Rush Enterprises Inc (RUSHB) 2004 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your Quarter One 2004, Rush Enterprises, Incorporated Earnings Conference Call. My name is Liz and I will be your coordinator for today.

At this time all participants are in a listen-only mode. We will have (INAUDIBLE) facilitating a question and answer session towards the end of the conference.

If at any time during the conference, you require assistance, simply key star followed by zero. And then operator will be happy to assist you.

As a reminder this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call Mr. Marvin Rush, Chairman and CEO.

Please proceed, sir.

Good morning and welcome to our first-quarter 2004 earnings release conference call. On the call with me are Rusty Rush, President and COO, Marty Naegelin, Senior Vice President and CFO, John Hiltabiddle, Controller, Rush Enterprises; Steve Keller, Director of Finance and Jay Hazelwood (ph), Vice President of Financial Controls for Rush equipment centers.

Now Marty Naegelin will say a few words regarding forward-looking statements.

Certain statements we'll make today are considered forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements.

The factors that could cause our actual results to differ materially from those expressed, or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended December 31, 2003, and in our other various filings with the Securities and Exchange Commission.

We'd now like to give you an update on several key issues.

First-quarter results.

Revenues for the quarter increased 44 percent to 229,900,000, versus 159,600,000 last year. Income from continuing operations for the quarter was 2,100,000 or 13 cents per diluted share, compared to 900,000, or six cents per diluted share last year's first quarter.

Our Truck operations.

Rush delivered 999 new heavy-duty trucks, 327 medium-duty trucks, and 775 used trucks during the first quarter of 2004, compared to 637 new heavy-duty trucks - excuse me - 151 new medium-duty trucks, and 519 used trucks for the same period last year. This quarter's numbers demonstrate the upturn in demand that we predicted last year.

This quarter's numbers demonstrate the upturn in demand that we - excuse me, I already read that. This quarter's numbers demonstrates the upturn in demand that we predicted and is finally here and that Rush is clearly benefiting from it.

Last year the industry sold approximately a 145,000 Class 8 trucks in the U.S. This year the industry projects to sell 186,000, with demand continuing to grow in the next three years, at least. In 2006, industry projections are sales of 230,000 Class 8 trucks.

As you know, we have an ambitious goal of selling 10,000 new, heavy and medium-duty trucks in 2006. However considering our first-quarter truck sales and recent truck order activity, one we believe is achievable.

Class 8 sales for this quarter were up 57 percent, and sales of medium-duty trucks were up 117 percent, which demonstrates our success in penetrating this significant market. We continue to expand our medium-duty presence by adding additional franchise to most of the locations.

Equally important is our performance in our parts, service and body-shop operations, which carries high margins and grew a significant 23.6 percent for the quarter to 63,400,000.

We also set a goal in 2006 for 100 percent absorption rate. This profitable yardstick will be a major contributor to the bottom line performance in the coming years. Our absorption rate increased from 88.7 for the first quarter of 2003, to 90.2 for the first quarter of 2004.

Same store sales - same store SG&A expenses increased 16.2 percent for the quarter to $34,600,000, primarily as a result of the increased commissions, resulting from increased truck sales. SG&A as a percentage of sales is down from 18.9, in the first quarter of 2003 to 15 percent in the first quarter of 2004.

Let's talk about the construction equipment business a little bit. The industry as a whole sold 18,304 new construction equipment units for the year, compared to 12,375 last year. And expects to sell approximately 64,500 for the balance of 2004.

In our first quarter of 2004 this segment recorded revenues of 10,500,000, versus 8,600,000, last year. John Deere's market share in the company's area of operation increased from 14.3 percent in 2003, to 17.9 percent in 2004. Market share is calculated using dealer sales and rentals, as well as direct sales from the manufacturer.

Talk about capital expenditures. For the quarter our CAPEX was $8,000,000. About 4,000,000 was for the replacement of the corporate aircraft, a 1,500,000 was for the routine maintenance and 1,000,000 was purchase for leasing trucks. The balance was used for purchasing dealership property and remodeling existing facilities.

Talk about forward-looking things a little bit. We continue to be bullish about the future of our business and our ability to take advantage of the improving economic climbing to which we have prepared so thoroughly. We expect demand to remain high as the industry continues to expand and as the replacement cycle continues to flourish, making up for the fact that we were simply - there were simply too few units sold in the last few years.

We also will continue to pursue external growth through acquisitions, while we invest in expanding our existing dealerships and add franchises to our medium-duty dealer network.

