GATX Corp (GATX) 2007 Q1 法說會逐字稿

Good morning. My name is Keisha and I will be your conference operator today. At this time, I'd like to welcome everyone to the GATX first quarter earnings conference call. (OPERATOR INSTRUCTIONS) After the speakers' remarks, there will be a question and answer session.

Thank you, Miss Johnson you may begin your conference.

Thank you, Keisha. And good morning, everyone. Thanks for listening in to our first quarter conference call. With me today are Brian Kenney, President and CEO of GATX Corporation. And Bob Lyons, Vice President and Chief Financial Officer. We've also asked Tom Elman, GATX's Chief Commercial Officer for Rail to join us today to provide additional color on any rail-market related questions you may have. But before we get to your questions, I will give you a brief overview of the numbers, which were provided in the press release this morning.

First, I'd like to remind you that any forward-looking statement made on this call represents our best judgment as to what may occur in the future. We've based these forward-looking statements on information currently available and disclaim any intention or obligation to update or revise these statements to reflect subsequent events or circumstances. The Company's actual results will depend on a number of competitive and economic factors, some of which may be outside of the control of the Company.

For more information, I'd refer you to our 2006 Form 10K filing. And one final housekeeping issue, tomorrow is our annual shareholders meeting. That will be held at the Northern Trust Building at the corner of Lasalle and Monroe in downtown Chicago. The meeting begins at 9:00 a.m. Slides from Brian's presentation to shareholders will be posted to our website, www.gatx.com.

Now, let's turn to the first quarter numbers. Today, we reported income from continuing operations of $37 million or $0.65 per diluted share. By comparison, in the first quarter of 2006, we reported net income from continuing operations of $38.1 million or $0.67 per diluted share which included nearly $20 million in re-marketing income at specialty, $14million of which was related to a single transaction in the managed portfolio. As reflected in our results for the quarter, our markets are performing as expected.

In rail, segment profit increased nearly 18% to $57.2 million in the first quarter of 2007, versus first quarter 2006. Thanks to a larger number of cars on lease, higher average lease rates. Increased were marketing income and stranger financial performance from our European operations. Our North American fleet utilization was 98.1%, down from 98.5% at year-end.

Demand remains very high for the vast majority of our fleet but as we've noted previously, there is some weakness in the narrow band of freight car types. We continued to have excellent results in renewing leases at higher rates with existing customers. Renewal rates on the basket of our most common cart types increased 19% over the expiring rate in the first quarter, similar to third and fourth quarter of 2006 and we were able to increase the lease term on those renewals to an average of 6 years. Rail is an inherently cyclical business and as we noted in this, the release, this balancing of lease rate and term is intended to reduce future earnings volatility.

We also invested $111 million in select Rail assets in the quarter, a significant increase over the first quarter of '06. Specialty reported $26.4 million in segment profit in the first quarter of 2007, down from $36.5 million in 2006. As I noted previously, the year-over-year quarter comparisons are challenging due to the abnormally high level over marketing income included in the first quarter 2006 results.

The marine market remains robust with high vessel utilization, strong demand and increasing charter rates in the first quarter of 2007. American Steamship Company began its 100th year of operation in the 2007 Great Lakes sailing season with its full complement of 18 bustles, following the 6 vessel fleet acquisition in June of last year.

As many of you know, January through March is the offseason on the Great Lakes as weather and ice on the Lakes halts shipping and as a result, any revenues and expenses at ASC are small in the quarter. So, in limited operations, the first quarter of 2007 was down from 2006. An earlier completion of customer contracts in January and weather and ice in March reduced ASC's operating days on the Lakes when compared to 2006.

To address a likely question, in January of this year, we announced a $300 million share repurchase program, which was launched in early February. Through the end of March, we've repurchased just over 2 million shares, encompassing nearly $100 million of the $300 million buyback so the program is progressing.

As for our 2007 guidance, we remain confident in the EPS range we outlined back in January. The first quarter was a solid start to the year and our markets are performing in line with our expectations. So, just to refresh, we anticipate income from continuing operations of $2.90 to $3.10 per diluted share in 2007. So, with that quick overview, Brian, Bob, Tom and I are ready to take your questions. Keisha?

(OPERATOR INSTRUCTIONS) Your first question comes from John Hecht.

