Rush Enterprises Inc (RUSHB) 2006 Q3 法說會逐字稿

(Call already in progress) -- Marty Naegelin, Senior Vice President and CFO; Steve Keller, Director of Finance; and [Jay Hazelwood], Controller of Rush Enterprises. Now Marty Naegelin would like to say a few words regarding forward-looking statements.

Good morning. Certain statements we will 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, 2005 and our other filings with the Securities and Exchange Commission.

Now we'd like to give you an update on our progress. Let's talk about the third-quarter results. In the third quarter of '06, the Company's gross revenues totaled $651.3 million, a 34.2% increase from gross revenues of $485.4 million reported in the same period last year. Net income for the quarter was $16.4 million or $0.65 per diluted share, a 22.6% increase compared to net income of $13.2 million or $0.53 per diluted share in last year's third quarter. As these numbers demonstrate, the third quarter shows that the trend of increasing demand continues.

Let's talk a little about the third-quarter results from the truck segment. Rush's truck segment recorded revenues of $625.5 million in the third quarter of '06 compared to $467.8 million in the third quarter of '05. The Company delivered 3,512 new heavy-duty trucks in the third quarter of '06 compared to 2,648 heavy-duty trucks in the same period of '05.

Revenue for Class 8 truck sales increased $106.4 million or 37.4% from $284.2 million in the third quarter of '05 to $390.6 million in the third quarter of '06. Gross profits from new Class 8 truck sales decreased from 7.1% in the third quarter of '05 to 6.6% in the third quarter of '06. The decrease in the gross margin is a result of delivering a higher number of fleet trucks in 2006 versus 2005.

We have moved aggressively to develop our medium-duty truck business and our efforts are showing results. In the third quarter of '06, 1,109 medium-duty trucks were sold versus 671 new medium-duty trucks in the same quarter last year. Revenue for medium-duty truck sales increased $20.7 million or 53.2% from $38.9 million in the third quarter of '05 to $59.6 million in the third quarter of '06.

Unit sales of used trucks increased 12.2% from 890 trucks in the third quarter of '05 to 999 trucks in the third quarter of '06. Revenue from used truck sales increased $8.3 million or 20.3% from $40.8 million in the third quarter of '05 to $49.2 million for third quarter of '06. Parts, service, and body shop sales increased 19.2% from $88.6 million in the third quarter of '05 to $105.6 million in the third quarter of '06.

Let's talk a little bit about the construction machinery business. The Company's construction equipment segment recorded revenues of $20.7 million in the third quarter of '06 compared to $14.2 million in the third quarter of '05. New and used construction equipment unit sales revenue increased 25.3% from $8.8 million in the third quarter of '05 to $10.9 million in third quarter of '06. Construction equipment parts, service, and body shop sales increased 16.2% from $3.7 million in the third quarter of '05 to $4.3 million in the third quarter of '06.

Let's talk about the industry outlook. Industry projections are for the North American new Class 8 truck sales to exceed 365,000 units in 2006. The pending emissions law change that will take effect in 2007 and a strong economy have been the primary drivers behind this record year. Industry projections in 2007 are that North American Class 8 truck sales should increase approximately 40% compared to 2006. We expect first-quarter deliveries to remain robust followed by weaker deliveries in the second and third quarter.

We believe the market will begin to rebound in the fourth quarter of '07 and will be followed by strong markets in 2008 and 2009 as customers purchase trucks in advance of even more stringent diesel engine emissions standards that will go in effect January 1, 2010.

As stated in the press release, we have worked hard to put Rush Enterprises into the best position possible heading into '07. We began increasing our new Class 8 truck inventory during the third quarter of '06 and expect to continue to increase it through the remainder of the year. We believe a large inventory of Class 8 trucks with engines manufactured before the new emission guidelines take effect will lead to a strong start in 2007.

Additionally, we've grown our medium-duty business across our network and we will still continue to focus on growing this facet of our business. Although industry medium-duty truck sales are expected to decrease approximately 15% in 2007, we expect to increase our medium-duty truck sales in 2007.

We also remain focused on increasing our absorption rate. The Company's absorption rate increased from 101.2 in the third quarter of '05 to 104.5 in the third quarter of '06. Through September '06 the Company's year-to-date absorption rate was 105% compared to 100.7% in the first nine months of '05. We expect to maintain or slightly increase our absorption rate in 2007 despite the decrease in Class 8 truck market while keeping our eye on our stated goal of achieving an absorption rate of 110% by 2008.