We are now proud to answer any questions you may have.

Operator, please review the procedure for asking questions.

Ladies and gentlemen, at this time, if you wish to ask a question or make a comment, please key star followed by 1 on your touch-tone telephone. If you wish to withdraw yourself from the queue, please key star followed by 2.

Please hold while I compile the list of questions.

Your first question comes from John Mcginty of Credit Suisse First Boston. Please go ahead, sir.

Good morning, Marvin. Good morning, guys.

Good morning, John.

Marvin, you talked a couple of times about adding franchises to the medium - on the medium-side. Can you talk about what you're adding where, give us some idea of the, you know, size, order of magnitude of that?

Yes, John, this is Rusty, I'll speak to that.

Hey, Rusty.

We've thought - since the first quarter of last year, we have added basically 14 medium-duty franchises - pretty much scattered through our whole network. I mean, there's - wherever we find that it makes sense to put it in line with our existing, of course, Peterbilt franchise, which we have everywhere.

Most of them are of the GMC and Hino brands currently and also UD. We're trying to build out what looks like a nice package to get us a full, a thorough penetration in the full Class 4 through 7 market, not just the 7, 6 but also the 4 and the 5 end.

So you'll have the Peterbilt medium in each of the Peterbilt heavy franchises?

Definitely, it's still our leading medium-duty seller there's no question at the moment. But we're trying to build out, so we can build out into that small - into the Class 6 through 4. The 4 through 6 range, which they really don't service currently.

Okay. And could you talk about availability. Are you all having trouble getting trucks? What's the situation there?

Well that is - obviously, since you're very astute in that. Looking at where bill rates are and what order intake is. Even if they continue to ramp-up bill rates at all manufacturers, it does become an issue. But we will, I'm sure get our fair share of that or better, we hope, as we move forward with all manufacturers - you know, we'll continue - it's a continual battle.

But I think, you know, you've got to look at what's available for manufacturers to build. What capacity rates are, this year? And probably the real hold will be your second and third tier suppliers. We won't be doing anything that will cramp the ramp-up in build rates, as we go forward. But manufacturers are ramping up build rates to meet the increasing demand.

But what is Rush doing? Are you saying, "Okay, we think it's going to get tight, so we're going to go out and be more aggressive in what we're ordering - maybe order a little bit more than we would, just in case." Or what's your thought process?

Well, you got to remember the mix of our sales, John. Seventy-five percent of what we sell is pre-sold. It's not sold off the yard, out of stock. We have a very strong, large customer base throughout the United States. So that's one of the things that insulated us during the downtimes when many - well, the majority 80 percent of your dealers lost money in '01.

Right.

But we didn't have that issue, because our customer base is strong and consistent. So I would tell you that our stock inventories right now are approaching almost double what they were a year ago. So we've taken care of the stock issue, we believe. And we're continuing to push to take care of our customer base, as we pre-sell sold orders.

Great, I'll get back in queue. Let somebody else have a turn.

Thanks.

Your next question comes from the line of George Neswald (ph) of Bear Stearns. Please go ahead.

Hey guys, its Peter Neswald (ph). Can you talk a little bit about gross margins? It's looks like they were down year-over-year. What was driving that and what do you expect going forward?

Well, gross margins from the truck line, yes, were down by about a half a point I believe from the first quarter of last year. But you got to remember they were up from where we were in the fourth quarter. So a lot of that has to do with mix of business.

We really just - and got our stock inventories increased here in the month of March. So as we go forward, hopefully we'll be able to increase those margins - margins, back to the levels of last year's first quarter.

We were a little short in inventory at the first of the year. But we ramped up considerably at the end of the first quarter. So our mix of business, even though it's increasing, we're hoping to continue to sell more stock trucks, which carry a higher margin percentage with them.

As our mix of business changes, as a lot of our niche markets come on line, which we see happening, is it continues to grow. Remember there's a lot of - a lot of over-the-road business in these numbers currently.

But as our oilfields service business comes on line, as our construction business, as our concrete mixer business, and as our garbage packer business, we think we will start increasing later this year, but overall, those mixes of business tend to drive your margins up a little. Especially the stock sales side of it. That's the highest margin.

Okay. And I guess, as a follow-up question, to John's question. What kind of order lead-times are you seeing right now at Peterbilt? And how does that compare to about four months ago?

Dramatically different. I would tell you, lead-time right now is in the 120-day range whereas before it was in the 60 to 75-day range.

