Slide 1: Presentation to ISS
Presentation to ISS April 30, 2015 LS ENTERPRISES
Slide 2: Company Overview
Company Overview Q Full service solutions provider to commercial vehicle industry QO Over 6,500 dedicated employees O $4.7 billion in revenues in 2014 O 35,352 commercial vehicles sold in 2014 QA and B common shares due to supplier control requirements Q Total 40.0 million shares of common stock out
Slide 3: Shareholder Proposal
Shareholder Proposal Shareholder Proposal to Adopt a Recapitalization Plan to Eliminate the Company’s Dual-Class Capital Structure — Proponent: Merlin Partners LP — “RESOLVED, that shareholders of Rush Enterprises, Inc. (“Rush Enterprises” or the “Company”) request that the Board of Directors take t
Slide 4: The current dual-class structure was adopted in 2002 with shareholder approval
The current dual-class structure was adopted in 2002 — with shareholder approval — to enable the Company to issue equity yet remain in compliance with the Voting Interest Provision (as defined below) of its Dealer Sales and Service Agreements with Peterbilt (the “Dealer Agreements”). The Dealer Agre
Slide 5: We are unaware of any actions we can unilaterally take to accomplish Merlin's objective
We are unaware of any actions that we can unilaterally take to accomplish Merlin’s stated objective to eliminate the Company’s dual-class capital structure without violating the Voting Interest Provision of the Dealer Agreements, which would allow PACCAR to immediately terminate the Dealer Agreement
Slide 6: The Proposal poses real risk
The Proposal poses real risk QO Contrary to assertions made by Ancora Advisors LLC (“Ancora”), the general partner of Merlin Partners LP, the risk of losing Peterbilt Dealer Agreements is real and material if the Company violates the explicit terms of the Dealer Agreements. OQ RUSHAs share price fel
Slide 7: The Proposal poses real risk — contd.
The Proposal poses real risk — contd. QO “Losing PACCAR dealer relationship: As the majority of dealerships in the Rush Truck Center network are Peterbilt dealerships, losing the relationship with PACCAR would have a severe effect on the results of Rush.” — Avondale Partners, 22 April 2015 Q “More t
Slide 8: Ancora's flawed analysis - TSR
Ancora’s flawed analysis - TSR OQ RUSHAs Total Shareholder Return (“TSR”) either exceeded or performed in-line with its peers* at the time of Ancora’s letter seeking collapse of the dual-class share structure year TR Synth {eso Ancor’ ter ated 0 Dec. 2014) (atof anco's eter ated30 Dee. 2018) mo oN p
Slide 9: Ancora's flawed analysis - TSR (contd.)
Ancora’s flawed analysis - TSR (contd.) QO Ancora’s appears to be deliberately ignoring industry dynamics which have adversely impacted RUSHA's to-date TSR performance independent of the dual-class share structure. Q Unlike Ancora, Wall Street analysts are very clear about the headwinds faced by RUS
Slide 10: RUSHA trades at a valuation premium to peers
Q If Ancora’s assertions were correct, then the market would assign a valuation discount to RUSHA. C1 RUSHA however, trades at a valuation premium to its peers* Price/Fwd Year 1 EPS and EV/Fwd Year 1 EBITDA multiples. As such, we believe, the dual-class share structure does not affect shareholder va
Slide 11: Cervus is not a good comparison
Cervus is not a good comparison QO Ancora’s comparison with Cervus Equipment Corporation (“Cervus”) is not meaningful. Cervus is a much smaller firm with three reportable segments: Agricultural, Transportation, and Commercial. In 2014, Cervus’ Transportation segment (which includes Peterbilt dealers
Slide 12: Strong corporate governance profile
Strong corporate governance profile Q Despite its dual-class share structure, RUSHA has several shareholder friendly corporate governance features: — Annually elected directors. — Directors may be removed with or without cause by a majority of the shares entitled to vote. — Action can be taken witho
Slide 13: Conclusion
Conclusion QO We believe Shareholder Proposal to collapse the dual-class structure poses serious and real risk to shareholders. Such risk is apparent in the negative 1-day market reaction to Ancora’s announcement of its intention to collapse the two classes of stock. Q If the Shareholder Proposal is
Slide 14: APPENDIX: Ancora's peer group
APPENDIX: Ancora’s peer group Q With the exception of Cervus, all the companies used by Ancora own consumer automobile dealerships. The consumer auto industry is subject to its own cycles, which are not the same cycles as the commercial truck industry. QO Cervus does not even have operations in the