By continuing to grow our medium-duty business and remaining focused on increasing our absorption rate and properly managing Class 8 inventory levels heading into '07, we hope to soften the earnings impact that will result in fewer Class 8 trucks being sold in '07. We're now prepared to answer any questions you may have. Operator, please review the procedure for asking questions.

(OPERATOR INSTRUCTIONS). John [Barnes].

Nice quarter. Could you give us an idea of number of units in inventory right now in the Class 8 side and where you would like that number to be at year-end?

John, I think I'd approach it this way. Without getting into the exact details, I would hope that we could carry over an inventory that -- maybe 75 or 80% larger than what we carried into this year without getting into exact numbers, that would be some similar -- actual stock units. Now remember, there are also IPD -- what we call IPD, in process of delivery units that will carry over. But actually unsold trucks that have no customers' names on them, we would look to carry probably 75 to 80% more into '07 that we did in '06, okay?

Okay. And you think most of those will be exhausted by the end of the first quarter? Is that why you think you'll see the weaker Q2 and Q3?

Well, remember, there's two reasons really if you look at it. We're on the end of the food chain, remember. We're at the final transaction stage, so when you take that into account, we will probably carry a substantial amount of trucks that were built possibly in late November and December that do not get delivered in this year simply because they're getting rigged up, they're having bodies put on, going through whatever procedure they may have to go through to get to the end-user.

So there will be a slug of those trucks that we'll carry over along with those stock trucks. But I would hope that we would carry the stock trucks a little further than just the first quarter. I mean -- well, I guess I could say I could hope we sell them all in the first quarter. At the same point, I would anticipate having a little larger supply than that.

All right. As you look at the absorption rate, I know your stated goal is 110 by '08. Obviously I got very excited about the number you put up last quarter. I'm just kind of curious as to could you explain a little bit why we see this degree of fluctuation quarter-to-quarter? Is this normal or is the quarter being a little bit skewed by just the sheer amount of Class 8 trucks you sold this quarter?

That really doesn't have anything to do -- to be honest with you the Class 8 doesn't have much to do with the absorption. I would tell you that the little downtick we had -- you have to look. We had a couple holidays. Usually if you look back last year the second quarter was also larger than the third quarter. There was about a 3 point difference, if I'm not mistaken, or better last year between the second and the third. We've got one less working day in the third quarter, we had two holidays. You factor that in and we were off a little bit from the second quarter, nothing to be alarmed about or nothing that's not in line with something we didn't expect.

Okay, very good. And then lastly, as you look out -- you guys obviously have been very acquisitive over the years. When do you think the best valuations for additional properties are? Do you think you'll get some opportunity in '07 with this projected falloff in Class 8?

That's a good question. We'd hope to have that opportunity arise. At the same time, it has to fit into our model and there are certain areas we definitely would be looking at. From an acquisition perspective -- actually during the quarter we added another medium-duty deal in Denver, Colorado. And we'll continue to look on that medium side of the business regardless of what time in the cycle we're in, because they seem to make more sense regardless of where we are in the cycle from a pricing perspective.

Okay, very good. Guys, nice quarter. Thanks for your time.

Peter Nesvold.

I guess maybe looking ahead to fourth quarter, seasonally 4Q is usually down from third quarter in terms of earnings. We had the big emissions deadline January 1. Do you expect the -- you saw a lot of strength here in third quarter from some pre-buy sales it seems. Do you think the pre-buy fourth quarter, does that kind of subvert the usual seasonality or we listen to a lot of the TL Carrier conference calls and the LTL guys, too. You're seeing some mixed messages on freight, so does that completely counteract --?

I wouldn't say completely counteract, but as you know, absorption in the fourth quarter is less than the second and third historically. I would hope that it would be more in line with the third this year, but we'll see as the quarter unfolds. But the pre-buy will definitely help offset in the fourth quarter any downtick we would have from the absorption perspective.

Okay. I guess a couple comments in the press release about medium-duty truck sales next year. I think in the past you've said that you think medium-duty sales for Rush could be 4,500 units or more. Are you still comfortable with that target?

I'm sorry, what number again?