Okay.

But, you know, I look for manufacturers to meet this demand by increasing build rates, as we continue increasing build rates throughout the year, as long as the stability and the increase in the orders stays there.

And where are you seeing the biggest improvement in demand? Is it owner-operators, regional fleets or, you know, maybe selective national carriers.

I'll tell you it's across the board. Okay, I really can't, and I'm not trying to dodge your question. But I see the demand strong across the board in all sectors.

Okay. And I want to ask one last question. Do you see any impact, as far as equipment orders go from things like, hours of service, or driver shortages? You know, are the customers talking about that at all, when placing orders? Is that driving anything?

It's driving some. I'll tell you what. It's still the same story we've been saying for about the last six to eight months. The leader in this cycle of upturn, and the upturn in sales is the replacement issue. You have got to look back and realize that over the last three years, we've been running to what, at an average of U.S. retail sales of about 145,000.

And we've cleansed out the used truck overflow that we had back in 2000-2001. And normal, in our opinion, normal replacement cycles should run in the 175,000 to 185,000 units per year just to meet normal replacement cycle.

We know that freight carriers are capacity constrained right at the moment. That's why you see a lot of these big 30,000 plus three months running net order intakes, at the Class 8 level. And I'm telling you that's just replacement cycle.

We have yet to see the expansion purchase because of, freight tonnage being up. And then looming on the horizon, of course is our emissions issue that we'll have to deal with in the first of '07.

Okay. Thanks for the time.

Your next question comes from the line of Andy Casey of Prudential Equity Group.

Please go ahead.

Thank you, good morning.

Good morning.

I guess three follow-up questions, the first two on truck, and then one on construction equipment.

On oilfield services, are you seeing any improvement in demand? I think you referred to it as improving in the back half of last year.

Actually, it's improving go ahead. Do you want to run all three, or do you want me to take them one at a time?

No, take them one at a time. That's fine.

It is improving. Is it where it has been at its heights? No. Is it better than it was last year? Yes. So, yes, it is improving and we do believe that sector of the business will continue to improve.

Okay, great.

Second half of the year.

Okay, then on trucks, have you noticed any hesitancy in the purchasers, as a result of the, kind of, diesel fuel issues that are going on right now, in terms of price increases?

Currently I have not seen that. But, you know, that's always looming there and we're always watching, and being – we are very intent, and watch it carefully. But so far, it doesn't seem to have hampered the demand that's out there. But, you know, that's always an issue we'll have to deal with if we can't get a handle on these fuel prices.

Okay. And I guess one more on truck and then on construction. The lead-times that you referred to, at a 120 versus roughly 60.

Yes, we're not saying it's a 120, it could be 100 to 120.

Sure.

Depends on the specifications of the equipment.

Sure. How quickly do you think manufacturers are going to go to double shifts?

I think they're doing it as we sit here.

Okay.

They're all - they're at the drawing board as we sit here right now.

Okay. And then on construction equipment. Have the lead-times increased in a similar fashion to what you described on trucks?

Yes - this is Marty Naegelin, by the way. Yes they have. The average lead-time range is anywhere from say, 60 to 75 days. Whereas previous, it was, you know, very easy to get equipment. No different really. Lead-times maybe changed a little bit, you know relative to the truck business. But anybody that wants to get equipment today is having to scrounge and search for it if they need it immediately.

Okay, thank you very much.

All right.

Your next question comes from the line of Tom Albrecht of BBT. Please go ahead.

Hey, good morning, guys. Several different questions here. First off, Rusty, how do you measure, I guess capacity growth, versus replacement trucks. I mean what tells you that trucks are replacements versus capacity? I mean, is there a certain metric you look at? Or is it just based upon all your years of experience?

I tell you, it's based more on my years of experience and my close communication with customers, okay?

Right.

It's - you know, I'm not far off from the customer base, trust me. I'm a very customer oriented person. And I stay in contact. In fact I was with probably three of your, top 50 - your top 50 carriers in the last two weeks. So, you know, we're pretty close to the customer base. So I'd tell you it's more of that.

Plus there hadn't been any purchases. They just haven't purchased, and they've stretched those life cycles out. And they have that - equipment's costing more money. And their customers are having to, you know, overhaul engines and do things that they haven't had to do in the past.

So you just see it by maybe some of your shop mix, you know. Things that are just going on all around me. And basically, just, you know, those are the answers. Your experience, plus being in close contact with your customer base.