Good morning, guys. Thanks for taking my questions. Just a -- I guess most of them are around some more granularity in the rail business. Just taking investments divided by the investment dollars divided by the number of rail cars, it looks like, you know, new rail cars and the tank car at least in the rail car business are sort of 90 to 100 "K-ish" right now. Maybe up a little bit more than 10% versus last year. Are you guys seeing any changes in the pricing trends given some of the variable conditions and other markets? And are you seeing any pockets of opportunity within the tank car segment itself?

This is Tom Elman, thanks for that question, John. Overall, pricing remains pretty high. Ten car backlogs remain very, very strong. And even in freight cars, where you might, you might expect a little bit more of a decline, by and large, the combination of high steel prices and high component prices have kept -- have kept prices up there. In the secondary market, there still is relatively high lease rates so pricing for cars there remains strong, as well. We're constantly, excuse me, looking for opportunities to buy right and catch the right combination of car price and lease rates. And our first quarter performance shows that we were able to do that and will continue to do so.

Okay, can you give a little more granularity of the freight car side of the portfolio? Maybe the composition by car type? And what kind of commodities you're trading? Excuse me, transporting?

Yes, are you talking as far as the investments we've made in freight cars?

No, no, really in the existing portfolio.

John, this is Rhonda. We will have a new overview presentation up on our website later this afternoon and that will give you a breakdown of the owned fleet, by car type and you will see that, again, over 60% of our fleet is in tank. Then the next largest segment is in covered Hoffers, which is about 25% of the fleet. Then we have open Hoffers and gondolas, much of which carries coal. And then there is a small piece of other car types.

Okay. And then you've actually highlighted some outperformance or improving margins in the European business. Can you give us a little more data on that, in terms of maybe of the size of the portfolio over there, what terms of investment allocation you had over there and what type of trends we should continue to see over there?

Sure, this is Brian. I can do that. I mean in general, everything that we've talked about over the years, about why we were attracted to the European market, appears to be materializing these days. You know, everything from the EU policies favoring rail over road transportation, you know, growth in private operators driving efficiency in traffic, the older fleet in need of replacement, we're starting to see that. And just changes in manufacturing patterns that have increased intermodal traffic. So, in general, those trends are all favorable and it's been reflected in the European financial performance. We have about 20,000 tank cars. Those are all owned in Europe. We also have an interest in AE, which is a freight car lessor. They have approximately 21,000 cars. If you look at our balance sheet, although it's not a segment, we have well over $500 million in assets in Europe. And in general, across all our markets, it's been pretty strong, especially in intermodal. We've had great investment both on the freight car and tank car side over there over the last year. And I object expect that to continue.

Thanks, I will get back in the queue.

Your next question comes from Richard Shane.

Rhonda, you've given some information on the -- on the mix of the portfolio. Is that on the dollar basis? Or is that on a unit basis?

Unit basis.

Okay. And so presumably, what -- can you give us some context -- how much more is a tank car versus a covered hopper?

Unfortunately it's not quite that simple because both tank cars and the covered hopper ranges are pretty broad. By and large, tank cars on average would be a little more expensive than freight cars, than covered hopper cars. Maybe on the order of 5 to 7%.

Okay. And, you know, our calculations show that based on the number of units you added and the expenditures during the quarter, the average cost per car was about $95,000. Does that sound reasonable?

For new cars, yes.

And the -- and was 100% of what you acquired during the quarter new cars?

No.

No.

Did you say no?

No. It's about a half and half like it usually is.

Okay. And then last question, of the new cars that you took delivery of, how much of that was on your -- the pre-- I don't even know what the right terminology is, but the presale contract that you'd had with manufacturers at favorable pricing?

About two-thirds of this quarter.

Okay. Great. And how much is left on that contract?

Left to deliver is about 1,200 cars, all of which will happen in 2007.

Great. Guys, thank you very much.

Thank you.

Your next question comes from Bob Napoli.

Thank you. The 19% pricing is pretty healthy. What do you expect over the balance of this year, to get a kind of trend-wise -- I know you're not going to give exact numbers, but, you know, when do we -- when do we start to see that, decline sharply? You know, do we start lapping some of the better pricing? Is that not until mid '08? Or do we, I think we probably stay pretty healthy pricing increases through -- through the balance of '07.

Yes, you would see, once again, assuming rates stay where they are today, let's not make assumptions about where it's going, you still will see healthy increases in double-digits throughout 2007.

