charges in a future period. The
annual impairment test was performed in the fourth quarter of 2021. No impairment of goodwill was identified during
2021.
35
Insurance Accruals
We are partially self-insured for a portion of the claims related to our property and casualty insurance
programs, which requires us to make estimates regarding expected losses to be incurred. We engage a third-party
administrator to assess any open claims and we adjust our accrual accordingly on a periodic basis. We are also
partially self-insured for a portion of the claims related to our workers’ compensation and medical insurance
programs. We use actuarial information provided from third-party administrators to calculate an accrual for claims
incurred, but not reported, and for the remaining portion of claims that have been reported.
Changes in the frequency, severity and development of existing claims could influence our reserve for
claims and financial position, results of operations and cash flows. We do not believe there is a reasonable likelihood
that there will be a material change in the estimates or assumptions we used to calculate our self-insured liabilities.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains
that could be material.
Accounting for Income Taxes
Management’s judgment is required to determine the provisions for income taxes and to determine whether
deferred tax assets will be realized in full or in part. Deferred income tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. When it is more likely than not that all or some portion of specific deferred income tax
assets will not be realized, a valuation allowance must be established for the amount of deferred income tax assets
that are determined not to be realizable. Accordingly, the facts and financial circumstances impacting deferred
income tax assets are reviewed quarterly and management’s judgment is applied to determine the amount of
valuation allowance required, if any, in any given period.
Our income tax returns are periodically audited by tax authorities. These audits include questions regarding
our tax filing positions, including the timing and amount of deductions. In evaluating the exposures associated with
our various tax filing positions, we adjust our liability for unrecognized tax benefits and income tax provision in the
period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant
taxing authority to examine the tax position or when more information becomes available.
Our liability for unrecognized tax benefits contains uncertainties because management is required to make
assumptions and to apply judgment to estimate the exposures associated with our various filing positions. Our
effective income tax rate is also affected by changes in tax law, the level of earnings and the results of tax audits.
Although we believe that the judgments and estimates are reasonable, actual results could differ, and we may be
exposed to losses or gains that could be material. An unfavorable tax settlement would generally require use of our
cash and result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement
would be recognized as a reduction in our effective income tax rate in the period of resolution. Our income tax
expense includes the impact of reserve provisions and changes to reserves that we consider appropriate, as well as
related interest.
Revenue Recognition
We recognize revenue when our customer obtains control of promised goods or services, in an amount that
reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue
recognition for arrangements that we determine are within the scope of ASU 2014-09, “Revenue from Contracts
with Customers (“Topic 606”), we perform the following five steps: (i) identify the contract with a customer; (ii)
identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction
price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance
obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration
we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the
contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each
contract and determine those that are performance obligations. We then assess whether each promised good or
service is distinct and recognize as revenue the amount of the transaction price that is allocated to the respective
performance obligation when (or as) the performance obligation is satisfied.
36
Leases
We lease commercial vehicles and real estate under finance and operating leases. We determine whether
an arrangement is a lease at its inception. For leases with terms greater than twelve months, we record a lease asset
and liability at the present value of lease payments over the term. Many of our leases include renewal options and
termination options that are factored into our determination of lease payments when appropriate.
When available, we use the rate implicit in the lease to discount lease payments to present value; however,
most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental
borrowing rate to discount the lease payments based on information available at lease commencement.
We lease commercial vehicles that we own to customers. Lease and rental revenue is recognized over the
period of the related lease or rental agreement. Variable rental revenue is recognized when it is earned.
Allowance for Credit Losses
All trade receivables are reported on the consolidated balance sheet at their cost basis adjusted for any
write-offs and net of allowances for credit losses. We maintain allowances for credit losses, which represent an
estimate of expected losses over the remaining contractual life of our receivables after considering current market
conditions and estimates for supportable forecasts, when appropriate. The estimate is a result of our ongoing
assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit
losses in each of our receivable portfolios (commercial vehicle receivables, manufacturers’ receivables, parts and
service receivables, leasing receivables and other trade receivables). For trade receivables, we use the probability
of default and our historical loss experience rates by portfolio and apply them to a related aging analysis while also
considering customer and economic risk where appropriate. Determination of the proper amount of allowances by
portfolio requires us to exercise our judgment about the timing, frequency and severity of credit losses that could
materially affect the provision for credit losses and, as a result, net earnings. The allowances take into consideration
numerous quantitative and qualitative factors that include receivable type, historical loss experience, collection
experience, current economic conditions, estimates for supportable forecasts (when appropriate) and credit risk
characteristics.
Results of Operations
The following discussion and analysis includes our historical results of operations for 2021, 2020 and 2019.
The following table sets forth for the years indicated certain financial data as a percentage of total revenues:
Year Ended December 31,
2020
2021
2019
New and used commercial vehicle sales
Aftermarket Products and Services sales
Lease and rental
Finance and insurance
Other
Total revenues
Cost of products sold
Gross profit
Selling, general and administrative
Depreciation and amortization
Gain (loss) on sale of assets
Operating income
Other income
Interest expense, net
Income from continuing operations before income taxes
Provision (benefit) for income taxes
Net income
59.3 %
35.0
4.8
0.6
0.3
100.0
78.7
21.3
14.3
1.0
0.0
6.0
0.1
0.0
6.1
1.4
4.7 %
60.5 %
33.8
5.0
0.4
0.3
100.0
81.5
18.5
14.0
1.2
0.0
3.3
0.1
0.2
3.2
0.8
2.4 %
64.7 %
30.3
4.3
0.4
0.3
100.0
82.3
17.7
13.0
1.0
0.0
3.7
0.0
0.5
3.2
0.8
2.4 %
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The following table sets forth the unit sales and revenue for new heavy-duty, new medium-duty, new
light-duty and used commercial vehicles and the absorption ratio for the years indicated (revenue in millions):
Vehicle unit sales:
New heavy-duty vehicles
New medium-duty vehicles
New light-duty vehicles
Total new vehicle unit sales
2021
2020
2019
% Change
2021
vs
2020
2020
vs
2019
11,052
10,485
1,722
23,259
10,670
11,311
1,132
23,113
14,986
14,470
2,219
31,675
3.6%
-7.3%
52.1%
0.6%
-28.8%
-21.8%
-49.0%
-27.0%
Used vehicles sales
7,527
7,400
7,741
1.7%
-4.4%
Vehicle revenue:
New heavy-duty vehicles
New medium-duty vehicles
New light-duty vehicles
Total new vehicle revenue
$ 1,661.9 $ 1,587.9 $ 2,192.3
1,124.0
90.6
$ 3,406.9
919.7
50.1
$ 2,557.7
857.1
79.4
$ 2,598.4
4.7%
-6.8%
58.5%
1.6%
-27.6%
-18.2%
-44.7%
-24.9%
Used vehicle revenue
$ 430.4 $ 291.5 $ 330.3
47.7%
-11.7%
Other vehicle revenue:(1)
$ 11.2 $ 14.1 $ 20.4
-20.6%
-30.9%
Dealership absorption ratio:
129.8%
118.7%
120.2%
9.4%
-1.2%
(1) Includes sales of truck bodies, trailers and other new equipment.
The following table sets forth for the periods indicated the percent of gross profit by revenue source:
Gross Profit:
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Finance and insurance
Other
Total gross profit
Industry
2021
2020
2019
27.7 %
62.7
5.4
2.6
1.6
100.0 %
25.3 %
66.7
3.9
2.5
1.6
100.0 %
27.0 %
64.9
4.0
2.4
1.7
100.0 %
We operate in the commercial vehicle market. There has historically been a high correlation between new
product sales in the commercial vehicle market and the rate of change in U.S. industrial production and the U.S.
gross domestic product.
Heavy-Duty Truck Market
T he U.S. retail heavy-duty truck market is affected by a number of factors, including general economic
conditions, fuel prices, other methods of transportation, environmental and other government regulation, interest rate
fluctuations and customer business cycles. According to data published by A.C.T. Research, total U.S. retail sales
of new Class 8 trucks have ranged from a low of approximately 110,000 in 2010 to a high of approximately 281,440
in 2019. Class 8 trucks are defined by the American Automobile Association as trucks with a minimum gross vehicle
weight rating above 33,000 pounds.
Typically, Class 8 trucks are assembled by manufacturers utilizing certain components that may be
manufactured by other companies, including engines, transmissions, axles, wheels and other components. As
commercial vehicles and certain commercial vehicle components have become increasingly complex, the ability to
provide service for commercial vehicles has become an increasingly competitive factor in the industry. The ability
to provide such service requires a significant capital investment in diagnostic and other equipment, parts inventory
and highly trained service personnel. EPA and Department of Transportation regulatory guidelines for service
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processes, including collision center, paint work and waste disposal, require sophisticated equipment to ensure
compliance with environmental and safety standards. Differentiation between commercial vehicle dealers has
become less dependent on price competition and is increasingly based on a dealer’s ability to offer a wide variety of
services to their clients in a timely manner to minimize vehicle downtime. Such services include the following:
efficient, conveniently located and easily accessible commercial vehicle service centers with an adequate supply of
replacement parts; financing for commercial vehicle purchases; leasing and rental programs; and the ability to accept
multiple unit trade-ins related to large fleet purchases. We believe our one-stop center concept and the size and
geographic diversity of our dealership network gives us a competitive advantage in providing these services.
A.C.T. Research currently estimates approximately 247,500 new Class 8 trucks will be sold in the United
States in 2022, compared to approximately 227,374 new Class 8 trucks sold in 2021. A.C.T. Research currently
forecasts sales of new Class 8 trucks in the U.S. to be approximately 287,000 in 2023.
Medium-Duty Truck Market
Many of our Rush Truck Centers sell medium-duty commercial vehicles manufactured by Peterbilt,
International, Hino, Ford or Isuzu, and provide parts and service for medium-duty commercial vehicles. Medium-
duty commercial vehicles are principally used in short-haul, local markets as delivery vehicles; they typically operate
locally and generally do not leave their service areas overnight. We also sell light-duty vehicles (Class 3 and under)
at several of our Ford dealerships.
A.C.T. Research currently forecasts sales of new Class 4 through 7 commercial vehicles in the U.S. to be
approximately 263,700 units in 2022, compared to 249,753 units in 2021. A.C.T. Research currently forecasts sales
of new Class 4 through 7 commercial vehicles in the U.S. to be approximately 279,100 in 2023.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Revenues
Total revenues increased $390.2 million, or 8.2%, in 2021, compared to 2020.
Our Aftermarket Products and Services revenues increased $192.9 million, or 12.1%, in 2021, compared to
2020. This increase was primarily due to the continued recovery of the national economy and strong demand for
aftermarket parts and services.
Our revenues from sales of new and used commercial vehicles increased $176.6 million, or 6.2%, in 2021,
compared to 2020. This increase was also primarily due to the continued recovery of the national economy, which
has led to strong freight rates throughout the country and strong demand for commercial vehicles and aftermarket
parts and services.
We sold 11,052 new heavy-duty trucks in 2021, a 3.6% increase compared to 10,670 new heavy-duty trucks
in 2020. Our share of the new U.S. Class 8 commercial vehicle sales market decreased to approximately 4.9% in
2021, from 5.5% in 2020. Our new Class 8 truck sales were negatively impacted by commercial vehicle production
constraints that affected the manufacturers we represent.
We sold 10,485 new medium-duty commercial vehicles, including 959 buses, in 2021, a 7.3% decrease
compared to 11,311 new medium-duty commercial vehicles, including 1,097 buses, in 2020. In 2021, we achieved
a 4.2% share of the Class 4 through 7 commercial vehicle market in the U.S., compared to 4.9% in 2020. Our new
Class 4 through 7 commercial vehicle sales were negatively impacted by new commercial vehicle production
constraints that affected the manufacturers we represent.
We sold 1,722 new light-duty vehicles in 2021, a 52.1% increase compared to 1,132 new light-duty vehicles
in 2020. Our light-duty vehicle sales benefited from the increased demand for light-duty vehicles in the U.S.
We sold 7,527 used commercial vehicles in 2021, a 1.7% increase compared to 7,400 used commercial
vehicles in 2020. Demand for used commercial vehicles remained strong in 2021, driven in large part by production
constraints for new Class 8 trucks. However, the number of used commercial vehicles we will be able to sell depends
on our ability to acquire quality used commercial vehicle inventory. We believe used truck demand and values will
decrease when new truck production increases to a level adequate to meet customer demand; however, we believe
demand for used trucks will remain strong throughout 2022.
39
Commercial vehicle lease and rental revenues increased $11.0 million, or 4.7%, in 2021, compared to 2020.
The increase is primarily due to increased rental fleet utilization and strong demand for vehicles to lease, which is
partly due to the limited supply of new commercial vehicles.
Finance and insurance revenues increased $6.0 million, or 27.4%, in 2021, compared to 2020. Finance and
insurance revenues have limited direct costs and, therefore, contribute a disproportionate share of our operating
profits. We expect finance and insurance revenues to fluctuate proportionately with our new and used commercial
vehicle sales in 2022.
Other revenues increased $3.6 million, or 25.8% in 2021, compared to 2020. Other revenues consist
primarily of document fees related to commercial vehicle sales.
Gross Profit
Gross profit increased $216.8 million, or 24.8%, in 2021, compared to 2020. Gross profit as a percentage
of sales increased to 21.3% in 2021, from 18.5% in 2020. This increase in gross profit as a percentage of sales is a
result of increased gross margins across our operations.
Gross margins from our Aftermarket Products and Services operations increased to 38.1% in 2021, from
36.5% in 2020. This increase is primarily related to the increase in parts rebates from parts suppliers and increases
in parts list pricing by the manufacturers we represent, which lead to increased margins on parts sales with respect
to inventory acquired prior to the manufacturers’ price increases, compared to 2020. Gross profit for Aftermarket
Products and Services increased to $684.1 million in 2021, from $583.9 million in 2020. Historically, parts
operations’ gross margins range from 28% to 30% and service and collision center operations range from 66% to
68%. Gross profits from parts sales represented 61.4% of total gross profit for Aftermarket Products and Services
operations in 2021 and 59.4% in 2020. Service and collision center operations represented 38.6% of total gross
profit for Aftermarket Products and Services operations in 2021 and 40.6% 2020. We expect blended gross margins
on Aftermarket Products and Services operations to range from 37.5% to 38.5% in 2022.
Gross margins on new Class 8 truck sales increased to 9.0% in 2021, from 8.2% in 2020. This increase is
primarily due to strong demand for Class 8 trucks and the mix of purchasers during 2021. In 2022, we expect overall
gross margins from new heavy-duty truck sales of approximately 8.0% to 9.0%.
Gross margins on new Class 4 through 7 commercial vehicle sales increased to 7.8% in 2021, from 6.3%
in 2020. This increase is primarily due to the mix of purchasers during 2021. For 2022, we expect overall gross
margins from new medium-duty commercial vehicle sales of approximately 7.0% to 8.0%, but this will largely
depend upon the mix of purchasers and types of vehicles sold.
Gross margins on used commercial vehicle sales increased to 18.7% in 2021, from 9.9% in 2020. This
increase in margins in 2021 was primarily due to the increase in used truck values due to strong demand for used
commercial vehicles. The lower margins that we recognized in 2020 were due to weak demand for used trucks in
early 2020 caused by the beginning of the COVID-19 pandemic and the write-down of used truck inventory values
to account for extremely weak market conditions at that time. We expect margins on used commercial vehicles to
gradually decrease throughout 2022 and reach their historical range between 8.0% and 10.0% by the end of 2022.
Gross margins from commercial vehicle lease and rental sales increased to 23.9% in 2021, from 14.3% in
2020. This increase is primarily related to increased rental fleet utilization and changes to the way we finance
commercial vehicles for our lease and rental fleet. In the third quarter of 2021, we entered into the WF Credit
Agreement that allows us to finance a portion of our Idealease lease and rental fleet through a general borrowing
facility. In October of 2021, we entered into the PLC Agreement with PLC in the amount of $300.0 million to be
used in connection with the acquisition of PacLease lease and rental fleet vehicles. The interest associated with the
WF Credit Agreement and the PLC Agreement is recorded in interest expense on the Consolidated Statement of
Income and was $2.4 million during 2021. Prior to the WF Credit Agreement and the PLC Agreement, interest
expense associated with our lease and rental fleet purchases was recorded in cost of sales because each borrowing
was directly related to each lease and rental vehicle purchased. This change in the structure of financing of our lease
and rental fleet results in increased gross margins from our commercial vehicle lease and rental sales. We expect
gross margins from lease and rental sales of approximately 31.0% to 33.0% during 2022. Our policy is to depreciate
our lease and rental fleet using a straight-line method over each customer’s contractual lease term. The lease unit is
depreciated to a residual value that approximates fair value at the expiration of the lease term. This policy results in
40
us realizing reasonable gross margins while the unit is in service and a corresponding gain or loss on sale when the
unit is sold at the end of the lease term.
Finance and insurance revenues and other revenues, as described above, have limited direct costs and,
therefore, contribute a disproportionate share of gross profit.
Selling, General and Administrative Expenses
SG&A expenses increased $66.1 million, or 9.9%, in 2021, compared to 2020. This increase resulted
primarily from increased personnel expense and increased selling expense, compared to 2020. SG&A expenses as
a percentage of total revenues increased to 14.3% in 2021, from 14.0% in 2020. Annual SG&A expenses as a
percentage of total revenues have ranged from approximately 12.4% to 14.3% over the last five years. In general,
when new and used commercial vehicle revenues decrease as a percentage of total revenues, SG&A expenses as a
percentage of total revenues will be at the higher end of this range. For 2022, we expect SG&A expenses as a
percentage of total revenues to range from 13.0% to 14.0%, due to the increase in revenues from sales of new and
used commercial vehicle and Aftermarket Products and Services. For 2022, we expect the selling portion of SG&A
expenses to be approximately 25.0% to 30.0% of new and used commercial vehicle gross profit.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased $4.1 million, or 7.1%, in 2021, compared to 2020.
Interest Expense, Net
Net interest expense decreased $7.2 million, or 80.4%, in 2021, compared to 2020. This decrease was
primarily attributable to the decrease in floorplan liability due to lower commercial vehicle inventory levels, the
product mix of our commercial vehicle inventory and reduced real estate debt. During 2021, a higher portion of our
vehicle inventory was from commercial vehicle manufacturers that were offering more favorable floorplan terms
than in 2020. We expect net interest expense in 2022 to increase due to interest related to lease and rental borrowings,
but the amount of the increase will depend on inventory levels, interest rate fluctuations and the amount of cash
available to make prepayments on our floor plan arrangements.