Sure, okay. And then, you know, on the owner-operators, I would assume most of those are more the stock purchases, as opposed to buying ahead of time.

Right.

Now there's a lot of talk and speculation about, you know, capacity coming back into the industry, in there. I'm just wondering how vibrant that business is. It goes to that owner-operator, the guy that owns five trucks or less.

Right. I would say that that part, or piece of the business, we've mentioned here over the last few months, has been picking up steadily. You know, your owner-operator got hit severely. Because the owner-operator in our opinion- the owner-operator - the definition of an owner-operator compared to 20 years ago - 15/20 years ago and today, is a total different breed.

In those days, an owner-operator went out and secured his own loads, did everything else. Now he's leased onto one of your major carriers. And is basically the variable piece of componentry in their equation.

So we have seen sales, you know, up 60 to 100 percent over the last couple - on a month-by-month basis, compared to where they were a year ago. So that is the variable piece. That is the guy that probably may have gone out of business in 2000-2001.

He became a driver and now he's saved up money. And as the capacity is increasing, you see a lot of your - you have a lot of your large carriers adding on to their owner-operator group. And so he goes out and purchases himself a piece of equipment and the lease is on.

Okay, yes, that's good color. And then, lastly - I think it's probably a little bit more of a fact of the trailers - but, you know, with high steel prices in there, I'm just curious what your customers might be saying, in response if prices go up with steel on that. And I think Freightliner had a $500 surcharge last week, for example.

So any color you can provide there would be useful.

Well, from the fuel - I mean the steel surcharge is a real issue. And I know Freightliner and other OEMs are looking at it currently also, as far as the surcharge. The fuel thing, in fact this morning, when I was heading in, I heard about the airlines adding on a fuel surcharge and raising that on ticket prices this - yesterday.

So I think our, the customer base, though - they've been able to get some rate increases, as we know, over the last year. And I would expect customers, after what we went through a couple of years ago, when fuel was up, you know, they're used to - used to the fuel - they're, should I say, conditions softens the fuel surcharges.

And we all realize they're real and out there. So as long as the consumer will accept it with the demand that's out there, it'll be passed on - hopefully be a pass-on through and won't affect folks' bottom lines.

Yes and I guess, really what I was asking was, with truck prices likely to go up, have any of your carrier customers expressed concern, that, "Oh, at some point, we're not going to be interested in paying more, because, even if it's legitimate with steel, I'm not thinking about the fuel surcharge so much as their view towards truck prices.

I have not seen that, you know, and I have not heard that yet. So that would indicate to me that they have been able to pass the rising cost of equipment on through, currently. Now if it continues, you know, only the future will know about that answer.

Sure. Okay, good. Thanks very much.

Welcome.

Your next question comes from the line of Doug Col of Morgan Keegan.

Please go ahead.

Good morning, everybody.

Good morning, Doug.

Hey, the used truck number was really strong. Can you talk about that a little bit? And is some of that related to the increase in medium-duty - what's the typical buyer like there, and what is he doing with his old truck?

Doug, it's interesting you asked that question. Most of that demand was driven by - there is a huge - most of that was driven by huge demand out there in that second and third tier marketplace.

And the medium-duty is going to be a growing piece of it. In fact we've just really, as we kicked off the new side of our medium-duty efforts about a year ago. We're in the process of kicking off the used here over the last 60 days by, you know, focusing our sales people on medium-duty used truck sales.

So that's going to be a bigger component as we go forward. I can't tell you that it has been in the first-quarter results. The first-quarter results were just driven by strong demand.

It is very, very hard to find equipment right now - used, good used equipment, to sell into that secondary market. So we've got three buyers that do nothing but go out looking across the country for used equipment. In fact keeping inventory levels up is going to be a very large issue, as we go forward.

You've got to remember that the last three years, you know, as we talked about it, we're talking about, you know, replacement purchases on the new side. It also has had a large dampening effect on availability of used equipment.

You know, 145,000 compared to say, 250,000 that we were running in the late nineties. Obviously it's a supply and demand issue. So three years later, you don't have a supply out in the field.

So it's driven prices up and it's been, met, you know, there is very little supply - supply side is very short. So that continues to drive the prices up. But we're doing our best to make sure to keep our levels up because the demand is there.

So, Marty, were the margins up nicely on the used trucks year-over-year, the gross margins, do you have those?

They basically held even Doug.

