Covenant Logistics Group Inc (CVLG) 2008 Q4 法說會逐字稿

Welcome to the Covenant Transportation Group fourth-quarter conference call. Please be aware that each of your lines is in a listen-only mode. At the conclusion of the presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question.

I would now like to turn the conference over to Mr. Joey Hogan. Mr. Hogan, you may begin.

Thank you, Carrie. Good morning and welcome, everyone, to our fourth-quarter conference call. Joining me on the call this morning is our CEO, David Parker; our CFO, Richard Cribbs; and various members of senior management. This conference call will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934 as amended.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. We ask that you please review our disclosures and our filings with the SEC.

As a reminder to everyone, a copy of our prepared comments and additional financial information is available on our website and due to the depth of disclosure within our release particularly in regard to the goodwill and tractor impairment charges, our prepared comments will be brief and then we'll open up the call for questions.

In summary, the sharp decline in the economy in the fourth quarter impacted our business significantly. Freight revenue per truck declined during the quarter 9.7% versus year ago after being up almost 7% during the third quarter. While entry still costs impacted our results negatively during the first nine months, lower diesel costs during the fourth quarter helped reduce our operating costs significantly during the fourth quarter. Our employees continue to surpass our expectations through these times, providing very high customer service, reducing our controllable costs, and continuing our safety initiatives.

The headline number on our loss for the quarter is large, but behind the impairment charges and a few other items is a significant reduction in controllable costs that is incrementally positioning Covenant to make money regardless of the economy.

Those of you looking at our website will be able to see the chart I'm about to describe. First of all during the second half of the year, we lost after tax about $43 million. First, if you peel away the goodwill and tractor impairment charges that were non-cash in the quarter, and they did not affect our bank covenant, that was about $34 million after tax.

Next, back out what we refer to as excess claims that were due to severe experience despite safety stats from a frequency standpoint. In essence, claims due to unexpectedly bad fortune compared with accidents per million miles. Those totaled about $7 million after tax.

Finally, we had debt extinguishment costs from our refinancing in the third quarter that was about $400,000 after tax and severance and related legal and settlement costs from downsizing our operations and eliminating one of our brokerage offices. Those totaled about $750,000 after tax.

If you back these out and look at what I would think of as normal cost of operations, the second half of 2008 was significantly better than the second half of 2007 and much closer resulting in about a loss of $800,000 after tax.

During the quarter on the positive side, first of all, we finished the year with our best ratio of preventable access per million miles in at least eight years. Number two, the national average of diesel fuel was down $0.31 per gallon or about 10% on average versus the fourth quarter of 2007. The combination of the reduced price at the pump, the favorable lag effect of fuel surcharge recovery and our fuel savings initiatives reduced our operating expense by $0.072 a mile, contributing about $0.30 a share.

Our Solutions subsidiary continued its dynamic growth with revenue increasing 51% in the fourth quarter over the fourth quarter of 2007. Revenue declined versus the third quarter due to the closing of a large location and costs were affected by the closure and related expenses. On the negative side, simply put, freight died in the fourth quarter and we were unable to reduce capacity or costs quickly enough to offset the reduced freight base.

Number two, we had a small number of severe accidents in workers compensation claims that impacted our results by about $4.3 million after tax or $0.19 a share. Also, we did have an after-tax impairment charges of $34 million related to the rapid deterioration of equipment market and the reduced value of the 2006 Star acquisition.

As for the current environment, freight revenue per truck has dropped another 4% or so from December's levels. Our team freight is very weak. On the dry side for all companies, the Southeast, Northeast, and Texas have been our problem areas in that order. The West Coast has been okay while the Midwest has been pretty good. We are somewhat encouraged in that our reefer fleet product serviced by our SRT subsidiary has seen some signs of tightening capacity over the last couple of weeks. We believe it is too early to make any capacity calls in the reefer market, but nevertheless, we are cautiously optimistic on the reefer side.

Additionally, we already reduced our total fleet size by almost 5% during the quarter compared to a year ago. Due to the continued weakness in the freight market we plan to reduce the fleet another 5% sequentially from the fourth quarter to the first quarter. By the end of March, we will have reduced our fleet by at least 350 trucks or 10% when compared to March of 2008. Also we continue to evaluate our fleet size across and among all divisions.