Income before Income Taxes
Income before income taxes increased $162.0 million, or 106.7%, in 2021, compared to 2020, as a result of
the factors described above.
Income Taxes
Income tax expense increased $35.4 million, or 96.2%, in 2021, compared to 2020, as a result of the factors
described above. We provided for taxes at a 23.0% effective rate in 2021, compared to an effective rate of 24.3% in
2020. We expect our effective tax rate to be approximately 23.0% to 24.0% of pretax income in 2022.
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
For a discussion of information on the year ended December 31, 2020, refer to Part II Item 7 in the 2020
Annual Report on Form 10-K.
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921003966/rusha20201231_10k.htm
Liquidity and Capital Resources
Our short-term cash requirements are primarily for working capital, inventory financing, the renovation and
expansion of existing facilities and the construction or purchase of new facilities. Historically, these cash
requirements have been met through the retention of profits, borrowings under our floor plan arrangements and bank
financings. As of December 31, 2021, we had working capital of approximately $321.0 million, including $148.1
million in cash, available to fund our operations. From time to time, we utilize our excess cash on hand to pay down
our outstanding borrowings under our Floor Plan Credit Agreement, and the resulting interest earned is recognized
as an offset to our gross interest expense under the Floor Plan Credit Agreement.
41
We continually evaluate our liquidity and capital resources based upon: (i) our cash and cash equivalents
on hand; (ii) the funds that we expect to generate through future operations; (iii) current and expected borrowing
availability under our secured line of credit, working capital lines of credit available under certain of our credit
agreements and our Floor Plan Credit Agreement; and (iv) the potential impact of our capital allocation strategy and
any contemplated or pending future transactions, including, but not limited to, acquisitions, equity repurchases,
dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and
working capital requirements, commitments and contingencies, debt repayments, acquisitions, capital expenditures
and any operating requirements for at least the next twelve months.
We have a secured line of credit that provides for a maximum borrowing of $15.0 million. There were no
advances outstanding under this secured line of credit at December 31, 2021, however, $14.3 million was pledged
to secure various letters of credit related to self-insurance products, leaving $0.7 million available for future
borrowings as of December 31, 2021.
Our long-term debt, floor plan financing agreements and the WF Credit Agreement require us to satisfy
various financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio. As of
December 31, 2021, we were in compliance with all debt covenants related to debt secured by lease and rental units,
our floor plan credit agreements and the WF Credit Agreement. We do not anticipate any breach of the covenants in
the foreseeable future.
We expect to purchase or lease commercial vehicles worth approximately $150.0 million to $170.0 million
for our leasing operations during 2022, depending on customer demand, most of which will be financed. We also
expect to make capital expenditures for the purchase of recurring items such as computers, shop tools and equipment
and Company vehicles of approximately $30.0 million to $35.0 million during 2022.
During the fourth quarter of 2021, we paid a cash dividend of $10.6 million. Additionally, on February 15,
2022, our Board of Directors declared a cash dividend of $0.19 per share of Class A and Class B Common Stock,
to be paid on March 15, 2022, to all shareholders of record as of February 28, 2022. The total dividend disbursement
is estimated to be approximately $10.6 million. We expect to continue paying cash dividends on a quarterly basis.
However, there is no assurance as to future dividends because the declaration and payment of such dividends is
subject to the business judgment of our Board of Directors and will depend on historic and projected earnings, capital
requirements, covenant compliance and financial conditions and such other factors as our Board of Directors deem
relevant.
On November 30, 2021, we announced that our Board of Directors approved a new stock repurchase
program authorizing management to repurchase, from time to time, up to an aggregate of $100.0 million of our
shares of Class A Common Stock and/or Class B Common Stock. In connection with the adoption of the new stock
repurchase plan, we terminated the prior stock repurchase plan, which was scheduled to expire on December 31,
2021. Repurchases, if any, will be made at times and in amounts as we deem appropriate and may be made through
open market transactions at prevailing market prices, privately negotiated transactions or by other means in
accordance with federal securities laws. The actual timing, number and value of repurchases under the stock
repurchase program will be determined by management at its discretion and will depend on a number of factors,
including market conditions, stock price and other factors, including those related to the ownership requirements of
our dealership agreements with Peterbilt. As of December 31, 2021, we had repurchased $4.9 million of our shares
of common stock under the current stock repurchase program. The current stock repurchase program expires on
December 31, 2022, and may be suspended or discontinued at any time.
We anticipate funding the capital expenditures for the improvement and expansion of existing facilities and
recurring expenses through our operating cash flows. We have the ability to fund the construction or purchase of
new facilities through our operating cash flows or by financing.
We have no other material commitments for capital expenditures as of December 31, 2021. However, we
will continue to purchase vehicles for our lease and rental operations and authorize capital expenditures for the
improvement or expansion of our existing dealership facilities and construction or purchase of new facilities based
on market opportunities.
Cash Flows
Cash and cash equivalents decreased by $163.9 million during the year ended December 31, 2021,
compared to the year ended December 31, 2020, and increased by $130.4 million during the year ended December
42
31, 2020, compared to the year ended December 31, 2019. The major components of these changes are discussed
below.
Cash Flows from Operating Activities
Cash flows from operating activities include net income adjusted for non-cash items and the effects of
changes in working capital. During 2021, operating activities resulted in net cash provided by operations of $422.3
million. Net cash provided by operating activities primarily consisted of $241.4 million in net income, as well as
non-cash adjustments related to depreciation and amortization of $169.5 million, deferred income tax of $13.7
million and stock-based compensation of $22.2 million. Cash used in operating activities included an aggregate of
$17.4 million net change in operating assets and liabilities. Included in the net change in operating assets and
liabilities were cash inflows of $32.3 million from a decrease in accounts receivable, $12.1 million from the increase
in accounts payable and $3.0 million from the increase in customer deposits, which were offset by cash outflows of
$33.6 million from an increase in inventory and $31.0 million from the decrease in accrued liabilities. The majority
of commercial vehicle inventory is financed through our floor plan credit agreements.
During 2020, operating activities resulted in net cash provided by operations of $763.0 million. Net cash
provided by operating activities primarily consisted of $114.9 million in net income, as well as non-cash adjustments
related to depreciation and amortization of $177.3 million, deferred income tax of $37.9 million and stock-based
compensation of $19.4 million. Cash used in operating activities included an aggregate of $495.9 million net change
in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of
$11.2 million from a decrease in accounts receivable, $536.7 million from a decrease in inventory, $5.8 million from
the decrease in other current assets, $31.5 million from the increase in customer deposits and $49.0 million from the
increase in accrued liabilities, which were offset by cash outflows of $23.3 million from the decreases in accounts
payable and $115.0 million from the net payments on floor plan (trade).
Cash Flows from Investing Activities
During 2021, cash used in investing activities totaled $432.9 million. Cash flows used in investing activities
consist primarily of cash used for capital expenditures and business acquisitions. Cash used for business acquisitions
was $269.3 million during the year ended December 31, 2021. See Note 15 of the Notes to Consolidated Financial
Statements for a detailed discussion of the business acquisitions. Capital expenditures totaled $167.2 million during
2021 and consisted primarily of purchases of property and equipment, improvements to our existing dealership
facilities and $164.6 million for purchases of rental and lease vehicles for the rental and leasing operations.
During 2020, cash used in investing activities totaled $127.5 million. Cash flows used in investing activities
consist primarily of cash used for capital expenditures. Capital expenditures totaled $136.2 million during 2020 and
consisted primarily of purchases of property and equipment, improvements to our existing dealership facilities and
$93.0 million for purchases of rental and lease vehicles for the rental and leasing operations, which were directly
offset by borrowings of long-term debt.
Cash Flows from Financing Activities
Cash flows used in financing activities include borrowings and repayments of long-term debt and net
payments of floor plan notes payable. During 2021, our financing activities resulted in net cash used in financing of
$153.3 million. The cash outflows consisted primarily of $468.8 million used for principal repayments of long-term
debt and capital lease obligations and $33.6 million used to purchase 329,451 shares of Rush Class A common stock
and 418,615 shares of Rush Class B common stock during 2021. Additionally, during 2021, we paid cash dividends
of $41.1 million. These cash outflows were partially offset by $118.9 million from net draws on floor plan notes
payable (non-trade), borrowings of $260.3 million of long-term debt related to the lease and rental fleet and $10.9
million from the issuance of shares related to equity compensation plans.
During 2020, our financing activities resulted in net cash used in financing of $505.1 million. The cash
outflows consisted primarily of $266.5 million used for principal repayments of long-term debt and capital lease
obligations, $369.6 million from net payments on floor plan notes payable (non-trade), and $24.9 million used to
purchase 843,020 shares of Rush Class A common stock and 225,444 shares of Rush Class B common stock during
2020. Additionally, during 2020, we paid cash dividends of $22.5 million. These cash outflows were partially offset
by borrowings of $157.3 million of long-term debt for the purchase of additional units for our rental and leasing
operations and $21.0 million from the issuance of shares related to equity compensation plans.
43
On September 14, 2021, we entered into the WF Credit Agreement with the WF Lenders and the WF Agent.
Pursuant to the terms of the WF Credit Agreement, the WF Lenders have agreed to make up to $250.0 million of
revolving credit loans for certain of our capital expenditures, including commercial vehicle purchases for our
Idealease leasing and rental fleet, and general working capital needs. We expect to use the revolving credit loans
available under the WF Credit Agreement primarily for the purpose of purchasing commercial vehicles for our
Idealease lease and rental fleet. We may borrow, repay and reborrow amounts pursuant to the WF Credit Agreement
from time to time until the maturity date. Borrowings under the WF Credit Agreement bear interest per annum,
payable on each interest payment date, as defined in the WF Credit Agreement, at (A) the daily SOFR rate plus (i)
1.25% or (ii) 1.5%, depending on our consolidated leverage ratio or (B) on or after the term SOFR transition date,
the term SOFR rate plus (i) 1.25% or (ii) 1.5%, depending on our consolidated leverage ratio. The WF Credit
Agreement expires on September 14, 2024, although, upon the occurrence and during the continuance of an event of
default, the WF Agent has the right to, or upon the request of the required lenders must, terminate the commitments
and declare all outstanding principal and interest due and payable. We may terminate the commitments at any time.
On December 31, 2021, we had approximately $149.9 million outstanding under the WF Credit Agreement.
On October 1, 2021, we entered into the PLC Agreement. Pursuant to the terms of the PLC Agreement,
PLC agreed to make up to $300.0 million of revolving credit loans to finance certain of our capital expenditures,
including commercial vehicle purchases and other equipment to be leased or rented through our PacLease franchises.
We may borrow, repay and reborrow amounts pursuant to the PLC Agreement from time to time until the maturity
date, provided, however, that the outstanding principal amount on any date shall not exceed the borrowing base.
Advances under the PLC Agreement bear interest per annum, payable on the fifth day of the following month, at our
option, at either (A) the prime rate, minus 1.55%, provided that the floating rate of interest is subject to a floor of 0%,
or (B) a fixed rate, to be determined between us and PLC in each instance of borrowing at a fixed rate. The PLC
Agreement expires on October 1, 2025, although either party has the right to terminate the PLC Agreement at any
time upon 180 days written notice. If we terminate the PLC Agreement prior to October 1, 2025, then all payments
will be deemed to be voluntary prepayments subject to a potential prepayment premium. On December 31, 2021, we
had approximately $185.0 million outstanding under the PLC Agreement.
Most of our commercial vehicle purchases are made on terms requiring payment to the manufacturer within
15 days or less from the date the commercial vehicles are invoiced from the factory. On September 14, 2021, we
entered into Floor Plan Credit Agreement with BMO Harris and the lenders signatory thereto. Prior to the Floor
Plan Credit Agreement, we financed the majority of all new commercial vehicle inventory and the loan value of our
used commercial vehicle inventory under the Fourth Amended and Restated Floor Plan Credit Agreement with BMO
Harris and the majority of such financings will continue to occur under the Floor Plan Credit Agreement. The Floor
Plan Credit Agreement includes an aggregate loan commitment of $1.0 billion. Borrowings under the Floor Plan
Credit Agreement bear interest at an annual rate equal to (A) the greater of (i) zero and (ii) one month LIBOR rate,
determined on the last day of the prior month, plus (B) 1.10% and are payable monthly. Loans under the Floor Plan
Credit Agreement for the purchase of used inventory are limited to $150.0 million and loans for working capital
purposes are limited to $200.0 million. The Floor Plan Credit Agreement expires September 14, 2026, although
BMO Harris has the right to terminate at any time upon 360 days written notice and we may terminate at any time,
subject to specified limited exceptions. On December 31, 2021, we had approximately $549.0 million outstanding
under the Floor Plan Credit Agreement. The average daily outstanding borrowings under the Floor Plan Credit
Agreement were $381.0 million during the twelve months ended December 31, 2021. We utilize our excess cash on
hand to pay down our outstanding borrowings under the Floor Plan Credit Agreement, and the resulting interest
earned is recognized as an offset to our gross interest expense under the Floor Plan Credit Agreement.
Navistar Financial Corporation and Peterbilt offer trade terms that provide an interest-free inventory
stocking period for certain new commercial vehicles. This interest-free period is generally 15 to 60 days. If the
commercial vehicle is not sold within the interest-free period, we then finance the commercial vehicle under the
Floor Plan Credit Agreement.
Cyclicality
Our business is dependent on a number of factors including general economic conditions, fuel prices,
interest rate fluctuations, credit availability, environmental and other government regulations and customer business
cycles. Unit sales of new commercial vehicles have historically been subject to substantial cyclical variation based
on these general economic conditions. According to data published by A.C.T. Research, total U.S. retail sales of
new Class 8 commercial vehicles have ranged from a low of approximately 110,000 in 2010, to a high of
approximately 281,440 in 2019. Through geographic expansion, concentration on higher margin Aftermarket
Products and Services and diversification of our customer base, we have attempted to reduce the negative impact of
44
adverse general economic conditions or cyclical trends affecting the Class 8 commercial vehicle industry on our
earnings.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact the financial position, results of operations, or cash
flows of the Company due to adverse changes in financial market prices, including interest rate risk, and other
relevant market rate or price risks.
We are exposed to market risk through interest rates related to our floor plan financing agreements, the WF
Credit Agreement, the PLC Agreement and discount rates related to finance sales. Our floor plan debt is based on
LIBOR, the WF Credit Agreement is based on SOFR and the PLC Agreement is based on the prime rate. As of
December 31, 2021, we had floor plan borrowings and borrowings from WF and PLC in the amount of $965.7
million. Assuming an increase or decrease in LIBOR, SOFR or the prime rate of 100 basis points, annual interest
expense could correspondingly increase or decrease by approximately $9.7 million.
45
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting (PCAOB ID: 42)
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Income for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
47
80
49
50
51
52
53
54
46
Report of Independent Registered Public Accounting Firm
The Shareholders and the Board of Directors of Rush Enterprises, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Rush Enterprises, Inc. and subsidiaries (the
Company) as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive
income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and
the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021
and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 Framework), and our report dated February 24, 2022, expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
47
New and Used Commercial Vehicle Inventory Reserves
Description of the
Matter
At December 31, 2021, the Company’s new and used commercial vehicle inventory balance is
approximately $711.4 million, which is net of management’s estimate of inventory reserves. As
described in Note 6 to the consolidated financial statements, management adjusts the value of its
inventory to net realizable value to the extent it determines inventory cost cannot be recovered.
Management estimates future demand and sales prices to calculate the inventory reserves and to
make corresponding adjustments to the carrying value of these inventories to reflect the lower of
cost or net realizable value.
Auditing management’s estimate of the inventory excess reserves involved auditor subjective
judgment because the estimate is sensitive to changes in management’s assumptions for forecasted
product demand and future sales prices.
How We
Addressed the
Matter in Our
Audit
We evaluated and tested the design and operating effectiveness of controls over the Company’s
processes to estimate the inventory reserves, which included management’s review of the
underlying significant assumptions.
Our substantive audit procedures included, among others, evaluating the significant assumptions
described above, and we tested the completeness and accuracy of underlying data used in the
estimation calculations and evaluating significant assumptions. We also compared the cost of on-
hand inventories to customer demand forecasts and historical sales. We assessed the historical
accuracy of management’s estimates and performed sensitivity analyses of significant
assumptions to evaluate the changes in the inventory reserves that would result from changes in
the assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
San Antonio, Texas
February 24, 2022
48
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Shares and Per Share Amounts)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Prepaid expenses and other
Total current assets
Property and equipment, net
Operating lease right-of-use assets, net
Goodwill, net
Other assets, net
Total assets
Liabilities and shareholders’ equity
Current liabilities:
Floor plan notes payable
Current maturities of long-term debt
Current maturities of finance lease obligations
Current maturities of operating lease obligations
Trade accounts payable
Customer deposits
Accrued expenses
Total current liabilities
Long-term debt, net of current maturities
Finance lease obligations, net of current maturities
Operating lease obligations, net of current maturities
Other long-term liabilities
Deferred income taxes, net
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; 43,107,867
Class A shares and 12,398,606 Class B shares outstanding in
2021; and 42,503,925 Class A shares and 12,470,308 Class B
shares outstanding in 2020
Additional paid-in capital
Treasury stock, at cost: 339,786 Class A shares and 492,052 Class B
shares in 2021; and 10,335 Class A shares and 73,437 Class B
shares in 2020
Retained earnings
Accumulated other comprehensive income
Total shareholders’ equity
Total liabilities and shareholders’ equity
December 31,
December 31,
2021
(unaudited)
2020
$
148,146 $
140,186
1,020,136
15,986
1,324,454
1,278,207
69,008
370,331
77,977
$
3,119,977 $
$
630,731 $
−
26,695
12,096
122,291
80,561
131,130
1,003,504
334,926
89,835
57,976
26,514
140,473
312,048
172,481
858,291
14,906
1,357,726
1,203,719
60,577
292,142
71,229
2,985,393
511,786
141,672
26,373
10,196
110,728
74,209
151,830
1,026,794
387,982
90,740
51,155
34,246
126,439
−
−
563
470,750
551
437,646
(36,933)
1,031,582
787
1,466,749
3,119,977 $
(2,879)
831,850
869
1,268,037
2,985,393
$
The accompanying notes are an integral part of these consolidated financial statements.