I would tell you they held even. We look for them to hopefully go up from a percentage basis, Doug. But, we had a pretty good first quarter last year in used from a margin percept, from a margin on the used side last year.

Okay. Just on the Class 8 side for a moment. A lot of the larger carriers over the last couple of years - there seems to be more of a willingness to operate, you know, multiple brands throughout their fleet, and they don't seem as tied to one vendor these days. Has that given you guys an opportunity to make sales calls to fleets you might not have gotten a return call from, in the past.

There is no question about that, Doug. I mean, we're not --.

Can you share any of your successes or is that --.

I prefer not to get into the specifics of customer names, if I could.

Did you had some new fleet customers in the last couple of quarters?

Yes. The answer to your question is yes.

Names, we'd all know about, if you told us.

You would all know about if I talked about. We just want to be - we want to be in and have a piece of their business, Doug. I don't want 100 percent of their business. It's a little large for us to handle 100 percent.

But based upon the fact of what happened to them and after the late-night boom of the late nineties being tied to one manufacturer, who really drove a false market into the - you know, false purchases into the market in the late nineties.

And then they got caught with, you know, with the buyback game that was going on. And some people backed off of their residual guarantees and they would stretch out life cycle cost. They want to have a little better control of their own destiny.

Do you sense that there're still some carriers out there that will buy Peterbilt because of the value of the brand. You know, in a tough driver market like, we've got at the moment, will you pick up some business there, because you know, some of the older, more experienced drivers like the Peterbilt?

No question. No question. That will be a big - you know, that's one of our main selling points when we talk, you know. So when there is no driver shortage like the last couple of years, that part, you know, goes out of your selling equation. But now that we're getting in with the driver shortage issue that's out there, that can become - is becoming a much larger component of our sales equation.

Okay. And the final one, just on the finance line, maybe for Marty. You know, a little bit of growth there, year-over-year, as your unit volumes start to grow again. What's going to - how should we model for that, going forward? What's the profile of this medium-duty buyer? How does he pay for his truck?

How does he - I mean, the fleet sales, you know, those guys aren't going to, you know, finance anything for you. But what about the used guy buying one or two medium-duty trucks?

Hey, Doug, you might get a little bit of a bump on the medium. But you're not going to get a tremendous bump on the medium. Most of those medium guys have - are local business people that have relationships with financial institutions that lend on asset basis.

Most of our finance comes from, you know, flat rate (ph) type environment where guys always breakdown on the highway. I'm not saying you are not going to get some; we do get a little bit. But you're not going to see an explosion in (indiscernible) income just because of a medium-duty presence.

More of your increase in that item is going to come as a result of the increased stock sales on the flat base side. And so it's going to pick up in the next several months. We expect a pretty good summer. It didn't double or anything, but it'll be a pretty strong summer for us, I expect.

Okay. Thanks for everything.

As a reminder, ladies and gentlemen, it is star 1 to ask a question.

And your next question is a follow-up from John Mcginty from Credit Suisse First Boston. Please go ahead.

Hi. Back on used again, just the fact that used demand is up, used prices should be up significantly. The fact that margins aren't up, is that because you're having to go out and buy used trucks? I mean one would assume that the margins should be going up with the tight availability and I assume better prices.

Well, I would agree and I think that's a pretty good observation, John, that we have had to go out maybe, and pay a little more money ourselves because the market's up and your customer base is continually watching when they're trading something in. You may make a transaction - do a transaction with a customer and 90 days later, margins, you know, prices are up.

So either you are going to raise what you're going to give him for that piece of equipment, or he's going to sell it to somebody else and not trade it to you.

So that has had a dampening effect, as far as the margins rising. And one of the reasons they were flat with the first quarter of last year, because the purchases and that rising market, and your customer base is much more intelligent, maybe, than they were 20 years ago, and keep their finger right on the pulse of those used prices.

Well, speaking of intelligence, or a lack of it in pricing, have you seen any of your competitors that were doing the buybacks and guarantees and pricing? Has that totally disappeared in this market? I fear it hasn't. But I'm just - what do you see out there?

That's a pretty good fear. Because it hasn't. No, I'm going to tell you, probably more selective from some manufacturers than it was in the nineties. But it would be - it wouldn't be - I would not discount the fact that it is out there still. Okay? It is still a part of the business equation for some OEMs and customers.

Okay. And on steel, has Peterbilt said any - done anything yet? And what kind of guarantees - if they were to do something, have they guaranteed if you have orders that it doesn't go on that, or would it be after a certain date. Or what's the - I guess it has been a while, since they've ever had a - I don't ever remember there being a surcharge.