And that's already bombed out, you know, kind of the assumption we went into the year with. And you know, now with one quarter under our belt, we don't see any real change to that.

And you had some pretty healthy residual gains in the quarter, in the rail area. I mean, I would imagine that, I mean -- that, you know, you have a lot of embedded gains in that portfolio? Is that just from repositioning or are you just saying that these gains are too big to ignore? And did you end up building capital, taking some earnings out of those cars. What is driving -- why are you selling cars or is that just --

It's not really harvesting cars that we really like. What it is is using a strong market to take advantage to get out of the weaker and older cars types at an attractive price. So, we will do it where it makes sense. We won't do it if , for instance, if it impacts a customer relationship, or if it's assets that we

You know, we're trying to look out over the course of the next few years and identify, and have been, because we were selling cars last year, as well. You know, that had very volatile characteristics, or ones that we feel are less certain and confident in long-term. So, those are the cars that are coming out.

Now, the purchases, you picked up your purchases of rail cars this quarter. When it does seem like the U.S. market, overall, is starting to maybe soften, as you mentioned, even last quarter a little bit. So, have the prices come down that much that you're interested in buying now that the market seems to be, you know, maybe softening a touch?

Richard, as I mentioned before, by and large, prices are not coming down yet.

Right.

But like always, there's certain spots where we can find something attractive. And that's what you saw in the quarter.

You know,I think, Bob, what's playing out here is what we would -- you know, kind of what we've been planning for and positioning the Company for, is that when those pockets of opportunity do present themselves, we can move aggressively.

Okay. Europe. Can you give a net income number, any kind of idea of what your contribution to the bottom line you're getting out of Europe?

We don't give a net income number, but, I think, Bob, if you look into the 10K, we did expand our disclosure around Europe and break the revenues out, which are in the 15% range for Europe, as noted in the -- in the "K." So, it's a growing and a larger -- a very important part of our overall business. But we haven't moved down to breaking out the net income numbers.

I know you'd like to make an acquisition there if you could, I think you've said in the past. Is there, are you seeing any opportunities? Are you feeling like, I mean, you know - Are you hopeful that you're going a, you know, some type of a material acquisition in Europe this year?

Well, there are small opportunities that we've taken advantage of and [inaudible] been successful at in the last year or two, but nothing of huge size has been for sale. We've always interested in making acquisitions. That's not just Europe. That's in the U.S., in terms of the fleet. Because anything that leverages our infrastructure as far as a fleet acquisition is a great thing. So, yes, we will always pursue that to the extent that we can.

Okay. And last question, you know, obviously your leverage is still, you know, with the buyback, even with the buyback, extremely low and I know it's not your goal to have leverage at that level. You know, any, any thoughts on what, you know, today with the right leverage is for you and what your plans are to, you know, maybe have a more optimal capital structure for shareholders?

Well, as we've said before, I think as we move through the buyback and move through the investment activity that we planned this year, kind of moving back into the range, where we were, you know, even pre-the air sale, which was, you know, the low 3's, you know 3.2, 3.3 to 1, that -- that's feasible, you know, in very -- and that would be desirable right now. Longer term, one of the reasons we like the credit rating where it's at is we believe we would have upside potential from that, given the right investment, so, you know, moving up from there. But, you know, clearly with leverage of 2.5 to 1 at the end of the first quarter, clearly we have work ahead of us to move back to where we were pre-the air sale and we expect to get there for now.

Thanks, congratulations. Nice job.

Thanks.

Your next question comes from Bob Cohen.

Did you mean Michael Cohen?

Sounds like it.

That will work! [ laughter ]

I'm sorry. Could you talk about sort of the dynamics of the, you know, sort of the economic drivers of your business and what I mean by that is obviously, you know, the economy can go through cycles, but, you know, you can operate in segments in the market that are less cyclical. Can you talk about sort of what to think about that over time and how we, as investors, should think about that?

Well, what we've been trying to do --

And the volatility of such.