49
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Revenues
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Finance and insurance
Other
Total revenue
Cost of products sold
New and used commercial vehicle sales
Aftermarket products and services sales
Lease and rental
Total cost of products sold
Gross profit
Selling, general and administrative
Depreciation and amortization
Gain (loss) on sale of assets
Operating income
Other income
Interest income (expense):
Interest income
Interest expense
Total interest expense, net
Income before taxes
Income tax provision
Net income
Earnings per common share
Basic
Diluted
Dividends declared per common share
Year Ended December 31,
2020
2021
2019
$
3,039,953 $
1,793,363
247,234
27,964
17,628
5,126,142
2,863,309 $
1,600,445
236,223
21,949
14,014
4,735,940
3,757,584
1,762,510
247,549
24,443
17,761
5,809,847
2,736,502
1,109,249
188,093
4,033,844
1,092,298
731,340
53,354
1,432
309,036
6,417
657
(2,427)
1,770
313,683
72,268
2,641,487
1,016,574
202,412
3,860,473
875,467
665,258
57,456
1,852
154,605
6,132
713
(9,727)
9,014
151,723
36,836
3,480,682
1,097,337
206,200
4,784,219
1,025,628
753,749
55,372
(102)
216,405
1,925
1,680
(30,487)
28,807
189,523
47,940
$
241,415
$
114,887
$
141,583
$
$
$
4.32
$
4.17 $
2.09
$
2.04 $
2.57
2.51
0.74
$
0.41
$
0.34
The accompanying notes are an integral part of these consolidated financial statements.
50
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
Year Ended December 31,
2020
2019
2021
Net income
$
241,415 $
114,887 $
141,583
Other comprehensive income net of tax and net of
reclassification adjustments:
Change in currency translation
Comprehensive income
(82)
532
337
$
241,333 $
115,419 $
141,920
The accompanying notes are an integral part of these consolidated financial statements.
51
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In Thousands)
Common Stock
Shares
Outstanding
Class A Class B
$0.01
Par
Value
Additional
Paid-In
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income(Loss)
Total
43,065
12,435
$ 458
$370,025
$ (245,842)
$ 942,287
$ –
$1,066,928
586
–
4
7,585
–
–
175
(1,896)
–
–
–
–
–
339
–
(414)
–
–
–
–
–
2
1
–
–
–
–
–
19,005
(2,834)
3,486
–
–
–
–
–
–
–
–
–
(58,287)
–
–
–
–
–
–
–
–
–
(14,037)
(4,280)
–
141,583
–
–
–
–
–
–
–
337
–
7,589
19,005
(2,832)
3,487
(58,287)
(14,037)
(4,280)
337
141,583
41,930
12,360
$ 465
$397,267
$ (304,129)
$1,065,553
$ 337
$1,159,493
Balance, December 31, 2018
Stock options exercised and stock
awards
Stock-based compensation related
to stock options, restricted
shares and employee stock
purchase plan
Vesting of restricted share awards
Issuance of common stock under
employee stock purchase plan
Common stock repurchases
Cash dividends declared on Class
A common stock
Cash dividends declared on Class
B common stock
Other comprehensive income
Net income
Balance, December 31, 2019
Stock options exercised and stock
awards
1,247
–
10
19,582
Stock-based compensation related
to stock options, restricted
shares and employee stock
purchase plan
Vesting of restricted share awards
Issuance of common stock under
employee stock purchase plan
Common stock repurchases
Cancellation of treasury stock
Cash dividends declared on Class
A common stock
Cash dividends declared on Class
B common stock
Other comprehensive income
Net income
Balance, December 31, 2020
Stock options exercised and stock
awards
Stock-based compensation related
to stock options, restricted
shares and employee stock
purchase plan
Vesting of restricted share awards
Issuance of common stock under
employee stock purchase plan
Common stock repurchases
Cash dividends declared on Class
A common stock
Cash dividends declared on Class
B common stock
Other comprehensive loss
Net income
–
–
–
–
–
–
–
(24,807)
326,057
–
–
(326,129)
–
–
–
–
(17,062)
(5,399)
–
114,887
–
–
–
–
–
–
–
–
532
–
19,592
19,356
(2,457)
3,902
(24,807)
–
(17,062)
(5,399)
532
114,887
–
–
177
(843)
(7)
–
–
–
–
–
339
–
(225)
(4)
–
–
–
–
–
2
2
–
72
–
–
–
–
19,356
(2,459)
3,900
–
–
–
–
–
–
784
–
8
14,157
42,504
12,470
$ 551
$437,646
$ (2,879)
$ 831,850
$ 869
$1,268,037
–
–
–
22,246
(7,447)
4,148
–
–
(34,054)
–
–
–
–
–
–
–
–
–
–
–
–
–
(31,816)
(9,867)
–
241,415
–
–
149
(329)
–
–
–
–
–
347
–
(418)
–
–
–
–
–
3
1
–
–
–
–
–
–
–
–
–
–
–
–
(82)
–
14,165
22,246
(7,444)
4,149
(34,054)
(31,816)
(9,867)
(82)
241,415
Balance, December 31, 2021
43,108
12,399
$ 563
$470,750
$ (36,933)
$ 1,031,582
$ 787
$1,466,749
The accompanying notes are an integral part of these consolidated financial statements.
52
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization
(Gain) loss on sale of property and equipment, net
Stock-based compensation expense related to employee stock
options and employee stock purchases
Provision (benefit) for deferred income tax expense
Change in accounts receivable, net
Change in inventories
Change in prepaid expenses and other, net
Change in trade accounts payable
Payments on floor plan notes payable – trade, net
Change in customer deposits
Change in accrued expenses
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of property and equipment
Proceeds from the sale of property and equipment
Business acquisitions
Purchase of equity method investment and call option
Other
Net cash used in investing activities
Cash flows from financing activities:
Draws (payments) on floor plan notes payable – non-trade, net
Proceeds from long-term debt
Principal payments on long-term debt
Principal payments on finance lease obligations
Draws on line of credit
Payments on line of credit
Proceeds from issuance of shares relating to employee stock options
and employee stock purchases
Payments of cash dividends
Common stock repurchased
Debt issuance costs
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Year Ended December 31,
2020
2019
2021
$
241,415 $
114,887 $
141,583
169,497
(1,432)
22,246
14,034
32,312
(33,572)
(252)
12,053
−
2,993
(31,337)
(5,611)
422,346
(167,177)
3,447
(269,332)
−
157
(432,905)
118,945
260,336
(455,064)
(13,774)
−
−
10,870
(41,060)
(33,596)
−
(153,343)
(163,902)
312,048
177,347
(1,852)
19,356
(37,858)
11,223
536,682
5,822
(23,336)
(114,958)
31,514
48,974
(4,819)
762,982
(136,200)
5,783
−
−
2,960
(127,457)
(369,592)
157,255
(255,279)
(11,192)
−
−
21,037
(22,461)
(24,865)
−
(505,097)
130,428
181,620
175,484
102
19,005
22,989
19,831
81,722
(10,237)
2,241
(26,579)
6,512
(12,757)
1,376
421,272
(293,493)
2,310
(10,168)
(22,499)
3,394
(320,456)
(104)
210,043
(183,538)
(8,331)
135,000
(135,000)
8,244
(18,317)
(58,188)
(731)
(50,922)
49,894
131,726
Cash and cash equivalents, end of year
$
148,146 $
312,048 $
181,620
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
Income taxes paid, net
Noncash investing and financing activities:
Assets acquired under finance leases
Guaranty agreement
$
$
$
22,224 $
101,987 $
38,806 $
36,364 $
57,373
42,440
29,044 $
−
49,523 $
− $
44,904
5,025
The accompanying notes are an integral part of these consolidated financial statements.
53
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
ORGANIZATION AND OPERATIONS:
Rush Enterprises, Inc. (the “Company”) was incorporated in 1965 under the laws of the State of Texas. The Company
operates a network of commercial vehicle dealerships that primarily sell commercial vehicles manufactured by Peterbilt,
International, Hino, Ford, Isuzu, IC Bus or Blue Bird. Through its strategically located network of Rush Truck Centers, the
Company provides one-stop service for the needs of its commercial vehicle customers, including retail sales of new and used
commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance
products.
Stock Split
On September 15, 2020, the Board of Directors of the Company declared a 3-for-2 stock split of the Company’s Class A
common stock and Class B common stock, which was effected in the form of a stock dividend. On October 12, 2020, the
Company distributed one additional share of stock for every two shares of Class A common stock, par value $0.01 per share,
and Class B common stock, par value $0.01 per share, held by shareholders of record as of September 28, 2020. All share
and per share data in this Form 10-K have been adjusted and restated to reflect the stock split as if it occurred on the first day
of the earliest period presented.
COVID-19 Risks and Uncertainties
In March 2020, the World Health Organization made the assessment that COVID-19 could be characterized as a pandemic,
and the President of the United States declared the COVID-19 outbreak a national emergency. The Company’s nationwide
network of commercial vehicle dealerships are classified as “essential businesses” and have remained operational across the
Company’s dealership network. While the COVID-19 pandemic is not over, business conditions have improved significantly
since the second quarter of 2020. The Company is unable to predict the impact that the COVID-19 pandemic will have on
its future business and operating results due to numerous uncertainties, including the duration and severity of the outbreak.
Joint Venture
On January 3, 2022, Cummins Inc. (“Cummins”) and the Company closed on Cummins’ acquisition of a 50% equity interest
in Momentum Fuel Technologies from the Company. The joint venture between the Company and Cummins will seek to
enhance production of near-zero emissions natural gas powertrains by manufacturing Cummins-branded natural gas fuel
delivery systems for the commercial vehicle market in North America. The joint venture will offer aftermarket support
through Rush Truck Centers’ dealerships and Cummins’ distributors that will be able to service both the engine and the fuel
delivery system.
2.
SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements presented herein include the accounts of Rush Enterprises, Inc. together with its
consolidated subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.
Estimates in Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.
54
Cash and Cash Equivalents
Cash and cash equivalents generally consist of cash and other money market instruments. The Company considers all highly
liquid investments with an original maturity of ninety days or less to be cash equivalents.
Allowance for Credit Losses and Repossession Losses
The Company maintains an allowance for credit losses based on the probability of default, its historical rate of losses, aging
and current economic conditions. Accounts receivable consists primarily of commercial vehicle sales receivables,
manufacturers’ receivables, leasing and parts and service receivables and other trade receivables. The Company writes off
account balances when it has exhausted reasonable collection efforts and determined that the likelihood of collection is
remote. These write-offs are charged against the allowance for credit losses.
The Company provides an allowance for repossession losses after considering historical loss experience and other factors
that might affect the ability of customers to meet their obligations on finance contracts sold by the Company when the
Company has a potential liability.
Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific identification of new and
used commercial vehicle inventory and by the first-in, first-out method for tires, parts and accessories. As the market value
of the Company’s inventory typically declines over time, reserves are established based on historical loss experience and
market trends. These reserves are charged to cost of sales and reduce the carrying value of the Company’s inventory on
hand. An allowance is provided when it is anticipated that cost will exceed net realizable value less a reasonable profit
margin.
Property and Equipment
Property and equipment are stated at cost and depreciated over their estimated useful lives. Leasehold improvements are
amortized over the useful life of the improvement, or the term of the lease, whichever is shorter. Provision for depreciation
of property and equipment is calculated primarily on a straight-line basis. The Company capitalizes interest on borrowings
during the active construction period of major capital projects. Capitalized interest, when incurred, is added to the cost of the
underlying assets and is amortized over the estimated useful life of such assets. The cost, accumulated depreciation and
amortization and estimated useful lives of the Company’s property and equipment are summarized as follows (in thousands):
Land
Buildings and improvements
Leasehold improvements
Machinery and shop equipment
Furniture, fixtures and computers
Transportation equipment
Lease and rental vehicles
Construction in progress
Accumulated depreciation and amortization
2021
$
156,169 $
552,965
39,665
92,762
84,728
103,611
947,318
6,664
(705,675)
2020
136,024
495,808
38,767
87,090
81,834
96,319
905,465
2,989
(640,577)
Total
$
1,278,207 $
1,203,719
Estimated Life
(Years)
–
10 – 39
2 – 39
5 – 20
3 – 15
3 – 15
1 – 8
The Company recorded depreciation expense of $148.3 million and amortization expense of $21.2 million for the year ended
December 31, 2021, depreciation expense of $157.8 million and amortization expense of $19.5 million for the year ended
December 31, 2020, and depreciation expense of $158.7 million and amortization expense of $16.8 million for the year ended
December 31, 2019.
As of December 31, 2021, the Company had $108.5 million in lease and rental vehicles under various finance leases included
in property and equipment, net of accumulated amortization of $43.5 million. The Company recorded depreciation and
amortization expense of $116.1 million related to lease and rental vehicles in lease and rental cost of products sold for the
55
year ended December 31, 2021, $119.9 million for the year ended December 31, 2020 and $120.1 million for the year ended
December 31, 2019.
Goodwill
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations
accounted for under the purchase method. The Company tests goodwill for impairment annually during the fourth quarter,
or when indications of potential impairment exist. These indicators would include a significant change in operating
performance, or a planned sale or disposition of a significant portion of the business, among other factors. The Company
tests for goodwill impairment utilizing a fair value approach at the reporting unit level. The Company has deemed its
reporting unit to be the Truck Segment, as all components of the Truck Segment are similar.
The impairment test for goodwill involves comparing the fair value of a reporting unit to its carrying amount, including
goodwill. If the carrying amount of the reporting unit exceeds its fair value, a second step is required to measure the goodwill
impairment loss. The second step includes hypothetically valuing all the tangible and intangible assets of the reporting unit
as if the reporting unit had been acquired in a business combination and comparing the hypothetical implied fair value of the
reporting unit’s goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill
exceeds the hypothetical implied fair value of the goodwill, the Company would recognize an impairment loss in an amount
equal to the excess, not to exceed the carrying amount. The Company determines the fair values calculated in an impairment
test using the discounted cash flow method, which requires assumptions and estimates regarding future revenue, expenses
and cash flow projections. The analysis is based upon available information regarding expected future cash flows of its
reporting unit discounted at rates consistent with the cost of capital specific to the reporting unit.
The annual impairment test was performed in the fourth quarter of 2021. No impairment of goodwill was identified during
2021. However, the Company cannot predict the occurrence of certain events that might adversely affect the reported value
of goodwill in the future.
The following table sets forth the change in the carrying amount of goodwill for the Company for the year ended December
31, 2021 (in thousands):
Balance December 31, 2020
Acquisitions During 2021
Balance December 31, 2021
Other Assets
ERP Platform
$
$
292,142
78,189
370,331
Total capitalized costs of the Company’s SAP enterprise resource planning software platform (“the ERP Platform”) of $5.5
million are recorded on the Consolidated Balance Sheet in Other Assets. Amortization expense relating to the ERP Platform,
which is recognized in depreciation and amortization expense in the Consolidated Statements of Income and Comprehensive
Income, was $1.5 million for the year ended December 31, 2021 and $1.9 million for the year ended December 31, 2020.
The Company estimates that amortization expense relating to the ERP Platform will be approximately $1.2 million for each
of the next four years.
Franchise Rights
The Company’s only significant identifiable intangible assets, other than goodwill, are rights under franchise agreements
with manufacturers. The fair value of the franchise right is determined at the acquisition date by discounting the projected
cash flows specific to each acquisition. The carrying value of the Company’s manufacturer franchise rights was $8.6 million
at December 31, 2021 and $7.0 million at December 31, 2020, and is included in Other Assets on the accompanying
Consolidated Balance Sheet. The Company has determined that manufacturer franchise rights have an indefinite life, as there
are no economic or other factors that limit their useful lives and they are expected to generate cash flows indefinitely due to
the historically long lives of the manufacturers’ brand names. Furthermore, to the extent that any agreements evidencing
manufacturer franchise rights have expiration dates, the Company expects that it will be able to renew those agreements in
the ordinary course of business. Accordingly, the Company does not amortize manufacturer franchise rights.
56
Due to the fact that manufacturer franchise rights are specific to a geographic region, the Company has determined that
evaluating and including all locations acquired in the geographic region is the appropriate level for purposes of testing
franchise rights for impairment. Management reviews indefinite-lived manufacturer franchise rights for impairment annually
during the fourth quarter, or more often if events or circumstances indicate that an impairment may have occurred. The
Company is subject to financial statement risk to the extent that manufacturer franchise rights become impaired due to
decreases in the fair market value of its individual franchises.
The significant estimates and assumptions used by management in assessing the recoverability of manufacturer franchise
rights include estimated future cash flows, present value discount rate and other factors. Any changes in these estimates or
assumptions could result in an impairment charge. The estimates of future cash flows, based on reasonable and supportable
assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates used,
the estimated future cash flows projected in the evaluations of manufacturer franchise rights can vary within a range of
outcomes.
No impairment write-down was required in the period presented. The Company cannot predict the occurrence of certain
events that might adversely affect the reported value of manufacturer franchise rights in the future.
Equity Method Investment and Call Option
On February 25, 2019, the Company acquired 50% of the equity interest in Rush Truck Centres of Canada Limited (“RTC
Canada”), which acquired the operating assets of Tallman Group, the largest International Truck dealer in Canada. The
Company was also granted a call option in the purchase agreement that provides the Company with the right to acquire the
remaining 50% equity interest in RTC Canada until the close of business on February 25, 2024. The value of the Company’s
call option was $3.6 million as of December 31, 2021, and is reported in Other Assets on the Consolidated Balance Sheet.