Now quickly let me comment on our bank covenant and liquidity situation. Our tangible book equity is $105 million or $7.44 a share. During the fourth quarter, we were able to reduce our balance sheet, off-balance sheet, and letters of credit debt by $10 million. At December 31, we were in compliance with our one financial covenant under our revolving line of credit and had $39 million of borrowing capacity to execute our 2009 plan.

During 2009, we expect to replace 1050 tractors maintaining one of the newer fleets in the industry. Our current expectations are that the economy will not improve for at least the first half of the year and will continue to pressure our Company's recovery. Our main objectives though are to hold or improve our freight base as best as we can while we aggressively lower our cost.

We feel our net cost of fuel will help our full-year 2009 results by $0.03 to $0.04 per mile. In addition, we have set a non-fuel savings target of another $0.05 to $0.06 per mile on top of that. The majority of the additional savings are focused in various areas from restructured and reduced workforce, less severe accidents, and a newer equipment fleet. The result of the before mentioned goals is a companywide objective of turning a profit in 2009.

Now, Carrie, that's all our prepared comments and we'll open it up for questions.

(Operator Instructions) Chaz Jones, Morgan Keegan.

Good morning, guys. I guess first of all, could you talk a little bit about the amount of brokerage freight that you are hauling at this point? Obviously freight fell off a cliff as you alluded to in the fourth quarter, but has that kind of changed dramatically year-over-year or sequentially?

Did you say reefer freight, Chaz?

No. I'm sorry, David, brokerage freight.

Yes, it's running 8% to 10%, about 10%, Chaz. It's more 10% than it is 8%

Okay and that would be relative to maybe mid-single digits a year ago?

A year ago it is actually down a little bit from a year ago by a couple of percent.

Okay, so you re running 12%?

About 12% a year ago, or about 10% this year.

Okay, did you guys want me to get back in queue? I'm a little bit confused.

Keep going.

Okay, then the 350 truck reduction you're talking about year-over-year, would that include owner operators or is that just the Company fleet?

That is total trucks, Chaz. We don't have many owner operators left complete right now. I think we've got across all the companies, probably 80 to 90 across all companies. So we -- that's the total fleet.

And from a cost perspective certainly that seems like that's a major focus here in 2009. Joey, you outlined in a table perhaps some low hanging fruit from a comp perspective that should benefit results moving forward. But in addition to that, did I hear you say at the end that the primary focus on cost savings is going to be headcount reduction, insurance and claims, and then potentially saving on the maintenance expense from a newer fleet?

Yes, I mean when you look -- it's pretty straightforward when you look at the P&L and see 50% of your operating expenses are salaries, wages, and benefits associated with all of that to get $0.05 to $0.06 a mile savings, you have no choice. And a lot of those decisions have already been made that we made throughout the fourth quarter and coming out of December. So it's basically results of decisions that have been made that our employees already know about, whether they are drivers or non-driving force.

And so what I mean by that is full-year effect of decisions being made either some downsizing, salary changes, things of that nature and our employees also know that we will continue to have to evaluate that as we move through this first half. So that's the target we set and we feel very confident that we will hit that $0.05 to $0.06 per mile number, non-fuel number that we mentioned. But it will come on additionally through less severe accidents. We've had five really strong years from a severity standpoint. We have been working hard on the incident rate.

And so finally we have had -- we have been able to move the needle significantly over the last 18 months on the incident rate side, but unfortunately, we did have a few very severe accidents that we have not had in a long time. So if we have another good year, keep moving our incident rate down further, we feel that and hope that we won't have as severe a year as we had in 2008.

Then maintenance is just a reflection of a slightly newer or younger fleet on average than what we had in 2008. So that's kind of three large areas that will get the predominance of the $0.05 to $0.06 a mile.

Okay, one last one and I will get back in queue. Could you just talk about pricing? I think for the most part you guys were fairly flat year-over-year. But I guess as we turn our attention to the bid season here in the spring, maybe any type of feedback you are getting from customers, what level of pricing pressures in the market and any expectations maybe relative to 2009?

There is no doubt that in the month of January that lots of customers are talking and what we are seeing more than anything is new business opportunities more so than our current pieces of business that are within the three asset companies. So we are seeing some pressure on there and quite honestly, we have got built-in internally around a 2% kind of number reduction in rates.

Okay, that's helpful. I will get back in the queue, guys. I appreciate the commentary.

Thom Albrecht, Stephens, Inc.