4,500.

This year?

No, for '07.

No, that was an '06 number. That's an '06 number, Peter. If you look at where we're at currently year-to-date we're in the -- where are we at year-to-date in medium? 3,185, so we'll be very close to 4,500 if not exceed it.

Okay, so 4,500 for this year and you'll be up from there next year?

That's exactly correct. And where we'll be exactly next year probably depends a lot on acquisitions. But from a same-store perspective we do not anticipate losing any sales next year.

I thought you have quantified in the past it was at least a double-digit increase in medium-duty trucks. I just want to make sure I'm not getting too -- letting the model get ahead of itself for --.

We're looking at a 10% type uptick, no question -- plus any acquisitions.

And I guess from the perspective of oil prices, you've commented in the past that you're not quite as levered to the over the road trucking freight economy because you have focused (indiscernible) where there is a lot of oil field services activity. With oil coming off the boil a little bit here, what are you expecting in terms of demand from that end market going into '07 and possibly '08?

Well, we've seen nothing from our customer base to indicate that the fluctuation down in the oil prices recently have had any effect on their long-term plans. As long as you've got oil above $50 a barrel, I don't see much affecting us from our perspective.

Again, if you go back to, Peter, it's important that people do understand the fundamentals behind who our customer base really is. I know most of the analysts that follow us do, I'm not sure that everyone else does. But the diversification of the customer base is extremely important as we look forward and we build our strategy around that in everything we do every day. Because it allows us to take some of the cyclicality out of the effect of the truckload side, which as we all know is the most cyclical piece of our business.

And the last question and I'll hand it off. Werner commented on some softening in the used truck price in their third-quarter report. What are you seeing right now in terms of prices for used equipment?

That's probably a pretty good comment. There's been slight softening. It's not plummeting or anything like that, but there has been softening in used truck prices. But remember, there's also seasonality in that because used truck prices historically as we get towards the fourth quarter get softer. In the fourth and first quarter used truck prices are historically softer than they are in the second and third.

I guess when you look year-over-year, which would negate the seasonality, are you seeing more than a 5 or 10% softening in prices per year?

No, I don't believe anything more than that, no double-digit softening from my perspective.

Okay. Thanks for the time.

Jamie Cook.

Nice quarter. My first question just sort of building on I think what Peter is trying to get at. We're hearing -- versus where you were last quarter we're hearing some sort of mixed commentary on the U.S. economy and whether or not it's deteriorating or we'll see moderating growth as we approach '07. Are you hearing any concern from your customers that would perhaps make '07 worse than we originally thought?

From the truckload perspective I don't think there's any question. You guys have probably been listening to the releases this week coming out of the public truckload sector, and there's no question there's been softening freight. So obviously we watch that closely because that has a direct effect upon their purchases. Obviously even more of a direct effect from our perspective has been the huge pre-buy that's built up here in '05 and '06.

There's no question there's going to the very few trucks probably sold in the public truckload sector through the second and third quarter. So we will watch that closely ourselves as we watch those GDP numbers and everything else. That's why it's important to understand the diversification of our customer base. It does allow some upside into the other market segments that we sell into.

Okay. And then the other question, can you just talk a little bit about -- we're also hearing different things on the construction side of the business, whether you're seeing any weakness in the equipment or on the used equipment side and what your outlook is going into '07?

Jamie, this is Marty. Our market in Houston is up about 3.8% year-to-date. Up until the last quarter it was running right at or slightly behind a year ago. So we feel like next year we'll have some modest growth, nothing terribly exciting, but modest growth. But there are other sections of the country we understand that are not growing and it's principally the East Coast. That's what we're being told. In our Houston market though we expect slight growth this year and we expect slight growth next year.

Okay. Then my last question and I will get back in queue; there has been a lot of press since the last quarter about the Caterpillar engine and potential problems. I guess what are you hearing from your customers, and any differences or opinions on the Caterpillar engine versus the [Covens] engine?

No, definitely not from my perspective and the customer base that I touch. The Caterpillar engine and the Caterpillar people will definitely have the solution. They've gone through nothing more than is typical of testing an engine as you prepare it -- as it gets prepared to go to market. You go through -- there is a year-and-a-half to two-year testing cycle, and I have seen nothing and know of nothing that makes me believe that they will not be ready and perform, and we do have demand out there and have taken some orders for Caterpillar '07 engines.