On April 25, 2019, the Company entered into a Guaranty Agreement (“Guaranty”) with Bank of Montreal (“BMO”),
pursuant to which the Company agreed to guaranty up to CAD250 million (the “Guaranty Cap”) of certain credit facilities
entered into by and between Tallman Truck Centre Limited (“TTCL”) and BMO. The Company owned a 50% equity
interest in TTCL, which was the sole owner of RTC Canada. Later in 2019, RTC Canada and TTCL were amalgamated
into RTC Canada. Interest, fees and expenses incurred by BMO to enforce its rights with respect to the guaranteed
obligations and its rights against the Company under the Guaranty are not subject to the Guaranty Cap. In exchange for the
Guaranty, RTC Canada is receiving a reduced rate of interest on its credit facilities with BMO. The Guaranty was valued
at $5.2 million as of December 31, 2021 and December 31, 2020, and is included in the investment in RTC Canada. As of
December 31, 2021, the Company’s investment in RTC Canada is $36.7 million. The Company’s equity income in RTC
Canada is included in Other income on the Consolidated Statements of Income.
Income Taxes
Management’s judgment is required to determine the provisions for income taxes and to determine whether deferred tax
assets will be realized in full or in part. Deferred income tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. When it is more likely than not that all or some portion of specific deferred income tax assets will not be realized,
a valuation allowance must be established for the amount of deferred income tax assets that are determined not to be
realizable. Accordingly, the facts and financial circumstances impacting deferred income tax assets are reviewed quarterly
and management’s judgment is applied to determine the amount of valuation allowance required, if any, in any given period.
In determining its provision for income taxes, the Company uses an annual effective income tax rate based on annual income,
permanent differences between book and tax income, and statutory income tax rates. The effective income tax rate also
reflects its assessment of the ultimate outcome of tax audits. The Company adjusts its annual effective income tax rate as
additional information on outcomes or events becomes available. Discrete events such as audit settlements or changes in tax
laws are recognized in the period in which they occur.
The Company’s income tax returns are periodically audited by tax authorities. These audits include questions regarding the
Company’s tax filing positions, including the timing and amount of deductions. In evaluating the exposures associated with
its various tax filing positions, the Company adjusts its liability for unrecognized tax benefits and income tax provision in
57
the period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing
authority to examine the tax position or when more information becomes available.
The Company’s liability for unrecognized tax benefits contains uncertainties because management is required to make
assumptions and to apply judgment to estimate the exposures associated with its various filing positions. The Company’s
effective income tax rate is also affected by changes in tax law, the level of earnings and the results of tax audits. Although
the Company believes that the judgments and estimates are reasonable, actual results could differ, and the Company may be
exposed to losses or gains that could be material. An unfavorable tax settlement would generally require use of the
Company’s cash and result in an increase in its effective income tax rate in the period of resolution. A favorable tax
settlement would be recognized as a reduction in the Company’s effective income tax rate in the period of resolution. The
Company’s income tax expense includes the impact of reserve provisions and changes to reserves that it considers
appropriate, as well as related interest.
Revenue Recognition Policies
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects
the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue
recognition for arrangements that the Company determines are within the scope of ASU 2014-09, “Revenue from Contracts
with Customers (“Topic 606”), the Company performs the following five steps: (i) identify the contract with a customer; (ii)
identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price
to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance
obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the
consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once
the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within
each contract and determines those that are performance obligations. The Company then assesses whether each promised
good or service is distinct and recognize as revenue the amount of the transaction price that is allocated to the respective
performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for
revenue, see Note 17 – Revenue of the Notes to Consolidated Financial Statements.
Cost of Sales
For the Company’s new and used commercial vehicle operations, cost of sales consists primarily of the Company’s actual
purchase price, plus make-ready expenses, less any applicable manufacturers’ incentives. For the Company’s parts
operations, cost of sales consists primarily of the Company’s actual purchase price, less any applicable manufacturers’
incentives. For the Company’s service and collision center operations, technician labor cost is the primary component of
cost of sales. For the Company’s rental and leasing operations, cost of sales consists primarily of depreciation and
amortization, rent, maintenance costs, license costs and interest expense considered direct and incremental on the lease and
rental fleet owned and leased by the Company. There are no costs of sales associated with the Company’s finance and
insurance revenue or other revenue.
Leases
The Company leases commercial vehicles and real estate under finance and operating leases. The Company determines
whether an arrangement is a lease at its inception. For leases with terms greater than twelve months, the Company records
a lease asset and liability at the present value of lease payments over the term. Many of the Company’s leases include renewal
options and termination options that are factored into its determination of lease payments when appropriate.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most
of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental
borrowing rate to discount the lease payments based on information available at lease commencement.
The Company leases commercial vehicles that the Company owns to customers. Lease and rental revenue is recognized
over the period of the related lease or rental agreement. Variable rental revenue is recognized when it is earned.
58
Taxes Assessed by a Governmental Authority
The Company accounts for sales taxes assessed by a governmental authority that are directly imposed on a revenue-producing
transaction on a net (excluded from revenues) basis.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of incentive based compensation for sales, finance and general
management personnel, salaries for administrative personnel and expenses for rent, marketing, insurance, utilities, research
and development and other general operating purposes.
Stock Based Compensation
The Company applies the provisions of ASC topic 718-10, “Compensation – Stock Compensation,” which requires the
measurement and recognition of compensation expense for all share-based payment awards made to employees and directors,
including grants of employee stock options, restricted stock units, restricted stock awards and employee stock purchases
under the Employee Stock Purchase Plan, based on estimated fair values.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of share-based payment awards on the
date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the
requisite service periods.
Compensation expense for all share-based payment awards is recognized using the straight-line single-option method. Stock-
based compensation expense is recognized based on awards expected to vest. Accordingly, stock based compensation
expense has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
The Company determines the fair value of share-based payment awards on the date of grant using an option-pricing model
that is affected by the Company’s stock price, as well as assumptions regarding a number of highly complex and subjective
variables. These variables include the Company’s expected stock price volatility over the term of the awards and actual and
projected stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded
options that have no vesting or hedging restrictions and are fully transferable. Because the Company’s stock options have
characteristics that are significantly different from traded options and because changes in the subjective assumptions can
materially affect the estimated value, in management’s opinion, the existing valuation models may not provide an accurate
measure of fair value and it may not be indicative of the fair value observed in a market transaction between a willing buyer
and a willing seller.
The following table reflects the weighted-average fair value of stock options granted during each period using the Black-
Scholes option valuation model with the following weighted-average assumptions used:
Expected stock volatility
Weighted-average stock volatility
Expected dividend yield
Risk-free interest rate
Expected life (years)
Weighted-average fair value of
stock options granted
2021
36.03%
36.03%
1.65%
1.07%
2020
33.11%
33.11%
1.20%
0.80%
2019
31.29%
31.29%
1.13%
2.45%
6.0
6.0
6.0
$ 14.77
$ 6.36
$ 8.37
The Company computes its historical stock price volatility in accordance with ASC Topic 718-10. The risk-free interest
rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of
grant. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The expected
life of stock options represents the weighted-average period the stock options are expected to remain outstanding.
59
Advertising Costs
Advertising costs are expensed as incurred. Advertising and marketing expense was $7.5 million for 2021, $7.9 million for
2020 and $11.5 million for 2019. Advertising and marketing expense is included in selling, general and administrative
expense.
Accounting for Internal Use Software
The Company’s accounting policy with respect to accounting for computer software developed or obtained for internal use
is consistent with ASC topic 350-40 (Internal Use Software), which provides guidance on accounting for the costs of
computer software developed or obtained for internal use and identifies characteristics of internal-use software. The
Company has capitalized software costs, including capitalized interest, of approximately $5.5 million as of December 31,
2021, net of accumulated amortization of $13.6 million, and had $7.0 million as of December 31, 2020, net of accumulated
amortization of $12.1 million.
Insurance
The Company is partially self-insured for a portion of the claims related to its property and casualty insurance programs.
Accordingly, the Company is required to estimate expected losses to be incurred. The Company engages a third-party
administrator to assess any open claims and the Company adjusts its accrual accordingly on an annual basis. The Company
is also partially self-insured for a portion of the claims related to its worker’s compensation and medical insurance programs.
The Company uses actuarial information provided from third-party administrators to calculate an accrual for claims incurred,
but not reported, and for the remaining portion of claims that have been reported.
Fair Value Measurements
The Company has various financial instruments that it must measure at fair value on a recurring basis. See Note 9 – Financial
Instruments and Fair Value of the Notes to Consolidated Financial Statements, for further information. The Company also
applies the provisions of fair value measurement to various nonrecurring measurements for its financial and nonfinancial
assets and liabilities.
Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date (an exit price). The Company
measures its assets and liabilities using inputs from the following three levels of the fair value hierarchy:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability
to access at the measurement date.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability
(i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data
by correlation or other means (market corroborated inputs).
Level 3 includes unobservable inputs that reflect the Company’s assumptions about what factors market participants would
use in pricing the asset or liability. The Company develops these inputs based on the best information available, including
its own data.
Acquisitions
The Company uses the acquisition method of accounting for the recognition of assets acquired and liabilities assumed through
acquisitions at their estimated fair values as of the date of acquisition. The purchase price allocation for business combinations
and asset acquisitions requires the use of accounting estimates and judgments to allocate the purchase price to the identifiable
tangible and intangible assets acquired and liabilities assumed based on their respective fair values. The Company determines
whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of
similar identifiable assets. If this threshold is met, the single asset or group of assets, as applicable, is not a business. If it is
not met, the Company determines whether the single asset or group of assets, as applicable, meets the definition of a business.
As a result, during the measurement period, which is not to exceed one year from the date of acquisition, any changes in the
60
estimated fair values of the net assets recorded for the acquisitions will result in an adjustment to goodwill. Upon the
conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever
comes first, any subsequent adjustments are recorded to the Consolidated Statements of Income.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848),” which provides temporary optional
guidance to ease the potential financial reporting burden of the expected market transition away from LIBOR. The new
guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications, hedge accounting,
and other transactions affected by reference rate reform if certain criteria are met through December 31, 2022. The Company
does not expect this standard to have a material effect on its financial position, results of operations and related disclosures.
3.
SUPPLIER CONCENTRATION:
Major Suppliers and Dealership Agreements
The Company has entered into dealership agreements with various manufacturers of commercial vehicles and buses
(“Manufacturers”). These agreements are nonexclusive agreements that allow the Company to stock, sell at retail and service
commercial vehicles and sell parts from the Manufacturers in the Company’s defined area of responsibility. The agreements
allow the Company to use the Manufacturers’ names, trade symbols and intellectual property and expire as follows:
Manufacturer
Peterbilt
International
Isuzu
Hino
Ford
Blue Bird
IC Bus
Expiration Dates
March 2022 through September 2022
December 2022 through December 2026
Indefinite
Indefinite
Indefinite
August 2024
December 2022 through October 2026
These agreements, as well as agreements with various other Manufacturers, impose a number of restrictions and obligations
on the Company, including restrictions on a change in control of the Company and the maintenance of certain required levels
of working capital. Violation of these restrictions could result in the loss of the Company’s right to purchase the
Manufacturers’ products and use the Manufacturers’ trademarks.
The Company purchases its new Peterbilt vehicles from Peterbilt and most of the parts sold at its Peterbilt dealerships from
PACCAR, Inc, the parent company of Peterbilt, at prevailing prices charged to all franchised dealers. Sales of new Peterbilt
commercial vehicles accounted for approximately 62.5% of the Company’s new vehicle sales revenue for the year ended
December 31, 2021, 59.0% of the Company’s new vehicle sales revenue for the year ended December 31, 2020, and 61.6%
of the Company’s new vehicle sales revenue for the year ended December 31, 2019.
Primary Lenders
The Company purchases its new and used commercial vehicle inventories with the assistance of floor plan financing
programs as described in Note 7 to these Notes to Consolidated Financial Statements. The Company finances the majority
of all new commercial vehicle inventory and the loan value of its used commercial vehicle inventory under the Floor Plan
Credit Agreement with BMO Harris. The Floor Plan Credit Agreement includes an aggregate loan commitment of $1.0
billion. The Company’s floor plan financing agreements provide that the occurrence of certain events will be considered
events of default. In the event that the Company’s floor plan financing becomes insufficient, or its relationship with any of
its current primary lenders terminates, the Company would need to obtain similar financing from other sources. Management
believes it can obtain additional floor plan financing or alternative financing if necessary.
On September 14, 2021, the Company entered into a credit agreement (“the WF Credit Agreement”) with the lenders
signatory thereto (the “WF Lenders”) and Wells Fargo Bank, National Association (“WF”), as administrative agent (in such
capacity, the “WF Agent”). Pursuant to the terms of the WF Credit Agreement, the WF Lenders have agreed to make up to
$250.0 million of revolving credit loans for certain of the Company’s capital expenditures, including commercial vehicle
purchases for the Company’s Idealease lease and rental fleet, and general working capital needs. The Company expects to
61
use the revolving credit loans available under the WF Credit Agreement primarily for the purpose of purchasing commercial
vehicles for the Company’s Idealease lease and rental fleet.
On October 1, 2021, the Company entered into that certain Amended and Restated Inventory Financing and Purchase Money
Security Agreement with PLC, a division of PACCAR Financial Corp. (the “PLC Agreement”). Pursuant to the terms of the
PLC Agreement, PLC agreed to make up to $300.0 million of revolving credit loans to finance certain of our capital
expenditures, including commercial vehicle purchases and other equipment to be leased or rented through the Company’s
PacLease franchises.
Concentrations of Credit Risks
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of
cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with what it considers
to be quality financial institutions based on periodic assessments of such institutions. The Company’s cash and cash
equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit.
The Company controls credit risk through credit approvals and by selling a majority of its trade receivables, other than
vehicle accounts receivable, without recourse. Concentrations of credit risk with respect to trade receivables are reduced
because a large number of geographically diverse customers make up the Company’s customer base; however, substantially
all of the Company’s business is concentrated in the United States commercial vehicle markets and related aftermarkets.
The Company generally sells finance contracts it enters into with customers to finance the purchase of commercial vehicles
to third parties. These finance contracts are sold by the Company both with and without recourse. A majority of the
Company’s finance contracts are sold without recourse. The Company provides an allowance for doubtful receivables and a
reserve for repossession losses related to finance contracts sold with recourse. Historically, the Company’s allowances and
reserves have covered losses inherent in these receivables.
4.
ACCOUNTS RECEIVABLE:
The Company’s accounts receivable, net, consisted of the following (in thousands):
Trade accounts receivable from sale of vehicles
Trade receivables other than vehicles
Warranty claims
Other accounts receivable
Less allowance for credit losses
Total
5.
INVENTORIES:
December 31,
2021
2020
$
37,599 $
68,884
9,290
26,003
(1,590)
82,338
58,689
9,032
24,027
(1,605)
$
140,186 $
172,481
The Company’s inventories, net, consisted of the following (in thousands):
New commercial vehicles
Used commercial vehicles
Parts and accessories
Other
Less allowance
Total
December 31,
2021
2020
$
617,225 $
95,051
290,007
26,232
(8,379)
563,097
56,214
238,195
16,175
(15,390)
$
1,020,136 $
858,291
62
6.
VALUATION ACCOUNTS:
Valuation and allowance accounts include the following (in thousands):
Balance
Beginning
of Year
Net Charged
to Costs and
Expenses
Net Write-
Offs
Balance
End
of Year
2021
Reserve for parts inventory
Reserve for commercial vehicle inventory
2020
Reserve for parts inventory
Reserve for commercial vehicle inventory
2019
Reserve for accounts receivable
Reserve for warranty receivables
Reserve for parts inventory
Reserve for commercial vehicle inventory
$
$
$
9,315 $
6,075
3,520 $
(536)
(5,375) $
(4,620)
7,460
919
7,661 $
9,602
4,501 $
9,598
(2,847) $
(13,125)
9,315
6,075
987 $
429
7,050
4,587
2,065 $
1,661
4,460
12,489
(2,038)
$
(1,680)
(3,849)
(7,474)
1,014
410
7,661
9,602
Accounts Receivable and Allowance for Credit Losses
The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be
collected. Under Topic 326, the Company is required to remeasure expected credit losses for financial instruments held on
the reporting date based on historical experience, current conditions and reasonable forecasts.
Accounts receivable consists primarily of commercial vehicle sales receivables, manufacturers’ receivables and leasing, parts
and service sales receivables and other trade receivables. The Company maintains an allowance for credit losses based on
the probability of default, its historical rate of losses, aging and current economic conditions. The Company’s assessment of
future losses in 2021 considered the impact of the COVID-19 pandemic on forecasted economic trends. The Company writes
off account balances when it has exhausted reasonable collection efforts and determined that the likelihood of collection is
remote. These write-offs are charged against the allowance for credit losses.
The following table summarizes the changes in the allowance for credit losses (in thousands):
Balance
December 31,
2020
Provision for
the Year
Ended
December 31,
2021
Write offs
Against
Allowance, net
of Recoveries
Balance
December 31,
2021
Commercial vehicle receivables
Manufacturers’ receivables
Leasing, parts and service receivables
Other receivables
Total
$
$
172 $
136
1,278
19
1,605 $
(96) $
1,158
1,335
7
2,404 $
− $
(875)
(1,544)
−
(2,419) $
76
419
1,069
26
1,590
Inventory
The Company provides a reserve for obsolete and slow moving parts. The reserve is reviewed and, if necessary, adjustments
are made on a quarterly basis. The Company relies on historical information to support its reserve. Once the inventory is
written down, the Company does not reverse any reserve balance until the inventory is sold.
The valuation for new and used commercial vehicle inventory is based on specific identification. A detail of new and used
commercial vehicle inventory is reviewed and, if necessary, adjustments to the value of specific vehicles are made on a
quarterly basis.
63
7.
FLOOR PLAN NOTES PAYABLE AND LINES OF CREDIT:
Floor Plan Notes Payable
Floor plan notes are financing agreements to facilitate the Company’s purchase of new and used commercial vehicle
inventory. These notes are collateralized by the inventory purchased and accounts receivable arising from the sale thereof.
The Company’s Floor Plan Credit Agreement provides for a loan commitment of up to $1.0 billion and has the interest rate
benchmarked to LIBOR, as defined in the agreement. The interest rate under the Company’s Floor Plan Credit Agreement
is the one month LIBOR rate plus 1.10%. The effective interest rate applicable to the Company’s Floor Plan Credit
Agreement was approximately 1.2% as of December 31, 2021. The Company utilizes its excess cash on hand to pay down
its outstanding borrowings under its Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset
to the Company’s gross interest expense under the Floor Plan Credit Agreement.