Excuse me, guys, I got a cold this morning. David, can you talk about a couple of things? Number one, what's the approximate size of Expedited now in terms of revenues, trucks, percentage of overall total?

Expedited is running about 11 -- about 1050 trucks. Let me get you the revenue here, Thom. About $50 million per quarter. The fourth quarter was about $50 million, about 40% of the total.

Okay and I know for a long time sort of the ranking from best to worst for profitability was Expedited, then probably Refrigerated and then you began to get in some of the solo operations, over the road stuff and maybe even SRT. Can you talk about if you have any pockets of profitability right now and where the rankings stand within your different service divisions?

There's two ways to look at it. If you -- because it was Covenant and SRT, that from August to October we had two accidents and had three fatalities from August to September and one which got into the third-quarter numbers, then SRT and Covenant had two fatality accidents in October. And this is after -- just to set that up so that everybody is clearly understanding, for some of the analysts that have followed us for the last few years, we have made phenomenal strides in our safety area evidenced by this year the Safety Director won an ATA Director of the Year as well as Truckload Carrier Director of the Year.

We have had our lowest accidents per million miles I think since I started the company was last year. We know since 2000, because I don't have records back to when I started the Company, but I think it is the lowest that we ever had. And so including, all of that is including the five fatalities that we had in a 60-day period of time. And so that's going to answer your question. Because SRT and Covenant were the two that were involved in there, we start running $0.13 and $0.14 a mile for insurance instead of $0.08 a mile. It does crazy stuff evident by our fourth-quarter announcement.

If you were to assume, which I do personally, that we are not going to have five fatality accidents and I think we may have five fatality accidents in the next three or four years, but not in three months, if you assume that, then it is basically still the same place that we were at and that is up until, say, November, when really freight just dropped dramatically or in October, the Expedited side and SRT would have been the two leaders of it as well as dedicated.

But all three of those, we got dedicated because they didn't have access. Actually had the best OR in a losing year; they had the [best]. But if you were to eliminate the fatalities of Covenant and Expedited, those three would have been in the mid-to lower 90s, to give you an idea. But because -- it's just a matter of how you want to look at it, are we going to have five fatalities every three months or are we not? Does that help you?

It certainly does, because I wasn't sure if given how nasty the freight environment is if -- whether there was still some core strengths there or not. Joey, I think you mentioned that in recent weeks though even team has been -- I don't remember your wording -- but very weak essentially. Does that hurt its ability to remain profitable?

Well, you mean traditionally, Tom, team -- there's two things everybody knows with teams. First of all, in the peaks and the valleys, strong -- quick increases in freight or quick decreases in freight and the teams, our teams see it first. It's more reflective real-time of sharp turns in the economy. So when -- and our teams are doing really, really well, very, very well. Increase in revenue per truck, significant increases in revenue per truck throughout the first nine months of 2008, and when the economy basically stopped or died as we called it at September 28, the teams immediately take it on the chin. So that's one thing being said.

Number two, then when you put on top of it the traditionally weak first quarter that teams have, you've got kind of a double whammy for teams. So that's why I said right now as we sit here today, our team freight is very, very, very weak. Does it impact our view long-term on the viability and strength of our Expedited division? No, it doesn't.

The only question is should -- because we have been on a mission from probably mid summer of '07 and through the mid of '08 we wanted to grow our team slightly and so really the only question in our mind is the size of that fleet. We did not grow it in the fourth quarter when the economy stopped. We immediately stopped growing teams. I think we could have continued to grow them based on all the things that we're doing. We stopped that and really the only question on the table is should we pull it back a bit? And that's something that we are evaluating right now.

Okay, so --

(multiple speakers) Tom, as you know, the teams are hauling the LTL, the Expedited, air freight, the electronic. I mean that's their niche.

Sure, all right. So Expedited is about half of the truck and Covenant Transport. As I recall, Dedicated as between, what, 500 and 600 trucks?

Yes.

And then OTR I guess, is that what you are still calling that --would be the remainder? That still seems to be left with an extraordinarily high OR, like north of 120% or something. Is that a fair read into that?

No, no, it's much less than that. It still is not profitable. There is no question, but no. What you -- if you base it on to date where it is today, actually where we have -- it's a complicated story, but what we've done on the OTR side as far as fleet size, we've been reducing that fleet significantly over the last two years. And that fleet is down and the quarter, fourth quarter is down 22% versus the fourth quarter of 2007, and we made some more changes to that late in the fourth quarter. So actually, we are slightly less than 400 trucks in that fleet.