Yes, I mean, obviously, we're in very cyclical markets across rail and marine and equipment leasing. And, what we try to do -- we can't predict when the cycle changes. As I've always said, I can't predict where we are in the cycle with great accuracy, there's all kind of economists that can do that - or can't. But what we look at and you see it actually in our press release every quarter, there is a number of broad indicators, like manufacturing, [inaudible] and car loading, which are all down in the latest quarter. What we really look at are more specific indicators in our fleet, in the markets that we operate in - the commodity markets. And an example of how we think about it is we, it appears that we were approaching the peak, and I've said that over the last year. In terms of some of the indicators and how our fleet is behaving. What we try to do strategically is extend our lease term dramatically. And we've been successful there. And be a little more careful about how we invest in the spot market. And we've tried to improve our balance sheet and have been successful there so that when the market does turn, we can take advantage of that. As Bob just eluded to, and one of the reasons that's important, is the last time we went into a downturn, we were levered at 6:1, couldn't take advantage of some of those opportunities, this time I feel a whole lot better about where we are from the balance sheet perspective and from a fleet perspective. So, we try to just be smart about the cycles and how we manage our assets.

Would you guys look -- clearly obviously, you know, you talked about some fairly favorable maybe demographics is not the right word, but industry characteristics or secular characteristics in Europe. Would you be inclined to sort of over -- you know, invest more heavily in Europe over the next three to four years than the U.S.?

Yes, that's a great question. It's one I've actually eluded to the last couple of quarters. Where, you know, it's a lot smaller fleet over there than the U.S. So, maybe total investment dollars may not be as large as the U.S., but certainly on a percentage basis it's getting higher. And, if I look at opportunities in the U.S. rail market versus the European rail market, they've been more attractive in Europe on, for instance, the spread over our cost of capital over the last year. So, the answer to that is yes. And, I think you will see that and you're seeing that in some of our numbers. Our investment numbers.

Is the competitive environment there different than the U.S.? I mean, are there very sophisticated competitors there, as well? Who would you identify as your competitors there and such?

Well, it is - the biggest railcar lessor in Europe is VTG. But there's a variety of very less sophisticated lessors over there, and there are new people looking at entering into the market. It's very competitive. I don't know that it's quite as competitive at the U.S., but still very competitive. But in general, if I look out over -- since I've really been looking at this market, generally the lease rates in it relation to car cost have been more attractive over there. And now we're starting, we're starting to see car costs go up a little bit over there as the market grows and manufacturing capacity gets a little tighter, but lease rates are also increasing. So, in general, it's been better dynamics over there than it has been in the U.S. lately.

Great. That's really helpful color commentary. And then, I guess, the last question, you know, sort of cycling back really to the first part of my question, is there, how do you think of about sort of trade flows and things like that? I mean, is there, are there any secular dynamics to this rebound that you think may make sort of a trough not quite as deep as it was in the past aside the [inaudible] actions you've taken in your own book?

Well, you know, if you take Europe, for example, and you look at manufacturing -- well, the same is true in the U.S. Manufacturing as it goes overseas has changed traffic flows and it's made the intermodal market very strong in Europe, for instance. And we're very well positioned to take advantage of that and we are. And that's one of the reasons our European business is so profitable. As far as whether the cycle will be as deep, I think that's going to be, you know, once again it's going to be how we manage our fleet. And that's why we've tried to push out lease terms so dramatically in the last year or two as those leases come up for renewal. So, if we do that right, it shouldn't be as volatile as it's been in the past.

Great, thank you.

Your next question comes from Art Hatfield.

Good morning, guys. This is actually Logan Stevens in for Art. Just wanted to get an update on the ethanol market. Are you using the same level of demand you were seeing in the last three or six months ago or have you seen any cooling in that?

Overall, our view of the ethanol market is consistent with what we've been talking about the past few quarters. But there has been some delays in ethanol plants coming online. Overall, the outlook for that is still very strong. One of the things we've talked about and we're continuing to do, though, is to maintain a very disciplined approach to this market. We're certainly participating in it, but only about 5% of our fleet can carry ethanol and of that, we only have about half of it currently in ethanol service. So, we're going to continue to look for those opportunities and they're going to continue to exist ,but we're going to maintain that discipline.

The other thing we've done, Logan, too, is where we have put cars into that service, we've really tried to focus those on the biggest, strongest players for the long haul. There is no shortage of smaller companies out there that we could be leasing cars to. But we're really opting to skew our mix toward the bigger players.

Right. Okay. Great. And then I don't know if you'll have this in front of you, but do you know how many turns you get on your ethanol car in a given month?

Not exactly. Overall, 10 cars do something like 80 year and ethanol would be probably a little bit better than that. But we don't maintain those statistics on a detailed level.