The Company finances substantially all of the purchase price of its new commercial vehicle inventory and the loan value of
its used commercial vehicle inventory under its Floor Plan Credit Agreement, under which BMO Harris pays the
manufacturer directly with respect to new commercial vehicles. Amounts borrowed under the Company’s Floor Plan Credit
Agreement are due when the related commercial vehicle inventory (collateral) is sold. The Company’s Floor Plan Credit
Agreement expires September 14, 2026, although BMO Harris has the right to terminate the Floor Plan Credit Agreement at
any time upon 360 days written notice and the Company may terminate at any time, subject to specified limited exceptions.
On December 31, 2021, the Company had approximately $549.0 million outstanding under its Floor Plan Credit Agreement.
The Company’s weighted average interest rate for floor plan notes payable was 0.42% for the year ended December 31,
2021, and 1.26% for the year ended December 31, 2020, which is net of interest related to prepayments of new and used
inventory loans.
Assets pledged as collateral were as follows (in thousands):
Inventories, new and used vehicles at cost based on specific
identification, net of allowance
Vehicle sale related accounts receivable
Total
Floor plan notes payable related to vehicles
Lines of Credit
December 31,
2021
2020
$
$
$
$
711,358
37,599
748,957 $
613,236
82,338
695,574
630,731 $
511,786
The Company has a secured line of credit that provides for a maximum borrowing of $15.0 million. There were no advances
outstanding under this secured line of credit as of December 31, 2021; however, $14.3 million was pledged to secure various
letters of credit related to self-insurance products, leaving $0.7 million available for future borrowings as of December 31,
2021.
64
8.
LONG-TERM DEBT:
Long-term debt was comprised of the following (in thousands):
Variable interest rate term notes
Fixed interest rate term notes
Total debt
Less: current maturities
December 31,
2021
2020
$
334,926 $
−
40,975
488,679
334,926
529,654
−
(141,672)
Total long-term debt, net of current maturities
$
334,926 $
387,982
As of December 31, 2021, long-term debt maturities were as follows (in thousands):
2022
2023
2024
2025
2026
Thereafter
Total
$
$
−
−
149,902
185,024
−
−
334,926
On September 14, 2021, the Company entered into the WF Credit Agreement with the WF Lenders and the WF Agent.
Pursuant to the terms of the WF Credit Agreement, the WF Lenders have agreed to make up to $250.0 million of revolving
credit loans for certain of the Company’s capital expenditures, including commercial vehicle purchases for the Company’s
Idealease lease and rental fleet, and general working capital needs. Borrowings under the WF Credit Agreement bear interest
per annum, payable on each interest payment date, as defined in the WF Credit Agreement, at (A) the daily simple secured
overnight financing rate (“SOFR”) rate plus (i) 1.25% or (ii) 1.5%, depending on the Company’s consolidated leverage ratio
or (B) on or after the term SOFR transition date, the term SOFR rate plus (i) 1.25% or (ii) 1.5%, depending on the Company’s
consolidated leverage ratio. The WF Credit Agreement expires on September 14, 2024, although, upon the occurrence and
during the continuance of an event of default, the WF Agent has the right to, or upon the request of the required lenders must,
terminate the commitments and declare all outstanding principal and interest due and payable. The Company may terminate
the commitments at any time. The Company expects to use the revolving credit loans available under the WF Credit
Agreement primarily for the purpose of purchasing commercial vehicles for the Company’s Idealease lease and rental fleet.
On October 1, 2021, the Company entered into the PLC Agreement. Pursuant to the terms of the PLC Agreement, PLC
agreed to make up to $300.0 million of revolving credit loans to finance certain of the Company’s capital expenditures,
including commercial vehicle purchases and other equipment to be leased or rented through the Company’s PacLease
franchises. Advances under the PLC Agreement bear interest per annum, payable on the fifth day of the following month,
at the Company’s option, at either (A) the prime rate, minus 1.55%, provided that the floating rate of interest is subject to a
floor of 0%, or (B) a fixed rate, to be determined between the Company and PLC in each instance of borrowing at a fixed
rate. The PLC Agreement expires on October 1, 2025, although either party has the right to terminate the PLC Agreement
at any time upon 180 days written notice.
The interest associated with the WF Credit Agreement and the PLC Agreement is recorded in interest expense on the
Consolidated Statement of Income. The WF Credit Agreement and the PLC Agreement are general borrowing facilities,
whereas prior to the WF Credit Agreement and PLC Agreement, interest expense associated with the Company’s lease and
rental fleet was recorded in cost of sales as the borrowings were directly related to each lease and rental vehicle.
The Company’s long-term debt, floor plan financing agreements and the WF Credit Agreement require us to satisfy various
financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio. As of December 31,
2021, the Company was in compliance with all debt covenants related to debt secured by lease and rental units, its floor plan
credit agreements and the WF Credit Agreement. The Company does not anticipate any breach of the covenants in the
foreseeable future.
65
9.
FINANCIAL INSTRUMENTS AND FAIR VALUE:
The Company measures certain financial assets and liabilities at fair value on a recurring basis. Financial instruments consist
primarily of cash, accounts receivable, accounts payable and floor plan notes payable. The carrying values of the Company’s
financial instruments approximate fair value due either to their short-term nature or existence of variable interest rates, which
approximate market rates. Certain methods and assumptions were used by the Company in estimating the fair value of
financial instruments as of December 31, 2021, and 2020. The carrying value of current assets and current liabilities
approximates the fair value due to the short maturity of these items.
The fair value of the Company’s long-term debt is based on secondary market indicators. Because the Company’s debt is
not quoted, estimates are based on each obligation’s characteristics, including remaining maturities, interest rate, credit
rating, collateral and liquidity. Accordingly, the Company concluded that the valuation measurement inputs of its long-term
debt represent, at its lowest level, current market interest rates available to the Company for similar debt and the Company’s
current credit standing. The Company has categorized such debt within Level 2 of the hierarchy framework. The carrying
amount approximates fair value.
10.
LEASES:
In February 2016, the FASB issued ASU No. 2016-02, “Leases (“Topic 842”),” which was intended to increase the
transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet
and disclosing key information about leasing arrangements. The standard requires lessees to record assets and liabilities on
the balance sheet for all leases with terms longer than twelve months. Leases are classified as either finance or operating,
with classification affecting the pattern of expense recognition in the income statement.
A lease is classified as a finance lease if any of the following conditions exist on the date of lease commencement:
The lease transfers ownership of the underlying asset to the lessee by the end of the lease
term.
The lease provides the lessee an option to purchase the underlying asset, and that option is
reasonably certain to be exercised.
The lease term is for the major part of the remaining economic life of the underlying asset.
The present value of the lease payments equals or exceeds substantially all of the fair value
of the underlying asset.
The underlying asset is of such a specialized nature that only the lessee can use it without
major modifications.
The lessor expects to have no alternative use for the leased asset at the end of the lease.
The Company adopted Topic 842 on January 1, 2019 and applied the practical expedients permitted, which among other
things, allowed it to retain its existing assessment of whether an arrangement is, or contains, a lease and whether such lease
is classified as an operating or finance lease. The Company made an accounting policy election that keeps leases with an
initial term of twelve months or less off of the balance sheet and results in recognizing those lease payments in the
Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term.
The Company leases commercial vehicles and real estate under finance and operating leases. The Company determines
whether an arrangement is a lease at its inception. For leases with terms greater than twelve months, the Company records
the related asset and obligation at the present value of lease payments over the term. Many of the Company’s leases include
renewal options and/or termination options that are factored into its determination of lease payments when appropriate. The
Company has elected not to account for lease and nonlease components as a single combined lease component as lessee.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most
of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental
borrowing rate to discount the lease payments based on information available at lease commencement.
66
Lease of Vehicles as Lessee
The Company leases commercial vehicles as the lessee under finance leases and operating leases. The lease terms vary from
one month to ten years. Commercial vehicle finance leases have always been reported on the Consolidated Balance Sheet,
while operating leases were added to the Consolidated Balance Sheet in 2019 with the adoption of Topic 842. These vehicles
are then subleased or rented by the Company to customers under various agreements. The Company received sublease
income under non-cancelable subleases of $33.0 million for the year ended December 31, 2021 and $26.9 million for the
year ended December 31, 2020.
The Company usually guarantees the residual value of vehicles under operating lease and finance lease arrangements. As of
December 31, 2021, the Company guaranteed commercial vehicle residual values of approximately $59.6 million under
operating lease and finance lease arrangements.
Lease of Facilities as Lessee
The Company’s facility leases are classified as operating and finance leases and primarily reflect its use of dealership
facilities and office space. The lease terms vary from one year to 83 years, some of which include options to extend the lease
term, and some of which include options to terminate the lease within one year. The Company considers these options in
determining the lease term used to establish its right-of-use assets and lease liabilities.
Lease Costs and Supplemental Information
Components of lease cost are as follows (in thousands):
Component
Operating lease cost
Operating lease cost
Finance lease cost – amortization of right-of-use assets
Finance lease cost – interest on lease liabilities
Short-term lease cost
Classification
Twelve Months Ended
December 31,
2021
December 31,
2020
$
SG&A expense
Lease and rental cost of products sold
Lease and rental cost of products sold
Lease and rental cost of products sold
SG&A expense
9,826 $
4,449
19,138
5,749
135
9,986
4,654
16,791
4,678
66
Supplemental cash flow information and non-cash activity related to operating and finance leases are as follows (in
thousands):
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Financing cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
Non-cash activity:
Operating lease right-of-use assets obtained in exchange for lease
obligations
Twelve Months Ended
December 31,
2021
December 31,
2020
$
$
$
20,024 $
19,318
13,774 $
11,192
24,802 $
16,545
Weighted-average remaining lease term and discount rate for operating and finance leases as of December 31, 2021 are as
follows:
Weighted-average remaining lease term
Weighted-average discount rate
72 months
4.4%
67
Maturities of lease liabilities by fiscal year for finance leases and operating leases as of December 31, 2021 are
as follows (in thousands):
2022
2023
2024
2025
2026
2027 and beyond
Total lease payments
Less: Imputed interest
Present value of lease liabilities
Finance
Leases
Operating
Leases
$
31,484 $
25,671
27,641
19,734
14,398
11,745
$
$
130,673 $
(14,143)
116,530 $
14,484
11,955
12,065
8,330
7,435
33,522
87,791
(17,719)
70,072
Lease of Vehicles as Lessor
The Company leases commercial vehicles that the Company owns to customers primarily over periods of one to ten years.
The Company applied the practical expedient permitted within Topic 842 that allows it not to separate lease and nonlease
components. Nonlease components typically consist of maintenance and licensing for the commercial vehicle. The variable
nonlease components are generally based on mileage. Some leases contain an option for the lessee to purchase the
commercial vehicle.
The Company’s policy is to depreciate its lease and rental fleet using a straight-line method over each customer’s contractual
lease term. The lease unit is depreciated to a residual value that approximates fair value at the expiration of the lease term.
This policy results in the Company realizing reasonable gross margins while the unit is in service and a corresponding gain
or loss on sale when the unit is sold at the end of the lease term.
Sales-type leases are recognized by the Company as lease receivables. The lessee obtains control of the underlying asset and
the Company recognizes sales revenue upon lease commencement. The receivable for sales-type leases as of December 31,
2021 in the amount of $5.4 million is reflected in Other Assets on the Consolidated Balance Sheet.
Minimum rental payments to be received for non-cancelable leases and subleases in effect as of December 31, 2021, are as
follows (in thousands):
2022
2023
2024
2025
2026
Thereafter
Total
$
126,844
99,774
72,594
43,753
20,264
6,021
$
369,250
Rental income during the year ended December 31, 2021, and 2020, consisted of the following (in thousands):
2021
2020
214,400 $
205,640
32,834
30,583
247,234 $
236,223
Minimum rental
Nonlease payments
Total
$
$
68
11.
SHARE BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS:
Employee Stock Purchase Plan
The Company’s 2004 Employee Stock Purchase Plan, as amended and restated (the “Employee Stock Purchase Plan”) allows
eligible employees to contribute up to $10,625 of their base earnings every six months toward the semi-annual purchase of
the Company’s Class A Common Stock. The employee’s purchase price is 85% of the lesser of the closing price of the Class
A Common Stock on the first business day or the last business day of the semi-annual offering period, as reported by The
NASDAQ Global Select Market. Employees may purchase shares having a fair market value of up to $25,000 (measured as
of the first day of each semi-annual offering period) for each calendar year. Under the Employee Stock Purchase Plan, there
are approximately 594,717 shares remaining of the 2,700,000 shares of the Company’s Class A Common Stock that were
reserved for issuance. The Company issued 148,999 shares under the Employee Stock Purchase Plan during the year ended
December 31, 2021 and 176,807 shares during the year ended December 31, 2020. Of the 7,166 employees eligible to
participate, approximately 1,854 elected to participate in the plan as of December 31, 2021.
Non-Employee Director Stock Option Plan
The Rush Enterprises, Inc. 2006 Non-Employee Director Stock Option Plan, as amended and restated (the “Director Plan”),
reserved 750,000 shares of Class A Common Stock for issuance upon exercise of any awards granted under the plan. The
Director Plan is designed to attract and retain highly qualified non-employee directors. Currently, each non-employee
director receives a grant of the Company’s Class A Common Stock equivalent to a compensation value of $145,000; provided
however, that directors may elect to receive up to 40% of the value of such grant in cash. In 2021, three non-employee
directors each received a grant of 2,875 shares of the Company’s Class A Common Stock and two non-employee directors
each received a grant of 2,013 shares of the Company’s Class A Common Stock and $43,500 cash and one non-employee
director received a grant of 1,725 shares of the Company’s Class A Common Stock and $58,000 cash for total compensation
equivalent to $145,000 each. One director who was appointed to the Company’s Board of Directors in October of 2021
received 1,350 shares of the Company’s Class A Common Stock, for total compensation equivalent to $72,500. In 2020,
three non-employee directors each received a grant of 5,235 shares of the Company’s Class A Common Stock and three non-
employee directors each received a grant of 3,141 shares of the Company’s Class A Common Stock and $50,000 cash, for
total compensation equivalent to $125,000 each. Under the Director Plan, there are approximately 148,152 shares remaining
for issuance of the 750,000 shares of the Company’s Class A Common Stock that were reserved for issuance. The Company
granted 15,726 shares of Class A Common Stock under the Director Plan during the year ended December 31, 2021 and
25,128 shares of Class A Common Stock under the Director Plan during the year ended December 31, 2020.
Employee Incentive Plans
In May 2007, the Board of Directors and shareholders adopted the Rush Enterprises, Inc. 2007 Long-Term
Incentive Plan (the “2007 Incentive Plan”). The 2007 Incentive Plan provides for the grant of stock options (which may be
nonqualified stock options or incentive stock options for tax purposes), stock appreciation rights issued independent of or in
tandem with such options (“SARs”), restricted stock awards and performance awards. The 2007 Incentive Plan was amended
and restated on May 20, 2014, May 16, 2017 and again on May 12, 2020, to increase the number of shares available for
issuance under the plan to 13,200,000 shares of Class A Common Stock and 4,800,000 shares of Class B Common Stock
and to make certain other changes intended to bring the 2007 Incentive Plan into conformance with current best practices.
The aggregate number of shares of common stock subject to stock options or SARs that may be granted to any one participant
in any year under the 2007 Incentive Plan is 150,000 shares of Class A Common Stock or 150,000 shares of Class B Common
Stock. Each option granted pursuant to the 2007 Incentive Plan has a ten year term from the grant date and vests in three
equal annual installments beginning on the third anniversary of the grant date. The Company has 13,200,000 shares of Class
A Common Stock and 4,800,000 shares of Class B Common Stock reserved for issuance under the Company’s 2007 Incentive
Plan. As of December 31, 2021, approximately 2,243,779 shares of Class A Common Stock and 1,308,825 shares of Class
B Common Stock are available for issuance under the Company’s 2007 Incentive Plan. The Company issues new shares of
its Class A or Class B Common Stock upon the exercise of stock options or vesting of restricted stock units and upon the
issuance of restricted stock awards. During the year ended December 31, 2021, the Company granted to employees 498,700
options to purchase Class A Common Stock and 340,650 restricted Class B Common Stock awards under the 2007 Incentive
Plan. Restricted stock awards are issued when granted, but are subject to vesting requirements. During the year ended
December 31, 2020, the Company granted to employees 753,600 options to purchase Class A Common Stock and 518,400
restricted Class B Common Stock awards under the 2007 Incentive Plan.
69
Valuation and Expense Information
Stock-based compensation expense related to stock options, restricted stock awards, restricted stock units and employee
stock purchases was $22.2 million for the year ended December 31, 2021, $19.4 million for the year ended December 31,
2020, and $19.0 million for the year ended December 31, 2019. Cash received from options exercised and shares purchased
under all share-based payment arrangements was $18.3 million for the year ended December 31, 2021, $23.5 million for the
year ended December 31, 2020, and $11.1 million for the year ended December 31, 2019.
The following table presents a summary of the Company’s stock option activity and related information for the year ended
December 31, 2021:
Options
Balance of Outstanding Options at January 1, 2021
Granted
Exercised
Forfeited
Shares
4,080,944
498,700
(768,668)
(6,000)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (in Years)
Aggregate
Intrinsic
Value
$ 22.01
49.47
18.43
37.16
Balance of Outstanding Options at December 31, 2021
3,804,976
$ 26.31
Expected to vest after December 31, 2021
2,549,712
$ 29.93
Vested and exercisable at December 31, 2021
1,228,362
$ 18.54
6.3
7.5
3.8
$111,599,381
$ 65,546,772
$ 45,572,873
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the closing price of
the Company’s Class A Common Stock on December 31, 2021, which was $55.64. The total intrinsic value of options
exercised was $23.4 million during the year ended December 31, 2021, $20.8 million during the year ended December 31,
2020, and $8.7 million during the year ended December 31, 2019.
The following table presents a summary of the status of the number of shares underlying the Company’s non-vested stock
options as of December 31, 2021, and changes during the year ended December 31, 2021:
Non-vested Shares
Non-vested at January 1, 2021
Granted
Vested
Forfeited
Number of
Shares
2,737,757
498,700
(653,843)
(6,000)
Weighted
Average
Grant Date
Fair Value
$ 7.95
14.77
7.60
11.07
Non-vested at December 31, 2021
2,576,614
$ 9.35
The total fair value of vested options was $5.0 million during the year ended December 31, 2021, $4.5 million during the
year ended December 31, 2020, and $5.0 million during the year ended December 31, 2019. The weighted-average grant
date fair value of options granted was $14.77 per share during the year ended December 31, 2021, $6.36 per share during the
year ended December 31, 2020, and $8.37 per share during the year ended December 31, 2019.