Our revenue per truck in that fleet is higher today than where it was in November/December. It is up fairly nicely, up almost about 8% to 10% than where it was in November/December, so sequentially we've kind of matched better fleet size, our capacity to demand on the OTR side.

Am I ready to say it's making money? No, I am not. I am just saying is that the fleet size has changed dramatically in that fleet and I think we found a pretty good balance there and we'll have to see where it goes in the next few weeks.

So I say all that to say is that OTR has moved a long way, still not where we want it to be yet and right now inside of the Covenant piece, the main question is the size of the team fleet. Dedicated is doing fine. Its revenue per truck is holding nicely. It's down very, very slightly, but it's holding nicely, made a great run throughout 2008 profitability-wise. We reduced a lot of cost in that fleet throughout 2007, which put it on a real good footing. So really on the Covenant piece, the main question is the size of the team fleet.

Okay, that's helpful, Joey. Thank you. Last charge or question, can you refresh my memory on what the fixed charge coverage ratio parameter is before you bump up against compliance?

Yes, we have a one times ratio, and so we were in compliance with that at the end of December and so that is -- we just have one covenant, just one time.

Okay. Guys, thank you.

(Operator Instructions) Justin Yagerman, Wachovia Capital.

Good morning, guys. This is [Rob Salmon] on for Justin. Could you guys give us a sense in terms of how utilization had trended throughout Q4 on a year-over-year basis by month, as well as what you are looking at in January?

Really Q4, I mean -- I would like to drop back into Q3 just to give you a perspective. Let's just talk about revenue per truck, if you don't mind. The majority of that is miles, but that's what we have quickly, handy.

I mean, for example, in the month of July, revenue per truck was up 9% versus July of 2007. August was up 3%. September was up 8% versus the same period in 2007. October dropped down to minus 3% versus the year ago period. November down 15%, December down 11% or 12%.

So that just gives you a little more perspective about how quickly freight turn impacted our results. Fleet size during that period of time, fleet size during the third quarter on the asset side, we were -- let's say, hold on a minute. During the third quarter was down about 5%, and in the fourth quarter it was down about 5%. So utilization just stopped, and so it just gives you a feel.

That's what I'm saying, the team fleet again in the strong moves of the economy, either up -- you see it when you're going up too. Teams move much quicker and when it's dropping, the impact of that impacts you very, very, very significantly.

And what are you seeing in January?

January, we are seeing about what we saw in December. Around that November/December, not any improvement in that 10% to 15% decline for the entire fleet, all the fleets in that 10% to 15%. It's a little worse than it was December, not near as bad as it was -- not quite as bad as it was in November, as far as the comparisons versus year ago.

That's definitely helpful, and in terms of -- you guys had indicated that your expectation for pricing I think was down roughly 2% for next year. As you move throughout the quarter, I would imagine that the pricing got increasingly more competitive given the declines in overall freight demand.

Yes, it did; there's no question. We were up throughout the third quarter 2% to 3%. We were up a little bit in September, up a little bit in October, and then it started dropping in November/December.

And where did pricing finish out in December and kind of where is it currently in January? Is it roughly at that 2% mark or is it a little bit better?

It's right at that. It is right at that 2% mark.

And then if you're thinking about your business strategically, are there any of the pieces of the business that you would consider kind of divesting, or do you kind of view the current portfolio as where you'd like it?

You know, I think it is more [right-siding], continue to right-side the fleet, Rob. Are we running too many teams? Today we are. In September, we were not. Today we are, and so we are looking much more at right-siding that, as well as the positive that's on the refrigerated side. We have grown it a little bit and look at ways to continue growing on the refrigerated side.

We have continued to downsize the Star piece of the business. We've taken 100 trucks out of Star in the last 12 months, and we are continuing to evaluate it. At the end of the day, either the economy has got to come to where Star is at or Star has got to go to where the economy is at. So I think teams, pressure down; Star, pressure down; refrigerated, pressure up; dedicated, pressure up as opportunities present ourselves.

That's really helpful out there. If we do experience another leg down in the economy, you guys had taken an impairment charge it looked like in terms of the held values of your tractor equipment for Q4 for those that are held for sale, as well as expected sales in 2009.

If you guys decide to shrink the fleet more than you currently have in your plans, should we be expecting another reduction in terms of the asset balance of those tractors?