All right, great. Thank you, guys.

Your next question comes from [Pax Rossum].

Hi, there, thanks. A solid quarter in, you know, seeing kind of strong pricing increases and, you know, your ability to extend out lease terms. I was wondering if you could comment a little more on kind of competitive pressures in rail here domestically.

I'm not sure I understand the thrust of your question?

I guess the thrust is just wondering kind of the extent to which you feel, you know, there is a pretty heavily competitive environment here in the U.S. -- you're still able to increase prices and extend out terms on the leases. So, kind of wondering how much you see [inaudible] pressure and whether you can comment at a more granular level on where the prizes are by car type?

Oh, certainly, okay. As I mentioned, things are still very strong in tank cars. The demand there is driven by two things, primarily. One is the replacement cycle, which will continue to be strong for quite some time and the other is ethanol. And as we mentioned, even though there might be a little pause in that because of some of the delays on the plants coming online, long-term, we still see that being quite strong. What you're seeing on the freight car side is some specific areas where we are seeing some softening and Brian talked about that and we've talked about that for the past few quarters. The biggest one is in the fourth products area. That's primarily related to housing. And we probably won't see that part of it pick up until you see housing pick up. Another one you're seeing some short-term softening, and we think, is in the coal market. Primarily related to some capacity constraints in the Powder River basin and some speculation of cars that was done in the industry. But that should resolve itself, we'd think, in the next couple years.

That's helpful. And I guess kind of following on that, what do you think, perhaps, the extent to which you kind of remain robust in some of the "hotter markets" like ethanol, is due as much to kind of constraints and just getting cars out of the factories as it is to kind of the existing fleet?

Obviously, they're very closely related. The fact that new cars and those markets aren't as plentiful obviously helps the existing car portfolio. And so the inner relationship between the two matters and in ethanol and in tank cars, we see that continuing for a while.

Thank you very much.

Keisha?

Your next question comes from Kent Mortensen.

My question's been asked. Thank you.

Thank you.

Your next question comes from Darius Braun.

Hi, guys. Very good quarter. I just had a couple of housekeeping questions. What was the share count at the end of the quarter?

As you can see we have the average there because you're going to have to start with the ones we had at the beginning of the quarter. So, we've got the average share counts at $52 million outstanding. And then if you want to do the shares and equivalents, it's 59. I mean basically how you get there is you start with the 62 that we had in the fourth quarter. You have to -- on the fully diluted basis. You take out the 5 of the sort of quote unquote phantom shares, that were related to the convertible. And then add back 1 for the premium that will be paid out in shares over the convertible. As I said in my opening remarks, we did about 2 million shares in the buyback. So, that gets you down around, somewhere around 54. And that still includes that additional convertible that we have, that the first opportunity to call it is in 2008.

Okay. And then next question, on the utilization rate, was that down primarily because of when cars were added in the quarter?

No, the primary driver of that is a couple of the car types that we talked about on the previous question. Primarily fourth product center beams which carry lumber and a then little bit on the coal side.

Do you expect that utilization rate to tick back up? Or is it in a stable place now or going down?

Darrius, in general, it's -- you know, 98 percent -- you know, that's very robust and healthy number. It's hard to predict. But, you know, anything in the level is very strong.

Okay, but you wouldn't expect it to have a material impact on something like maintenance expense, for example.

No.

Okay, great, thank you.

Your next question comes from John Hecht.

Real quick follow up question, guys, related to ASC. I understand there with a large weather impact in Q1. Going forward, do you guys see any changes in daily rates or have those been pretty consistent over the past few quarters?

Generally they've been pretty consistent. Our outlook for the full year for ASC is positive. The end of the 2006 season, there was buildup in ore inventories on the Great Lakes. So, the season got off a little bit slower than -- you know, the January activity was a little bit slower than anticipated. We're watching how that plays out. But in general, what we see from customers and what we see on the demand side is very positive for the full year.

Thanks very much.

Your next question comes from Nick Elfner.

A few questions. I think you answered your commitment to invest in grade ratings. Is that correct?

Yes, we're BBB+ , BAA 1right now which is a very good spot and where we want to

And just to, just to clarify, when we have not been below an investment grade rating at all. We were at BBB- a couple of years ago.

Do you think you could run your business in a cost-effective manner, utilizing the secured markets as opposed to, you know, without benefit of unsecured funding?