Stock Awards
The Company granted restricted stock awards to certain of its employees under the 2007 Incentive Plan and unrestricted
stock awards to its non-employee directors under the Director Plan during the year ended December 31, 2021. The restricted
stock awards and previously granted restricted stock units granted to employees vest in three equal installments on the first,
second and third anniversary of the grant date and are forfeited in the event the recipient’s employment or relationship with
the Company is terminated prior to vesting, except as a result of retirement or under certain circumstances associated with a
70
change of control or involuntary termination, as further described in the Company’s executive transition plan. The fair value
of the restricted stock awards and restricted stock unit awards granted to the Company’s employees is amortized to expense
on a straight-line basis over the restricted stock’s vesting period. The shares granted to non-employee directors are expensed
on the grant date.
The following table presents a summary of the Company’s non-vested restricted stock awards at December 31, 2021:
Stock Awards and Units
Shares
Outstanding non-vested shares at January 1, 2021
Granted
Vested
Forfeited
Outstanding non-vested at December 31, 2021
Expected to vest after December 31, 2021
987,728
356,376
(499,084)
(1,200)
843,820
842,423
Weighted
Average
Remaining
Contractual
Life (in Years)
Aggregate
Intrinsic
Value
Weighted
Average
Grant Date
Fair Value
$ 24.28
44.86
25.94
44.59
31.97
8.4
8.4
$45,540,965
$45,465,553
The total fair value of the shares issued upon the vesting of restricted and unrestricted stock awards and restricted stock unit
awards during the year ended December 31, 2021 was $12.9 million. The weighted-average grant date fair value of stock
awards granted was $44.86 per share during the year ended December 31, 2021, $21.98 per share during the year ended
December 31, 2020 and $26.91 per share during the year ended December 31, 2019.
As of December 31, 2021, the Company had $9.3 million of unrecognized compensation expense related to non-vested
employee stock options to be recognized over a weighted-average period of 2.2 years and $9.2 million of unrecognized
compensation cost related to non-vested restricted stock awards to be recognized over a weighted-average period of 1.3 years.
Defined Contribution Plan
The Company has a defined contribution plan (the “Rush 401k Plan”) that is available to all employees. Each employee who
has completed 30 days of continuous service is entitled to enter the Rush 401k Plan on the first day of the following month.
Participating employees may contribute from 1% to 50% of their total gross compensation. However, certain highly
compensated employees are limited to a maximum contribution of 15% of total gross compensation. Effective February 1,
2012, for the first 10% of an employee’s contribution, the Company contributed an amount equal to 20% of the employees’
contributions for those employees with less than five years of service and an amount equal to 40% of the employees’
contributions for those employees with more than five years of service. Effective June 16, 2020, as part of the Company’s
expense reductions due to the Covid-19 pandemic, for the first 10% of an employee’s contribution, the Company contributed
an amount equal to 5% of the employees’ contributions for those employees with less than five years of service and an
amount equal to 10% of the employees’ contributions for those employees with more than five years of service. Effective
March 15, 2021, for the first 10% of an employee’s contribution, the Company contributed an amount equal to 20% of the
employees’ contributions for those employees with less than five years of service and an amount equal to 40% of the
employees’ contributions for those employees with more than five years of service. The Company incurred expenses related
to the Rush 401k Plan of approximately $8.2 million during the year ended December 31, 2021, $6.0 million during the year
ended December 31, 2020 and $9.4 million during the year ended December 31, 2019.
Deferred Compensation Plan
On November 6, 2010, the Board of Directors of the Company adopted the Rush Enterprises, Inc. Deferred Compensation
Plan (the “Deferred Compensation Plan”) pursuant to which certain employees and directors may elect to defer a portion of
their annual compensation. The Deferred Compensation Plan was amended and restated effective May 18, 2021 in order to
bring the plan into conformance with current “best” practices. The Deferred Compensation Plan also provides the Company
with the discretion to make matching contributions to participants’ accounts. The Company established a rabbi trust to
finance obligations under the Deferred Compensation Plan with corporate-owned variable life insurance contracts.
Participants are 100% vested in their respective deferrals and the earnings thereon. The first deferral election period began
on January 1, 2011. The Company’s liability related to the Deferred Compensation Plan was $21.3 million on December 31,
71
2021 and $19.5 million on December 31, 2020. The related cash surrender value of the life insurance contracts was $12.7
million on December 31, 2021 and $11.5 million on December 31, 2020.
The Company currently does not provide any post-retirement benefits nor does it provide any post-employment benefits.
12.
EARNINGS PER SHARE:
Basic earnings per share (“EPS”) were computed by dividing income from continuing operations by the weighted average
number of shares of common stock outstanding during the period. Diluted EPS differs from basic EPS due to the assumed
conversions of potentially dilutive options, restricted shares awards and restricted stock unit awards that were outstanding
during the period.
Each share of Class A Common Stock ranks equal to each share of Class B Common Stock with respect to receipt of any
dividends or distributions declared on shares of common stock and the right to receive proceeds on liquidation or dissolution
of the Company after payment of its indebtedness and liquidation preference payments to holders of any preferred shares.
However, holders of Class A Common Stock have 1/20th of one vote per share on all matters requiring a shareholder vote,
while holders of Class B Common Stock have one full vote per share.
The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for
income from continuing operations (in thousands, except per share amounts):
Numerator-
Numerator for basic and diluted earnings per share −
Net income available to common shareholders
Denominator-
Denominator for basic earnings per share –
weighted average shares
Effect of dilutive securities−
Employee and director stock options and restricted share awards
Denominator for diluted earnings per share − adjusted weighted average
shares outstanding and assumed conversions
Basic earnings per common share
Diluted earnings per common share and common share equivalents
2021
2020
2019
$
241,415 $
114,887 $
141,583
55,892
54,866
54,988
1,986
1,376
1,368
57,878
4.32 $
4.17 $
56,242
2.09 $
2.04 $
56,356
2.57
2.51
$
$
Options to purchase shares of common stock that were outstanding for the years ended December 31, 2021, 2020 and 2019
that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive are
as follows (in thousands):
Anti-dilutive options – weighted average
2021
437
2020
1,349
2019
1,663
72
13.
INCOME TAXES:
The tax provisions are summarized as follows (in thousands):
Income before income taxes:
Domestic
Foreign
Total
Current provision
Federal
State
Total
Deferred provision (benefit)
Federal
State
Foreign
Total
Provision (benefit) for income taxes
Year Ended December 31,
2020
2021
2019
307,260 $
6,423
313,683
146,055 $
5,668
151,723
188,174
1,349
189,523
47,475 $
10,759
58,234
13,809
(631)
856
14,034
72,268 $
67,988 $
6,706
74,694
(37,683)
(1,254)
1,079
(37,858)
36,836 $
20,303
4,648
24,951
20,925
2,064
−
22,989
47,940
$
$
$
A reconciliation of taxes based on the federal statutory rates and the provisions (benefits) for income taxes are summarized
as follows (in thousands):
Income taxes at the federal statutory rate
State income taxes, net of federal benefit
Tax effect of permanent differences
Foreign tax rate differential
Other, net
Provision (benefit) for income taxes
2021
Year Ended December 31,
2020
2019
$
$
65,694 $
7,874
(2,502)
(313)
1,515
72,268 $
31,862 $
4,487
283
(111)
315
36,836 $
39,530
5,303
1,562
−
1,545
47,940
The following summarizes the components of net deferred income tax liabilities included in the balance sheet (in thousands):
Deferred income tax (assets) liabilities:
Inventory
Accounts receivable
Finance lease obligations
Finance and operating leases
Stock options
Accrued liabilities
State net operating loss carry forward
State tax credit
$
Other
Difference between book and tax basis- Operating lease assets
Difference between book and tax basis- Depreciation and amortization
Net deferred income tax liability
$
December 31,
2021
2020
(2,704) $
(349)
(27,242)
(16,379)
(6,993)
(5,768)
(1,438)
(120)
(2,765)
16,132
188,099
140,473 $
(4,329)
(168)
(27,522)
(13,607)
(7,463)
(7,680)
(1,101)
(193)
(3,302)
13,444
178,360
126,439
As of December 31, 2021, the Company had approximately $30.8 million in state net operating loss carry forwards that
expire from 2021 to 2040, which result in a deferred tax asset of approximately $1.4 million. The Company has evaluated
whether its state net operating losses are realizable and has not recorded a valuation allowance against them. The valuation
allowance did not change over the prior year ending December 31, 2020.
73
The Company had unrecognized income tax benefits totaling $4.3 million as a component of accrued liabilities as of
December 31, 2021, and $3.3 million at December 31, 2020, the total of which, if recognized, would impact the Company’s
effective tax rate. An unfavorable settlement would require a charge to income tax expense and a favorable resolution would
be recognized as a reduction to income tax expense. The Company recognizes interest accrued related to unrecognized tax
benefits in income tax expense. During the years ended December 31, 2020, 2019 and 2018, the Company recognized
approximately $129,660, $6,150, and $5,220 in interest expense (income). No amounts were accrued for penalties. The
Company had approximately $279,000, $150,000 and $144,000 of interest accrued as of December 31, 2021, 2020 and 2019,
respectively.
Undistributed earnings of certain of the Company’s foreign subsidiaries amounted to approximately $13.4 million at
December 2021. Those earnings are considered to be indefinitely reinvested. Upon repatriation of those earnings in the form
of dividends or otherwise, the Company may be subject to state and local taxes, and/or withholding taxes payable to the
various foreign countries. The Company expects to be able to take a 100% dividends received deduction to offset any U.S.
federal income tax liability on the distribution of untaxed earnings and profits.
The Company does not anticipate a significant change in the amount of unrecognized tax benefits in the next 12 months. As
of December 31, 2021, the tax years ended December 31, 2018 through 2021 remained subject to audit by federal tax
authorities and the tax years ended December 31, 2017 through 2021, remained subject to audit by state tax authorities.
The table below presents the reconciliation of the change in the unrecognized tax benefits (in thousands):
Unrecognized tax benefits at beginning of period
Gross increases – tax positions in current year
Reductions due to lapse of statute of limitations
Unrecognized tax benefits at end of period
2021
2020
2019
$
$
3,306 $
1,512
(509)
4,309 $
3,007 $
651
(352)
3,306 $
2,389
1,188
(570)
3,007
14.
COMMITMENTS AND CONTINGENCIES:
From time to time, the Company is involved in litigation arising out of its operations in the ordinary course of business. The
Company maintains liability insurance, including product liability coverage, in amounts deemed adequate by management.
To date, aggregate costs to the Company for claims, including product liability actions, have not been material. However, an
uninsured or partially insured claim, or claim for which indemnification is not available, could have a material adverse effect
on the Company’s financial condition or results of operations. The Company believes that there are no claims or litigation
pending, the outcome of which could have a material adverse effect on its financial position or results of operations. However,
due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding
would not have a material adverse effect on the Company’s financial condition or results of operations for the fiscal period
in which such resolution occurred.
15.
ACQUISITIONS
All of the following acquisitions, unless otherwise noted, were considered business combinations accounted for under ASC
805 “Business Combinations.” Pro forma information is not included in accordance with ASC 805 since no acquisitions
were considered material individually or in the aggregate.
On December 13, 2021, the Company completed the acquisition of certain of the assets of the of Summit Truck Group, LLC
and certain of its subsidiaries and affiliates (collectively, “Summit”) which included full-service commercial vehicle
dealerships and Idealease franchises in Arkansas, Kansas, Missouri, Tennessee and Texas. The acquisition included
Summit’s dealerships representing International, IC Bus, Idealease, Isuzu and other commercial vehicle manufacturers for a
purchase price of approximately $205.3 million, excluding the real property associated with the transaction. The Company
financed approximately $102.0 million of the purchase price under its floor plan and lease and rental truck financing
arrangements and the remainder of the purchase price was paid in cash. In addition, the Company purchased certain real
property owned by Summit for a purchase price of approximately $57.0 million, which was paid in cash.
The purchase price allocation has not yet been finalized related to the Summit acquisition as additional information is
expected to be obtained that needs to be evaluated by management, that existed at the time of the acquisition related to
74
property and equipment, inventory and valuation of intangible assets. Management has recorded the purchase price
allocations based upon acquired company information that is currently available.
The operations of these acquired locations are included in the accompanying consolidated financial statements from the date
of the acquisition. The preliminary purchase price was allocated based on the fair values of the assets and liabilities at the
date of acquisition as follows (in thousands):
Goodwill
Franchise rights
Inventory
Property and equipment, including real estate
Customer deposits
Other
$
73,710
1,581
76,078
113,161
(3,359)
1,156
Total
$
262,327
The goodwill acquired in the Summit acquisition will be amortized over 15 years for tax purposes.
On November 1, 2021, the Company acquired certain assets of Illinois Truck Centre, Inc., which included real estate and a
full-service Hino and Isuzu commercial vehicle dealership in Elk Grove, Illinois. The transaction was valued at approximately
$2.7 million, with the purchase price paid in cash. The goodwill acquired in the Illinois Truck Centre, Inc. acquisition, which
was valued at $1.0 million, will be amortized over 15 years for tax purposes.
On October 18, 2021, the Company acquired certain assets of Commercial Engine Service, Inc., which included a long-term
lease for a commercial vehicle facility in Victorville, California, along with commercial vehicle parts inventory. The
transaction was valued at approximately $4.3 million, with the purchase price paid in cash. The goodwill acquired in the
Commercial Engine Service, Inc. acquisition, which was valued at $3.5 million, will be amortized over 15 years for tax
purposes.
16.
SEGMENTS:
The Company currently has one reportable business segment - the Truck Segment. The Truck Segment includes the
Company’s operation of a nationwide network of commercial vehicle dealerships that provide an integrated one-stop source
for the commercial vehicle needs of its customers, including retail sales of new and used commercial vehicles; aftermarket
parts, service and collision center facilities; and financial services, including the financing of new and used commercial
vehicle purchases, insurance products and truck leasing and rentals. The commercial vehicle dealerships are deemed a single
reporting unit because they have similar economic characteristics. The Company’s chief operating decision maker considers
the entire Truck Segment, not individual dealerships or departments within its dealerships, when making decisions about
resources to be allocated to the segment and assessing its performance.
The Company also has revenues attributable to three other operating segments. These segments include a retail tire company,
an insurance agency and a guest ranch operation and are included in the All Other column below. None of these segments
has ever met any of the quantitative thresholds for determining reportable segments.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
The Company evaluates performance based on operating income.
The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current
market prices. There were no material intersegment sales during the years ended December 31, 2021, 2020 or 2019.
The following table contains summarized information about reportable segment revenue, segment income or loss from
continuing operations and segment assets for the periods ended December 31, 2021, 2020 and 2019 (in thousands):
75
2021
Revenues from external customers
Interest income
Interest expense
Depreciation and amortization
Segment operating income
Segment income from continuing
operations before taxes
Segment assets
Goodwill
Expenditures for segment assets
2020
Revenues from external customers
Interest income
Interest expense
Depreciation and amortization
Segment operating income
Segment income from continuing
operations before taxes
Segment assets
Goodwill
Expenditures for segment assets
2019
Revenues from external customers
Interest income
Interest expense
Depreciation and amortization
Segment operating income (loss)
Segment income from continuing
operations before taxes
Segment assets
Goodwill
Expenditures for segment assets
Truck
Segment
All
Other
$
5,109,070 $
657
2,119
53,096
307,394
312,350
3,068,365
367,771
163,624
17,072 $
–
308
258
1,642
1,333
51,612
2,560
3,553
Totals
5,126,142
657
2,427
53,354
309,036
313,683
3,119,977
370,331
167,177
$
4,721,058 $
713
9,444
57,162
153,841
151,222
2,939,390
289,582
135,956
14,882 $
–
283
294
764
4,735,940
713
9,727
57,456
154,605
501
46,003
2,560
244
151,723
2,985,393
292,142
136,200
$
5,794,155 $
1,680
30,201
55,036
216,691
15,692 $
–
286
336
(286)
5,809,847
1,680
30,487
55,372
216,405
188,122
3,369,517
289,582
292,980
1,401
37,812
2,560
513
189,523
3,407,329
292,142
293,493
17.
REVENUE:
The Company’s revenues are primarily generated from the sale of finished products to customers. Those sales predominantly
contain a single delivery element and revenue from such sales is recognized when the customer obtains control, which is
typically when the finished product is delivered to the customer. The Company’s material revenue streams have been
identified as the following: the sale of new and used commercial vehicles, arrangement of associated commercial vehicle
financing and insurance contracts, the performance of commercial vehicle repair services and the sale of commercial vehicle
parts. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded
from revenues.
76
The following table summarizes the Company’s disaggregated revenue by revenue source, excluding lease and rental
revenue, for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 (in thousands):
Commercial vehicle sales revenue
Parts revenue
Commercial vehicle repair service
Finance revenue
Insurance revenue
Other revenue
$
$
2021
3,039,953
1,059,382
733,981
16,385
11,579
17,628
2020
2,863,309
911,102
689,343
12,047
9,902
14,014
$
2019
3,757,584
993,288
769,222
14,618
9,825
17,761
Total
$
4,878,908
$
4,499,717
$
5,562,298
All of the Company's performance obligations are generally transferred to customers at a point in time. The Company did
not have any material contract assets or contract liabilities on the balance sheet as of December 31, 2021 or December 31,
2020. Revenues related to commercial vehicle sales, parts sales, commercial vehicle repair service, finance and the majority
of other revenues are related to the Truck Segment.
For the sale of new and used commercial vehicles, revenue is recognized at a point in time when control is transferred to the
customer, which is when delivery of the commercial vehicle occurs. Revenue is measured as the amount of consideration
the Company expects to receive in exchange for transferring the commercial vehicle. When control is transferred to the
customer, the Company has an unconditional right to payment and a receivable is recorded for any consideration not received.