Yes, what we are assuming, Rob, is that the used truck market has dropped 30%. It's what the used truck market dropped in about a six-week period of time, in October/November timeframe. Our model is saying that there is no recovery of that, that it does not drop any further; that it maintains where it's at, which is terrible, up until the middle of summer. And then we expect in the middle of summer that you will see some recovery in the used truck segment. So that's what our model is showing. So to answer your question, we don't see that, but that is what our assumptions are.

I appreciate all the color, guys. Thank you.

Donald Broughton, Avondale Partners.

Good morning, guys. Let me just get a little bit of a magnitude here. You've got 522 tractors held for sale. You sold approximately half of them so far in January and the $5.2 million pretax charge, so almost $10,000 a truck. What is the average miles age of the trucks that you are selling?

Hold on a minute, Donald, let's see.

The other one was can you give me kind of a magnitude here? Are we talking about trucks that you thought were worth $28,000 that are worth $18,000 or trucks that you thought that were worth $18,000 and they are worth $10,000? I mean kind of where are we in these trucks?

Yes, the mileage on those trucks and that's the held for sales were roughly 500,000 to 525,000 miles and more, it's north of that. So '05 and '06 model year tractors, so they are high mileage tractors. And what was your second part of your question?

Did it drop $10,000? Did it drop from say $38,000 to $28,000? $36,000 to $26,000 kind of numbers, Donald?

All right, just so I kind of know where we are in these assets. I noticed your DSO jumped and we are running at a full five days longer to collect than you were last year. What is driving that?

Well, we had a few things. We had some large projects in the Solutions group, the brokerage group that actually trailed on from late in the third quarter with the large FEMA jobs we did with the hurricane and those take a while to get pushed through and get collected. They have been collected in January, but that was a large piece of that.

So I should expect to see that come back down when you post Q1 results?

Yes, assuming there's no other large project like that (multiple speakers) at the end of the first quarter.

Which you would be happy to have happen, right? Very good, very good. Great, thanks, gentlemen.

(Operator Instructions) [David Minkoff], [Maximum Group].

I noticed in your commentary you said you were in compliance with the covenant, but that you were evaluating it for the first quarter. I guess you are not done yet, but what is your best guess as to whether you remain in compliance in that first quarter and what is the repercussion if you don't?

Right now we do expect it to be tight throughout the first half of the year and we are working to complete our plan around that. We have been in communication with our financial group, I mean our financing group for a couple of months on how 2009 was starting out as related to the slowdown in the economy.

As far as options, we have options that we are running down various paths from -- to keep us in compliance, whether that's lower in cost or looking at some facilities that we still have or possible sale leaseback on some equipment that we own. So there's several things that we are working on and right now, we are continuing to work through it. Like I said, it's going to be tight.

Right, does that covenant relate to the entire $160 million in debt?

No, it relates to zero -- well, there's $2 million, $2 million or $3 million drawn on that at the end of December, and that's it. Mainly it relates to our revolver that we have with B-of-A and JP.

The $39 million you mean that's left?

That's correct. Well, letters of credit. Mostly what that revolver is used for is to secure our letters of credit, so that's -- we've got about $40 million of leveraged credit outstanding that the majority of that revolver is used for. As far as actual borrowing, it's almost nonexistent in the revolver at the end of December.

Right, so it sounds like we are on the fence. I guess you're thinking we're going to stay in compliance, but it's close. If we were not, what would happen immediately? Legally or technically, what would happen if we fell out of compliance temporarily?

Well, first of all we don't pursue needing to use it, so it will just be a matter of as any other amendment or blowing a covenant if you will is working with our financial institutions to remedy that.

Right. So it's not going to change our method of operation, really. It's not going to hamper our ability to do business, right?

That's correct.

I noticed that David made several purchases of stock back in December. That was good to see. Are any other insiders buying the stock at this low level?

Yes, there were several back in the fourth quarter. I bought some. I bought some back in the spring. I know several of our other insiders have. And so yes, David -- actually the total from insiders is closer to 600,000 shares that have been bought.

In the last quarter?

Since the end of the second quarter, it's about 600,000 shares of which -- of about 500,000 shares.

And what was the average price on that?

I don't know.

I think it was in the $2 range, so slightly under $2 perhaps in David's case.

The Parkers were clearly under $2 and the rest were probably in that's $2 to $3 per share range if I recall.