I - there hasn't been that I can remember in my 25 years in this industry. But I would say that anything that is in the order bank is protected. Okay.

Okay.

It's a forward-looking surcharge.

Right. On engines ACERT, cooled EGR any - I mean the standard Peterbilt line is - we love them all. They're all great. You guys seen anything? Anything different?

No. I would say that both - both technologies, as we talked about at your conference, back in February are performing, as projected a year ago. And I see nothing that shows any failure in the technology side of it. One of them, obviously EGR is old technology. But the ACERT technology is standing firm, as we go forward, living up to the expectations of Caterpillar.

Okay. On the construction side, your share is up, demand is up, margins, pricing - pricing is amazingly, in different parts of the country, still pretty tight, which is a little bizarre given the way demand is rising.

What was your margin experience on the construction side of the business, given on the one hand, better demand and a higher share, but what about it, with pricing and everything?

John, our margins are up. Our margins are better.

Okay.

All I can say is that there has been improvement in margins. Now remember last year, the margins deteriorated because manufacturers pressed through a nice price increase and Deere probably absorbed half of it.

Right.

We're probably getting some of that back now.

But isn't Deere - didn't Deere just put in - isn't Deere just putting in this week a steel surcharge on construction equipment?

Three percent.

As of when?

As of just recently.

With price protection or effective immediately?

Yes, with price protection.

With price protection. And what is your absorption rate? You talked about the 90 percent absorption rate on the - that I assume was the truck side or is that all Rush?

The truck side we talked about it being in the low 90 percent range. It was in fact, about 88 percent.

Okay. And one final question. It's kind of a, take a step back. You got out of part of the construction equipment business up in Michigan. Obviously a third of Deere's distribution is for sale. The question is, why keep a little piece of it? You know why wouldn't it be upper end? What's the logic?

I would tell you that —and I'll let Rusty address this after I I comment on it too. And Martin if he wants to. But I would tell you that, John, if we find doors that make sense for us to own in our geographic areas of response - you know, our lane (ph) that we currently have truck stores in. Not that they have to sit next to a truck store. Where it makes sense? Sure, we would expand the construction business.

If it were quasi-contiguous or at least contiguous to the truck side of the business.

Let's just say, if it made sense.

The majority of what they have for sale John, I think doesn't lineup with where we're at.

It sure as hell doesn't. Also it's no good, but that's a different issue.

Another issue to the cause.

Yes, but they make up for it with a high price.

That is not to be determined yet, John.

Yes, well, that's true. Thanks a lot, guys.

This is Marvin, John. I have got to say that I think they've figured out the retail business isn't all things of pleasure anymore.

Took them long enough.

Yes, and millions of dollars.

Can't have everything. Thanks.

Your next question comes from the line of Tom Albrecht of BBT. It is a follow-up question. Please go ahead, sir.

Hey, guys, just kind of thinking through the cycle a little bit more. And that is company drivers in some cases, begin to convert back to owner-operators.

How are you going to treat that from a credit perspective, if it was some money that defaulted on their payments a few years ago? Are they candidate to be a customer, or is there basically "no way Jose" for that type of individual?

No. This historic - if you look historically at this industry, they'll cycle through about five times during their lives.

Right.

So, no they will be treated if they've got us a good down payment. And you got to remember credit is loosening up. When I say that, I shouldn't say credit, but money is loosening up. The availability of money and players getting that back into this market are - you know, there's more of them. And I see more on a monthly basis getting back into the marketplace.

So, no, if a guy has a good down payment, just because he got in trouble in the last cycle - you know, remember, buying habits back in the late nineties got way out of line. If we will maintain a good credit practice, as far as buying, with a good down payment, and a right length of term, without putting a bunch of balloons on it, you can manage through the issue. You just can't go crazy like finance institutions did in the late nineties.

Right, yes, that - your answer kind of, supports my gut . But I appreciate the color you provided. Thank you.

You're welcome.

As a reminder, ladies and gentlemen, it is star 1 to ask a question.

You have no further questions in queue. Please go ahead.

Well, thank you very much for listening. We look forward to talking to you next quarter. If you've got any questions between now and then, please feel free to call any of us. Thanks a lot. Good luck. Bye-bye.

Ladies and gentlemen, that concludes today's presentation. We thank you for your participation. I'll ask that you disconnect your lines.