It certainly limits your flexibility in managing your fleet. So, you could do it, but it's much more difficult. You couldn't run it as profitably that way.

For example, a lot of the cars that we sold last year, this year, which is just very good, proactive fleet management, to -- to reduce the volatility of the business going forward, you know, if a lot of those cars weren't incumbered, you have a very big challenge on your hands in terms of trying to manage that fleet. And also the more you secure, the less you can do on the unsecured side and to the extent big opportunities come our way in a down market, you want to be able to move very aggressively. And if you securitize, you know, the entire business, you're going to limit your ability to do that.

Okay. Have you provided any CapEx or free cash flow guidance this year, next year? Could you give me a feeling for where to expect run rate numbers on those two metrics to be?

We haven't on cash flow numbers. You can kind of look at where last year came out. All fully laid out in the "K." And get some sense for, you know, where it's been the last few years. Cash flow remains very strong. On the CapEx side, you know, last year we did about $760 million of total investment, but keep in mind, $127 of that was for the acquisition of the vessels at American Steamship. So, that's -- that would no occur again. So, when you kind of back that one out, you look at investment volume last year and the $630 million range and we would hope to do that or expect to do that or, you know, materially better this year.

And just perhaps lastly, it is cyclical business, but with the lease extensions to sort of 72 months on average, it looks like on the real side and some of the kind of 19% increase, it would seem like you can manage that cyclicality and I hate to bring this up, but there is sort of chatter and [inaudible] screens on the street and I just wondering if you think your business would be attractive given the cash flow characteristics and some of the volatility-reducing measures you've put in place. Could you sort of address that, to the extent you can?

Sure, what do you want me to say? You know, we run the business to maximize the value of the fleet. And generally don't concern ourselves with that.

So, you still view this as a fairly cyclical business on the rail side?

Well, it depends on how long the cycles are. I mean, what we've done is extend the lease terms out dramatically. That should dampen the volatility. But if there was a recession that lasted long enough it would be reflected in our fleet. But the idea is to take advantage of the high points in the market to extend leases as long as possible. That's what we've been trying to do. And invest very aggressively in a more counter cyclical philosophy.

Thank you.

Your next question comes from Dan Kirk.

Good morning, guys. Great quarter. Do you guys track the potential current market value of your rail fleet versus, you know, the depreciated on the book value? If my back of the envelope math works, I get about 25,000 per car. Is that right?

We don't -- we don't track that in terms of, you know, looking at a mark-to-market type philosophy or what the whole fleet could go out at. You know, the fleet value and where current market values are for those cars is largely reflected in the lease rate increases we're picking up. It flows through in that, through that avenue. But, no, we don't -- I don't have a handbook here that lays everything out on that format.

The other thing I've said in past quarters, I mean, because we do get that question a lot is we've also said we're very careful about investing at those spot market values in today's market because they don't make a lot of sense in some cases. So, that market price, even if you were to do that calculation, isn't, really isn't that relevant to us.

Okay, and just, can you remind me what the, what is the average new price for cars, as most represented by your fleet mix?

Yes, as I mentioned, it's a real, real big range but we've been talking on the this call about numbers between $90 to $100,000 and that's reasonable.

Okay, and so just, you know, kind of getting back to the math, if your used -- the used fleet is being valued around $25,000, obviously the spa price is volatile, but, you know, is 25 to 30% for a used car, you know, typical as a discount to a new car?

It depends on how old the car is.

But obviously, you know, you guys put a lot of maintenance and work into the cars, correct?

Yeah, exactly. Which is why, you know, for -- if you want to look at the curve of a value of a car, and Tom, you can jump in, for the first full of years -- the utility is is the same, there's not a lot of maintenance, the price doesn't go down dramatically. And, as you just eluded to, as the car gets a little older and maintenance becomes a higher percentage of your operating expenses, you get an impact on the value. So, there is an ebb and flow, but, you know, in general, the utility is pretty much the same for a while. And, there's not that much difference for a long time. But, if you have a 30-year-old car that's nearing the end of its life, it's going to be, obviously, a fraction of the new car cost, so it depends on where you are in the curve.

Okay, great. Thanks and again great quarter.

Thank you.

There are no further questions at this time.

All right, thanks, everyone. And I will be around all afternoon if you have any additional questions.

This concludes today's conference call.