So you say we have a tangible book value right now, tangible net worth of $7.44. Does that include the off-balance sheet financing as well?

No, that's just tangible equity.

Right, tangible equity of $7.44 so how would you bring in that $97 million of off-balance sheet items? Does that reduce the tangible net equity by -- well, the tangible book value is $106 million and the off-balance sheet obligation is $97 million. That almost knocks out the whole $104 million, or am I looking at it wrong?

Well, you've got to add the assets in too, so if you bring the off-balance sheet debt in, you bring the off balance sheet assets in, so it shouldn't change tangible net equity.

Right, so those things are pretty cheap and under $2 with a book value of $7.44 I would think. You can just nod your head, it's all right. That's all I have really. I hope things turn around for everybody's sake here. Goodbye now.

(Operator Instructions) John Barnes, BB&T Capital Markets.

Good morning, guys, a couple of questions. One, just given the losses during 2008 and the issues with potential noncompliance with the covenant in the first half, those kinds of issues, have your auditors expressed any decision one way or the other on the audit opinion whether qualified, going concern, anything like that?

Go ahead, Richard.

Well, we are continuing to address that with the auditors. We have got to go through a couple more weeks of analysis on forecasts and what impact it would have if a covenant was breached. Those type items, so they haven't given any opinion on that at this point. And that will be wrapped up during the next two to three weeks and would be obviously part of our K filing.

All right. Joey, you mentioned as possible remedies additional sale leaseback transactions. Can you give us an idea of how much you think you have left that you can actually do a transaction with? I mean what you think you could generate proceed-wise from whatever terminals were left or potential equipment sale leaseback? Do you have a rough figure in your mind?

We have got about 2000 trailers roughly, 2000 trailers that we own, number one. We have got one terminal that's currently for sale that we have been marketing for about a year now that is currently on the market and we have several terminals out on the West Coast that we own that are still very valuable. We would prefer not to sell those. But those are out there. And we have a terminal in Dallas that is a very, very nice facility. We've got several owned facilities and -- but you are in kind of that peak -- that trough of the market on the real estate side, so you balance needing to versus wanting to versus having to. And so right now, we only have one for sale, but those are some of the options that are out there.

Okay, as you look at going through the sale leaseback transactions, can you talk a little bit about what permanent change does it make to your cost structure on a go forward basis? Obviously stripping out the depreciation associated with those terminals when you sell them, but turning around and having -- does it impact the interest expense line? Was it a financing option? Was it -- or is it an operating expense where you are going to -- be paying rent on those facilities? Can you just talk about how it changes your cost structure going forward?

Basically we would be replacing the depreciation and interest with rent expense. It would be operating.

Is about equal or is it a little higher?

We would attempt to make it fairly equal.

Okay, and then --

But there's additional -- there's a little bit of additional cash flow because the depreciation would not be (inaudible) whereas the rent would be.

Sure, sure. Okay. And then lastly, just as you work with your covenant, you know the covenant on your credit facility in the first half, can you just talk a little bit about your potential cash flow needs in the first half of '09? And do you foresee a need to draw any more on the revolver or do you think you generate enough cash from operations to fund what you need in the first half?

Yes. John, on a temporary basis, there may would be a need to get some money out of the revolver. As the year -- about midyear as we expect additional revenue per truck and those kind of things, we would not need that. In addition to that for any equipment that we are purchasing, we have the note facilities set up especially with Daimler that we would utilize. And so most of it is really just a timing issue with us. We could possibly need some in the first few months but then after that we would not.

Okay, and if you --? You made the comment that you may slow down some purchases in '09. Does that impact your credit availability with Daimler and some of the other vendor-related kind of financing? I mean is there a minimum requirement that you adhere to or could you just refresh our memory on that?

There is no minimums. There is no minimums. That wouldn't impact. We have already kind of pushed back a few of our tractors that when we observed that they had lower miles than what would be expected at this age, we felt like we could push back about 500 tractor purchases to a little bit later in the year and without any real issues of additional maintenance expense or any kind of customer service issues because those tractors that we identified had lower miles than what would be expected at this age anyway.

Okay, very good. Thanks for your time today.

(Operator Instructions) Gentlemen, there are no more questions at this time.

We want to thank everybody for joining us and we will be talking to you in the first quarter. Thank you.

Thank you, ladies and gentlemen. This call has ended. You may disconnect your lines now.