The Company controls the commercial vehicle before it is transferred to the customer and it obtains all of the remaining
benefits from the commercial vehicle relating to the sale, ability to pledge the asset or hold the asset. The Company is a
principal in all commercial vehicle transactions. The Company retains inventory risk, determines the selling price to the
customer and delivers the commercial vehicle to the customer. The Company generally pays a commission to internal sales
representatives for the sale of a commercial vehicle. The Company will continue to expense the commission and recognize
it concurrently with the respective commercial vehicle sale revenue upon delivery of the commercial vehicle to a customer.
Revenue from the sale of parts is recognized when the Company transfers control of the goods to the customer and
consideration has been received in the form of cash or a receivable from the customer. The Company provides its customers
the right to return certain eligible parts, estimates the expected returns based on an analysis of historical experience and
records an allowance for estimated returns, which has historically not been material.
Revenue from the sale of commercial vehicle repair service is recognized when the service performed by the Company on a
customer’s vehicle is complete and the customer accepts the repair. Because the Company does not have an enforceable
right to payment while the repair is being performed, revenue is recognized when the repair is complete. After a customer’s
acceptance, the Company has no remaining obligations to transfer goods or services to the customer and consideration has
been received in the form of cash or a receivable from the customer.
Any remaining performance obligations represent service orders for which work has not been completed. The Company’s
service contracts are predominantly short-term in nature with a contract term of one month or less. For those contracts, the
Company has utilized the practical expedient in Topic 606 exempting the Company from disclosure of the transaction price
allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected
duration of one year or less.
The Company receives commissions from third-party lenders for arranging customer financing for the purchase of
commercial vehicles. The receipt of such commissions is deemed to be a single performance obligation that is satisfied when
a financing agreement is executed and accepted by the financing provider. Once the contract has been accepted by the
financing provider, the Company’s performance obligation has been satisfied and the Company generally has no further
obligations under the contract. The Company is the agent in this transaction, as it does not have control over the acceptance
of the customer’s financing arrangement by the financing provider. Consideration paid to the Company by the financing
provider is based on the agreement between the Company and the financing provider.
77
The Company receives commissions from third-party insurance companies for arranging insurance coverage for customers.
The receipt of such commissions is deemed to be a single performance obligation that is satisfied when the insurance coverage
is bound. The Company has no further obligations under the contract. The Company is the agent in this transaction because
it does not have control over the insurance coverage provided by the insurance carrier. Consideration paid to the Company
by the insurance provider is based on the agreement between the Company and the insurance provider.
The Company records revenues from finance and insurance products at the net commission amount, which includes estimates
of chargebacks that can occur if the underlying contract is not fulfilled. Chargeback amounts for commissions from financing
companies are estimated assuming financing contracts are terminated before the customer has made six monthly
payments. Chargeback amounts for commissions from insurance companies are estimated assuming insurance contracts are
terminated before the underlying insurance contractual term has expired. Chargeback reserve amounts are based on historical
chargebacks and have historically been immaterial. The Company does not have any right to retrospective commissions
based on future profitability of finance and insurance contracts arranged.
Other revenue consist mostly of documentation fees that are charged to customers in connection with the sale of a commercial
vehicle and recognized as other revenue when a truck is sold. The Company recognizes the documentation fees at the point
in time when the commercial vehicle is delivered to the customer.
18.
ACCUMULATED OTHER COMPREHENSIVE INCOME:
The following table shows the components of accumulated other comprehensive income (in thousands):
Balance as of December 31, 2020
Foreign currency translation adjustment
Balance as of December 31, 2021
$
$
869
(82)
787
The equity method investment in RTC Canada was valued using the exchange rate of one US Dollar to 1.27 Canadian dollars
as of December 31, 2021. The adjustment is reflected in Other Assets on the Consolidated Balance Sheet.
78
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company carried out an evaluation, under the supervision
and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the
effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that
evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and
procedures were effective as of December 31, 2021, to ensure that information required to be disclosed in its reports filed or
submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in
the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31,
2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. The Company’s internal control over financial reporting is a process designed under the
supervision of the Company’s President and Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for
external purposes in accordance with generally accepted accounting principles.
As of December 31, 2021, management assessed the effectiveness of the Company’s internal control over financial reporting
based on the criteria for effective internal control over financial reporting established in “Internal Control – Integrated
Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission (2013
Framework). On December 13, 2021, we consummated our acquisition of certain of the assets of Summit Truck Group, LLC
(“Summit”). As permitted by the SEC rules and regulations, management's assessment did not include the internal controls
of Summit’s acquired operations, which are included in our consolidated financial statements as of December 31, 2021 and
for the period from the acquisition date through December 31, 2021. In accordance with our integration efforts, we plan to
incorporate Summit’s acquired operations into our internal control over financial reporting program within the time period
provided by applicable SEC rules and regulations. The assets of Summit’s acquired operations constituted approximately
6.6% of our total assets as of December 31, 2021. Operating results of Summit’s acquired operations comprised
approximately 0.3% of our total consolidated revenues and less than 0.02% of our consolidated net income for the year ended
December 31, 2021. Based on the assessment, management determined that the Company maintained effective internal
control over financial reporting as of December 31, 2021, based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements of
the Company included in this annual report on Form 10-K, has issued an attestation report on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2021. The report, which expresses an unqualified
opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, is included
in this Item 9A under the heading “Attestation Report of Independent Registered Public Accounting Firm.”
79
Report of Independent Registered Public Accounting Firm
The Shareholders and Board of Directors of Rush Enterprises, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Rush Enterprises, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Rush Enterprises, Inc.
and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2021, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Summit Truck Group, LLC, which is included in the 2021 consolidated financial statements of the Company and
constituted approximately 6.6% of total assets as of December 31, 2021 and approximately 0.3% and 0.0% of total revenues
and net income, respectively, for the year ended December 31, 2021. Our audit of internal control over financial reporting of
the Company also did not include an evaluation of the internal control over financial reporting of Summit Truck Group, LLC.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020 the related
consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years
in the period ended December 31, 2021, and the related notes and our report dated February 24, 2022, expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
80
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Antonio, Texas
February 24, 2022
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information called for by Item 10 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders.
Item 11. Executive Compensation
The information called for by Item 11 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The information called for by Item 12 of Form 10-K, other than the equity compensation plan information set forth herein,
is incorporated herein by reference to such information included in the Company’s Proxy Statement for the 2022 Annual
Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by Item 13 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders.
Item 14. Principal Accountant Fees and Services
The information called for by Item 14 of Form 10-K is incorporated herein by reference to such information included in the
Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders.
81
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements
PART IV
Included in Item 8 of Part II of this annual report on Form 10-K are the following:
Report of Independent Registered Public Accounting Firm;
Consolidated Balance Sheets as of December 31, 2021, and 2020;
Consolidated Statements of Income for the years ended December 31, 2021, 2020, and 2019;
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020, and 2019;
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2021, 2020, and 2019;
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019; and
Notes to Consolidated Financial Statements.
(a)(2) Financial Statement Schedules
These schedules are omitted as the required information is inapplicable or the information is presented in the consolidated
financial statements or related notes.
(a)(3) Exhibits
Index to Exhibits:
Exhibit
No.
3.1
3.2
3.3
4.1
4.2
4.3
10.1
Identification of Exhibit
Restated Articles of Incorporation of Rush Enterprises, Inc. (incorporated herein by reference to
Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q (File No. 000-20797) for the quarter
ended June 30, 2008)
https://www.sec.gov/Archives/edgar/data/1012019/000110465908051789/a08-18770_1ex3d1.htm
Rush Enterprises, Inc. Amended and Restated Bylaws (incorporated herein by reference to Exhibit
3.1 of the Company’s Current Report on Form 8-K (File No. 000-20797) filed May 21, 2013)
https://www.sec.gov/Archives/edgar/data/1012019/000143774913006455/rusha20130517_8kex3-1.htm
First Amendment to Amended and Restated Bylaws of Rush Enterprises, Inc. (incorporated herein
by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 000-20797)
filed May 24, 2021)
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921013172/rusha20210524_8k.htm
Specimen of certificate representing Common Stock (now Class B Common Stock), $.01 par value, of
Rush Enterprises, Inc. (incorporated herein by reference to Exhibit 4.1 of the Company’s Registration
Statement No. 333-03346 on Form S-1 filed April 10, 1996)
https://www.sec.gov/Archives/edgar/data/1012019/0000950129-96-000812-index.html
Specimen of certificate representing Class A Common Stock, $.01 par value, of the Registrant
(incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 8-
A filed July 9, 2002)
https://www.sec.gov/Archives/edgar/data/1012019/000091205702026743/a2083861zex-4_1.htm
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934 (incorporated herein by reference to Exhibit 4.3 of the Company’s Form 10-K filed
February 26, 2020 (File No. 000-20797) for the year ended December 31, 2019)
ex_174053.htm (sec.gov)
Right of First Refusal dated December 19, 2012 between Peterbilt Motors Company and W. Marvin
Rush (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed December 20, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912013051/ex10-2.htm
82
10.2
10.3+
10.4+
10.5+
10.6+
10.7+
10.8+
10.9+
10.10+
10.11+
10.12+
10.13+
10.14+
Right of First Refusal dated December 19, 2012 between Peterbilt Motors Company and W.M. “Rusty”
Rush (incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed December 20, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912013051/ex10-3.htm
Rush Enterprises, Inc. 2004 Employee Stock Purchase Plan (Amended and Restated on May 12,
2020) (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form
8-K (File No. 000-20797) filed May 15, 2020)
ex_186990.htm (sec.gov)
First Amendment to Rush Enterprises, Inc. Amended and Restated Employee Stock Purchase Plan
(incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed February 22, 2021)
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921003645/rusha20210222_8k.htm
Rush Enterprises, Inc. Amended and Restated 2006 Non-Employee Director Stock Plan
(incorporated herein by reference to Exhibit 10.10 of the Company’s Form 10-K (File No. 000-
20797) for the year ended December 31, 2010)
https://www.sec.gov/Archives/edgar/data/1012019/000095012311024520/c13928exv10w10.htm
Form of Rush Enterprises, Inc. 2006 Non-Employee Director Stock Option Agreement (incorporated
herein by reference to Exhibit 4.4 of the Company’s Registration Statement No. 333-138556 on Form
S-8 filed November 9, 2006)
https://www.sec.gov/Archives/edgar/data/1012019/000110465906073551/a06-23617_2ex4d4.htm
Form of Rush Enterprises, Inc. 2006 Non-Employee Director Stock Plan Restricted Stock Unit
Award Agreement (incorporated herein by reference to Exhibit 10.1 of the Company’s Form 10-Q
(File No. 000-20797) for the quarter ended June 30, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912008036/ex10-1.htm
Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan (incorporated herein
by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 000-20797)
filed May 15, 2020)
ex_186989.htm (sec.gov)
First Amendment to Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan
(incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed February 22, 2021)
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921003645/rusha20210222_8k.htm
Form of Rush Enterprises, Inc. 2007 Long-Term Incentive Plan Restricted Stock Unit Agreement
(incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed March 14, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000119312512114188/d315042dex101.htm
Form of Rush Enterprises, Inc. 2007 Long-Term Incentive Plan Stock Option Agreement
(incorporated herein by reference to Exhibit 4.4 of the Company’s Form S-8 (File No. 333-144821)
filed July 24, 2007)
https://www.sec.gov/Archives/edgar/data/1012019/000110465907055737/a07-20147_1ex4d4.htm
Form of Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan Stock Option
Agreement (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K (File No. 000-20797) filed March 8, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919004483/ex_137075.htm
Form of Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan Stock Option
Award Agreement (incorporated herein by reference to Exhibit 10.4 of the Company’s Current
Report on Form 8-K (File No. 000-20797) filed February 22, 2021)
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921003645/rusha20210222_8k.htm
Form of Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan Restricted
Stock Award Agreement (incorporated herein by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K (File No. 000-20797) filed March 8, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919004483/ex_137076.htm
83
10.15+
10.16+
10.17+
10.18+
10.19+
10.20
10.21
10.22
10.23
10.24
10.25
Form of Rush Enterprises, Inc. Amended and Restated 2007 Long-Term Incentive Plan Restricted
Stock Award Agreement (incorporated herein by reference to Exhibit 10.5 of the Company’s Current
Report on Form 8-K (File No. 000-20797) filed February 22, 2021)
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921003645/rusha20210222_8k.htm
Rush Enterprises, Inc. Deferred Compensation Plan (Amended and Restated Effective as of May 18,
2021) (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-
K (File No. 000-20797) filed May 24, 2021)
https://www.sec.gov/Archives/edgar/data/0001012019/000143774921013172/ex_252721.htm
Form of Indemnity Agreement (incorporated herein by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K (File No. 000-20797) filed January 7, 2015)
https://www.sec.gov/Archives/edgar/data/1012019/000143774915000385/ex10-1.htm
Rush Enterprises, Inc. Executive Transition Plan (as Amended and Restated Effective as of February
20, 2018) (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form
8-K (File No. 000-20797) filed February 26, 2018)
https://www.sec.gov/Archives/edgar/data/1012019/000110465908047652/a08-20031_1ex10d1.htm
First Amendment to Rush Enterprises, Inc. Amended and Restated Executive Transition Plan
(incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed February 22, 2021)
https://www.sec.gov/ix?doc=/Archives/edgar/data/1012019/000143774921003645/rusha20210222_8k.htm
Form of dealer agreement between Peterbilt Motors Company and Rush Truck Centers (incorporated
herein by reference to Exhibit 10.18 of the Company’s Form 10-K (File No. 000-20797) for the year
ended December 31, 1999)
https://www.sec.gov/Archives/edgar/data/1012019/000095013400002832/0000950134-00-002832.txt
Amended and Restated Amendment to Dealer Sales and Service Agreements, dated December 19,
2012, by and among Peterbilt Motors Company, a division of PACCAR, Inc., Rush Enterprises, Inc.
and the subsidiaries of Rush Enterprises, Inc. named a party therein (incorporated herein by reference
to Exhibit 10.1 of the Company's Form 8-K (File No. 000-20797) filed December 20, 2012)
https://www.sec.gov/Archives/edgar/data/1012019/000143774912013051/ex10-1.htm
Guaranty Agreement, dated December 31, 2010, by Rush Enterprises, Inc. and each other Guarantor
party thereto in favor of General Electric Capital Corporation. (incorporated herein by reference to
Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 000-20797) filed January 6,
2011)
https://www.sec.gov/Archives/edgar/data/1012019/000095012311001052/c10658exv10w2.htm
Guaranty Agreement, dated as of April 25, 2019 between Rush and the Bank of Montreal
(incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed May 1, 2019)
https://www.sec.gov/Archives/edgar/data/1012019/000143774919008424/ex_142494.htm
Fifth Amended and Restated Credit Agreement, dated as of September 14, 2021 by and among
Rush Enterprises, Inc., the subsidiaries of Rush party thereto as borrowers, the Lenders signatory
thereto and BMO Harris Bank N.A., as Administrative Agent and Collateral Agent (incorporated
herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 000-
20797) filed September 20, 2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921022435/ex_285039.htm
Credit Agreement, dated as of September 14, 2021 by and among Rush Enterprises, Inc., the
subsidiaries of Rush party thereto as borrowers, the Lenders signatory thereto and Wells Fargo
Bank, National Association, as Administrative Agent (incorporated herein by reference to Exhibit
10.2 of the Company’s Current Report on Form 8-K (File No. 000-20797) filed September 20,
2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921022435/ex_285040.htm
84
10.26
10.27
10.28
10.29
10.30
21.1*
23.1*
31.1*
31.2*
32.1++
32.2++
101.INS
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104
Collateral Agreement, dated as of September 14, 2021, executed by Rush Enterprises, Inc. and the
subsidiaries of Rush party thereto as borrowers in favor of Wells Fargo Bank, National
Association, as Administrative Agent (incorporated herein by reference to Exhibit 10.3 of the
Company’s Current Report on Form 8-K (File No. 000-20797) filed September 20, 2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921022435/ex_285041.htm
Guaranty Agreement, dated as of September 14, 2021, executed by Rush Enterprises, Inc. in favor
of Wells Fargo Bank, National Association, as Administrative Agent (incorporated herein by
reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K (File No. 000-20797)
filed September 20, 2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921022435/ex_285042.htm
Amended and Restated Inventory Financing and Purchase Money Security Agreement, dated as of
October 1, 2021 by and between Rush Truck Leasing, Inc. and PACCAR Leasing Company
(incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
(File No. 000-20797) filed October 7, 2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921023441/ex_289969.htm
Promissory Note dated October 1, 2021 issued by Rush Truck Leasing, Inc. in favor of PACCAR
Leasing Company (incorporated herein by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K (File No. 000-20797) filed October 7, 2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921023441/ex_289970.htm
Corporate Guarantee dated November 1, 2002, issued by Rush Enterprises, Inc. in favor of
PACCAR Leasing Company (incorporated herein by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K (File No. 000-20797) filed October 7, 2021)
https://www.sec.gov/Archives/edgar/data/1012019/000143774921023441/ex_290053.htm
Subsidiaries of the Company
Consent of Ernst & Young LLP
Certification of President and Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
XBRL Instance Document – The instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the inline XBRL document
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
*
+
++
Filed herewith.
Management contract or compensatory plan or arrangement.
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 16. Form 10-K Summary
Intentionally left blank.
85
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RUSH ENTERPRISES, INC.
By: /s/ W. M.”RUSTY” RUSH
W. M. “Rusty” Rush
President, Chief Executive Officer and
Chairman of the Board
Date: February 24, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities on the dates indicated:
Signature
Capacity
Date
/s/ W. M. “RUSTY” RUSH
W. M. “Rusty” Rush
President, Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
February 24, 2022
/s/ STEVEN L. KELLER
Steven L. Keller
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
February 24, 2022
/s/ THOMAS A. AKIN
Thomas A. Akin
Director
/s/ JAMES C. UNDERWOOD
James C. Underwood
Director
/s/ RAYMOND J. CHESS
Raymond J. Chess
Director
/s/ DR. KENNON GUGLIELMO Director
Dr. Kennon Guglielmo
/s/ WILLIAM H. CARY
William H. Cary
Director
/s/ ELAINE MENDOZA
Elaine Mendoza
Director
/s/ TROY A. CLARKE
Troy A. Clarke
Director
86
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
February 24, 2022
SUBSIDIARIES OF THE COMPANY
EXHIBIT 21.1
Rush Truck Centers of Alabama, Inc.
Name
State of
Incorporation
Delaware
Rush Truck Centers of Arizona, Inc.
Delaware
Rush Truck Centers of Arkansas, Inc.
Delaware
Rush Medium Duty Truck Centers of
California, Inc.
Rush Truck Centers of California, Inc.
Delaware
Delaware
Rush Medium Duty Truck Centers of
Colorado, Inc.
Delaware
87
Names Under Which Subsidiary Does Business
Rush Truck Center, Mobile
Rush Peterbilt Truck Center, Mobile
Rush Truck Center, Flagstaff
Rush Peterbilt Truck Center, Flagstaff
Rush Truck Center, Phoenix
Rush Peterbilt Truck Center, Phoenix
Rush Truck Center, Phoenix East
Rush Peterbilt Truck Center, Phoenix East
Rush Truck Center, Tucson
Rush Peterbilt Truck Center, Tucson
Rush Truck Center, Yuma
Rush Peterbilt Truck Center, Yuma
Rush Truck Center, Jonesboro
Rush Truck Center, Lowell
Rush Isuzu Trucks, Springdale
Rush Truck Center, North Little Rock
Rush Truck Center, Pine Bluff
Rush Truck Center, Russellville
Rush Truck Center, Ceres
Rush Truck Center, Fontana
Rush Peterbilt Truck Center, Fontana
Rush Truck Center, Fontana Collision Center
Rush Medium Duty Truck Center, Fontana
Rush Peterbilt Medium Duty Truck Center, Fontana
Rush Isuzu Trucks, Fontana
Rush Towing Systems, Fontana
Rush Truck Center, Fontana Used Trucks
Rush Truck Center, Fontana Vocational Service
Rush Truck Center, Long Beach
Rush Peterbilt Truck Center, Long Beach
Rush Peterbilt Truck Center, Pico Rivera
Rush Truck Center, Pico Rivera
Rush Peterbilt Truck Center, Los Angeles
Rush Truck Center, Los Angeles
Rush Truck Center, San Diego
Rush Peterbilt Truck Center, San Diego
Rush Truck Center, Sylmar
Rush Peterbilt Truck Center, Sylmar
Rush Truck Center, Victorville
Rush Peterbilt Truck Center, Victorville
Rush Truck Center, Whittier
Rush Isuzu Trucks, Whittier
Rush Peterbilt Truck Center, Whittier
Rush Medium Duty Truck Center, Denver
Rush Medium Duty Ford Trucks, Denver
Rush Towing Systems, Denver
Rush Truck Centers of Colorado, Inc.
Delaware
Rush Truck Centers of Florida, Inc.
Delaware
Rush Truck Centers of Georgia, Inc.
Delaware
Rush Truck Centers of Idaho, Inc.
Delaware
Rush Truck Centers of Illinois, Inc.
Delaware
88
Rush Truck Center, Colorado Springs
Rush Peterbilt Truck Center, Colorado Springs
Rush Truck Center, Denver
Rush Peterbilt Truck Center, Denver
Rush Isuzu Trucks, Denver
Rush Truck Center, Greeley
Rush Peterbilt Truck Center, Greeley
Rush Truck Center, Pueblo
Rush Peterbilt Truck Center, Pueblo
House of Trucks, Miami
Rush Truck Center, Haines City
Rush Peterbilt Truck Center, Haines City
Rush Truck Center, Jacksonville
Rush Peterbilt Truck Center, Jacksonville
Rush Truck Center, Jacksonville East
Rush Peterbilt Truck Center, Jacksonville East
Rush Truck Center, Lake City
Rush Peterbilt Truck Center, Lake City
Rush Truck Center, Miami
Rush Truck Center, Orlando
Rush Peterbilt Truck Center, Orlando
Rush Isuzu Trucks, Orlando
Rush Isuzu Truck Center, Orlando
Rush Truck Center, Orlando Light & Medium Duty
Rush Truck Center, Orlando North
Rush Isuzu Trucks, Orlando North
Rush Truck Center, Orlando South
Rush Peterbilt Truck Center, Orlando South
Rush Truck Center, Orlando Used Trucks
Rush Truck Center, Tampa
Rush Peterbilt Truck Center, Tampa
Rush Bus Center, Atlanta
Rush Truck Center, Atlanta Collision Center
Rush Truck Center, Atlanta
Rush Isuzu Trucks, Atlanta
Rush Medium Duty Truck Center, Atlanta
Rush Truck Center, Augusta
Rush Truck Center, Columbus
Rush Truck Center, Doraville
Rush Isuzu Trucks, Doraville
Rush Truck Center, Gainesville
Rush Truck Center, Macon
Rush Truck Center, Smyrna
Rush Truck Center, Tifton
Rush Bus Center, Tifton
Rush Truck Center, Valdosta
Rush International Truck Center, Boise
Rush Truck Center, Boise
Rush International Truck Center, Idaho Falls
Rush Truck Center, Idaho Falls
Rush International Truck Center, Lewiston
Rush Truck Center, Lewiston
Rush International Truck Center, Twin Falls
Rush Truck Center, Twin Falls
House of Trucks, Willowbrook
Rush Truck Center, Bloomington
Rush Truck Center, Carol Stream
Rush Truck Centers of Indiana, Inc.
Delaware
Rush Truck Centers of Kansas, Inc.
Delaware
Rush Truck Centers of Kentucky, Inc.
Rush Truck Centers of Missouri, Inc.
Delaware
Delaware
Rush Truck Centers of Nebraska, Inc.
Rush Truck Centers of Nevada, Inc.
Delaware
Delaware
Rush Truck Centers of New Mexico, Inc.
Delaware
Rush Truck Centers of Mississippi, Inc.
Rush Truck Centers of North Carolina, Inc.
Delaware
Delaware
Rush Truck Centers of Ohio, Inc.
Delaware
Rush Truck Center, Champaign
Rush Truck Center, Chicago
Rush Truck Center, Effingham
Rush Truck Center, Elk Grove
Rush Truck Center, Huntley
Rush Truck Center, Joliet
Rush Truck Center, Quincy
Rush Truck Center, Springfield
Rush Truck Center, Gary
Rush Truck Center, Indianapolis
Rush Truck Center, Kansas City
Rush Truck Center, Salina
Rush Truck Center, Topeka
Rush Truck Center, Wichita
Rush Truck Center, Bowling Green
Rush Truck Center, Cape Girardeau
Rush Truck Center, Joplin
Rush Truck Center, Kansas City
Rush Truck Center, Kansas City Used Truck
Rush Truck Center, St. Joseph
Rush Truck Center, St. Louis
Rush Truck Center, St. Peters
Rush Truck Center, Sedalia
Rush Truck Center, Springfield
Rush Truck Center, West Plains
Rush Truck Center, Omaha
Rush Truck Center, Las Vegas
Rush Peterbilt Truck Center, Las Vegas
Rush Truck Center, Albuquerque
Rush Peterbilt Truck Center, Albuquerque
Rush Truck Center, Farmington
Rush Peterbilt Truck Center, Farmington
Rush Truck Center, Las Cruces
Rush Peterbilt Truck Center, Las Cruces
None
Rush Truck Center, Asheville
Rush Truck Center, Charlotte
Rush International Truck Center, Charlotte
Rush Isuzu Trucks, Charlotte
Rush Truck Center, Charlotte Collision Center
Rush Truck Center, Hickory
Rush Truck Center, Akron
Rush Bus Center, Akron
Rush Truck Center, Cincinnati
Rush Bus Center, Cincinnati
Rush Isuzu Trucks, Cincinnati
Rush Truck Center, Cleveland
Rush Bus Center, Cleveland
Rush Truck Center, Columbus
Rush Bus Center, Columbus
Rush Truck Center, Columbus West
Rush Isuzu Trucks, Columbus West
Rush Truck Center, Dayton
Rush Bus Center, Dayton
Rush Isuzu Trucks, Dayton
Rush Truck Center, Lima
Rush Bus Center, Lima
89
Rush Truck Centers of Oklahoma, Inc.
Delaware
Rush Truck Centers of Pennsylvania, Inc.
Delaware
Rush Truck Centers of Tennessee, Inc.
Delaware
Rush Truck Centers of Texas, L.P.
Texas
Perfection Equipment
Perfection Truck Parts & Equipment, Oklahoma City
Perfection Crane Repair
Rush Truck Center, Ardmore
Rush Peterbilt Truck Center, Ardmore
Rush Truck Center, Oklahoma City
Rush Peterbilt Truck Center, Oklahoma City
Rush Isuzu Trucks, Oklahoma City
Rush Truck Center, Tulsa
Rush Peterbilt Truck Center, Tulsa
Rush Truck Rigging
Rush Used Truck Center, Tulsa
Custom Vehicle Solutions
Rush Truck Center, Greencastle
Rush Truck Center, Memphis
Rush Truck Center, Memphis Collision Center
Rush Truck Center, Memphis Used Trucks
Rush Truck Center, Nashville
Rush Peterbilt Truck Center, Nashville
Rush Towing Systems, Nashville
Custom Vehicle Solutions
Rig Tough Used Trucks, Dallas
House of Trucks, Dallas
Rush Crane and Refuse Systems International
Rush Truck Center, Abilene
Rush Peterbilt Truck Center, Abilene
Rush Truck Center, Amarillo
Rush Peterbilt Truck Center, Amarillo
Rush Truck Center, Arlington
Rush Peterbilt Truck Center, Arlington
Rush Bus Center, Arlington
Rush Truck Center, Austin
Rush Peterbilt Truck Center, Austin
Rush Isuzu Trucks, Austin
Rush Bus Center, Austin
Rush Truck Center, Austin North
Rush Truck Center, Beaumont
Rush Truck Center, Brownsville
Rush Peterbilt Truck Center, Beaumont
Rush Peterbilt Truck Center, Brownsville
Rush Truck Center, Bryan
Rush Truck Center, College Station
Rush Peterbilt Truck Center, College Station
Rush Isuzu Trucks, College Station
Rush Truck Center, Corpus Christi
Rush Peterbilt Truck Center, Corpus Christi
Rush Isuzu Trucks, Corpus Christi
Rush Bus Center, Corpus Christi
Rush Truck Center, Cotulla
Rush Peterbilt Truck Center, Cotulla
Rush Truck Center, Dalhart
Rush Peterbilt Truck Center, Dalhart
Rush Truck Center, Dallas
Rush Peterbilt Truck Center, Dallas
Rush Medium Duty Truck Center, Dallas
Rush Isuzu Trucks, Dallas
Rush Bus Center, Dallas
90
Rush Truck Center, Dallas Light and Medium Duty
Rush Truck Center, Dallas Medium Duty
Rush Truck Center, Dallas South
Rush Peterbilt Truck Center, Dallas South
Rush Truck Center, Denton
Rush Truck Center, El Paso
Rush Peterbilt Truck Center, El Paso
Rush Isuzu Trucks, El Paso
Rush Truck Center, Fort Worth
Rush Peterbilt Truck Center, Fort Worth
Rush Bus Center, Fort Worth
Rush Truck Center, Houston
Rush Peterbilt Truck Center, Houston
Rush Bus Center, Houston
Rush Towing Systems, Houston
Rush Truck Center, Houston Medium Duty
Rush Truck Center, Houston Northwest
Rush Peterbilt Truck Center, Houston Northwest
Rush Truck Center, Laredo
Rush Peterbilt Truck Center, Laredo
Rush Bus Center, Laredo
Rush Truck Center, Lubbock
Rush Peterbilt Truck Center, Lubbock
Rush Truck Center, Lufkin
Rush Peterbilt Truck Center, Lufkin
Rush Bus Center, Lufkin
Rush Truck Center, Odessa
Rush Peterbilt Truck Center, Odessa
Rush Truck Center, Pharr
Rush Peterbilt Truck Center, Pharr
Rush Bus Center, Pharr
Rush Truck Center, San Antonio
Rush Peterbilt Truck Center, San Antonio
Rush Bus Center, San Antonio
Rush Refuse Systems
Rush Towing Systems, San Antonio
Rush Truck Center, Sealy
Rush Peterbilt Truck Center, Sealy
Rush Isuzu Trucks, Sealy
Rush Bus Center, Sealy
Rush Truck Center, Texarkana
Rush Peterbilt Truck Center, Texarkana
Rush Bus Center, Texarkana
Rush Truck Center, Tyler Rush Peterbilt Truck
Center, Tyler
Rush Bus Center, Tyler
Rush Truck Center, Victoria
Rush Peterbilt Truck Center, Victoria
Rush Truck Center, Waco
Rush Medium Duty Truck Center, Waco
Rush Peterbilt Truck Center, Waco
Rush Isuzu Trucks, Waco
Rush Bus Center, Waco
Rush Truck Center, Wichita Falls
Rush Bus Center, Wichita Falls
Rush Peterbilt Truck Center, Wichita Falls
World Wide Tires
91
Rush Truck Centers of Utah, Inc.
Delaware
Rush Truck Centers of Virginia, Inc.
Delaware
Rush Truck Leasing, Inc.
Delaware
Advance Premium Finance, Inc.
AiRush, Inc.
Associated Acceptance, Inc.
Associated Acceptance of Florida, Inc.
Associated Acceptance of Georgia, Inc.
Associated Acceptance of Illinois, Inc.
Associated Acceptance of Oklahoma, Inc.
Commercial Fleet Technologies, Inc.
Idealease of Chicago LLC
International General Agency, Inc.
Los Cuernos, Inc.
Rig Tough, Inc.
California
Delaware
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Illinois
Texas
Delaware
Delaware
92
Rush International Truck Center, Ogden
Rush Truck Center, Ogden
Rush Truck Center, Farr West
Rush International Truck Center, Salt Lake City
Rush Truck Center, Salt Lake City
Rush International Truck Center, Springville
Rush Truck Center, Springville
Rush International Truck Center, St. George
Rush Truck Center, St. George
Rush Truck Center, Chester
Rush Truck Center, Richmond
Rush Crane Systems
Rush Idealease, Charlotte
Rush Refuse Systems
Augusta Idealease
Asheville Idealease
Boise Idealease
Champaign Idealease
Charlotte Idealease
Chicago Idealease
Cincinnati Idealease
Cleveland Idealease
Columbus Idealease
Dayton Idealease
Effingham Idealease
Hickory Idealease
Indianapolis Idealease
Indy Idealease
Joplin Idealease
Kansas City Idealease
Lima Idealease
Lowell Idealease
Macon Idealease
Memphis Idealease
Norfolk Idealease
North Little Rock Idealease
Quincy Idealease
Richmond Idealease
Salina Idealease
Salt Lake City Idealease
Springfield Idealease
St. Louis Idealease
Wichita Idealease
None
None
Automotive Industry Insurance
Associated Truck Insurance Services
Rush Truck Insurance Services
None
None
None
None
Partsriver, Inc.
None
None
Los Cuernos Ranch
Rush Truck Center, Birmingham
RTC Nevada, LLC
Rush Accessories Corporation
Rush Administrative Services, Inc.
Rush Momentum Holdings, Inc.
Rushcare, Inc.
Rushco, Inc.
Rush Logistics, Inc.
Rush Real Estate Holdings, Inc.
Rush Retail Centers, Inc.
Rushtex, Inc.
Truck & Trailer Finance, Inc.
1187394B.C. Ltd.
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Canada
None
Chrome Country
None
None
None
None
None
None
None
None
None
None
93
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
1. Form S-8 No. 333-242488 pertaining to the Rush Enterprises, Inc. Amended and Restated 2007 Long-
Term Incentive Plan and Rush Enterprises, Inc. Amended and Restated 2004 Employee Stock Purchase
Plan,
2. Form S-8 No. 333-219878 pertaining to the Rush Enterprises, Inc. Amended and Restated 2007 Long-
Term Incentive Plan,
3. Form S-8 No. 333-198080 pertaining to the Rush Enterprises, Inc. 2007 Long-Term Incentive Plan,
4. Form S-8 No. 333-170732 pertaining to the Rush Enterprises, Inc. Deferred Compensation Plan,
5. Form S-8 No. 333-138556 pertaining to the Rush Enterprises, Inc. 2006 Non-Employee Director Stock
Plan, and
6. Form S-8 No. 333-121355 pertaining to the Rush Enterprises, Inc. Long-Term Incentive Plan, the Rush
Enterprises, Inc. 2004 Employee Stock Purchase Plan and Certain Non-Plan Options
of our reports dated February 24, 2022, with respect to the consolidated financial statements of Rush
Enterprises, Inc. and subsidiaries and the effectiveness of internal control over financial reporting of Rush
Enterprises, Inc. and subsidiaries, included in this Annual Report (Form 10-K) of Rush Enterprises, Inc. for the
year ended December 31, 2021.
/s/ Ernst & Young LLP
San Antonio, Texas
February 24, 2022
94
EXHIBIT 31.1
I, W. M. “Rusty” Rush, certify that:
CERTIFICATION
1.
I have reviewed this annual report on Form 10-K of Rush Enterprises, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
5.
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date: February 24, 2022
By: /S/ W. M. “RUSTY” RUSH
W. M. “Rusty” Rush
President, Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
95
CERTIFICATION
EXHIBIT 31.2
I, Steven L. Keller, certify that:
1.
I have reviewed this annual report on Form 10-K of Rush Enterprises, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date: February 24, 2022
By: /S/ STEVEN L. KELLER
Steven L. Keller
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
96
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with this annual report of Rush Enterprises, Inc. (the “Company”) on Form 10-K for the
year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, W. M. “Rusty” Rush, President, Chief Executive Officer and Chairman of the Board of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
1.
Exchange Act of 1934; and
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
2.
condition and results of operations of the Company.
The information contained in the Report fairly presents, in all material respects, the financial
By: /S/ W. M. “RUSTY” RUSH
Name: W. M. “Rusty” Rush
Title: President, Chief Executive Officer and
Chairman of the Board
Date: February 24, 2022
97
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with this annual report of Rush Enterprises, Inc. (the “Company”) on Form 10-K for the
year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Steven L. Keller, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
Exchange Act of 1934; and
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
2.
condition and results of operations of the Company.
The information contained in the Report fairly presents, in all material respects, the financial
By: /S/ STEVEN L. KELLER
Name: Steven L. Keller
Title: Chief Financial Officer and
Treasurer
Date: February 24, 2022
98