So I think that's important to understand; not huge volumes but we haven't taken huge volumes of anybody's engine. So as we prepare them -- no, they will be ready for market. Their historical performance speaks for itself.

Okay, then I'm sorry, just last question. Do you think the stockpiling issue this time versus the previous downturn is any worse or about the same?

I'm sorry, I didn't quite follow that.

Stockpiling engines, having an '07 truck with the '06 engine. Orders have been much stronger than we had anticipated. In terms of stockpiling '06 engines, do you think it's worse this time versus the previous downturn?

Well, the last emissions change, remember, was in the middle of the year and it was in the middle of a recession and it didn't have a two-year run. It wasn't a two-year pre-buy, it was like a four-month pre-buy, so there wasn't a possibility to stockpile. You were just trying to meet demand in October of '02. So I don't think there's any question there's probably going to be more engines -- there's going to be more '06 trucks with -- or '07 trucks with '06 engine in inventory around the country this time because there's been more time to prepare for it.

And obviously when you look at what was built this year, production is going to -- should exceed retail sales. And next year I would expect retail sales to exceed production because of the inventories that will be carried into '07.

Great, thank you very much.

(OPERATOR INSTRUCTIONS). Peter Nesvold.

Maybe if I could ask Jamie's question a slightly different -- when do you expect to have '07 Peterbilt's with '07 Cats in the dealership ready for sale?

Actually unsold inventory, Peter, if you're talking about stock frontline inventory, I would imagine that would begin really in the second quarter. We'll be carrying enough late first, second quarter, it would be something along that line depending on how the inventory that we do carry over moves. Obviously that will be a direct link as to how we move the inventory that we do have will more dictate the time that we stockpile more engines or put more engines on the front lines.

Got you. Okay. Maybe if I could ask a follow-up on the absorption ratio, it's really been pretty dramatic, the improvement here since 2000. You haven't had a year where the absorption ratio has ticked down. And if we were to just think as an assumption fleet utilization is lower in '07 versus '06 due to macro things, would you expect your absorption ratio to show any more cyclicality in '07 than you have in the last five years? (technical difficulty) low hanging fruit still in terms of improving that in '07 versus '06 (multiple speakers) the economy.

Let's step back and look at it this way. I would say we could maintain it. Remember, absorption has a numerator and a denominator in it, obviously. There's a revenue and gross profit side and expense side. And it's up to my management under the leadership of our team to guide ourselves through that. And depending on where the market is is to make the movement needed in whatever direction needs to be made.

You can grow absorption or maintain absorption without having the same revenue growth that you have maybe the prior year when you get some type of downtick, so that is the way we would approach it. That's how we approach it on a daily basis. It's never a total revenue driven thing. It's driven by revenue and expenses and it needs to be approached that way at all times.

Got you, so cutting some dealership overhead costs to offset any decline in utilization?

Correct, because if you want to look at our absorption, it actually was higher in the quarter from a same-store perspective. We were a couple points higher from a same-store perspective, but we're always making investments in the future. So if we stop making acquisitions and stop doing -- and taking on under performing dealers, we could grow it exponentially much quicker. But at the same time that's not what we're about. We're about balancing that between growth and return. At the same time, that's the way we run this company and that's the stated goals of the organization.

You've got to understand, right now we've probably got -- we've got about nine pieces of real estate that are actually unfunded that are in some phase of construction where we bought the dirt, they're sitting there, and they're either going -- either we've moving an older store and putting it into an updated store or we're putting in a new operation in a city we're not already in. So we're constantly making these investments and that is a drain on absorption. But from a long-term perspective it's not a drain. It obviously presents more upside in the future.

Got you. Okay, and then last question -- in your financing activities, how much visibility do you have whether there's any increase in delinquencies over maybe bankruptcy is among end-users?

I can tell you, Peter, it's been pretty constant all year. If you want to I'll run you through some numbers real quick. Delinquency -- when we can say delinquency we talk about 30 days and over. We've got about a $600 million portfolio out there with two big lenders -- it's their portfolio but it's our portfolio we sold to them. So we get a pretty good look at that. I can tell you that in January 30 days plus was at 1.98; in March it went down to 1.04; June 1.34; September 1.68. So you can see it's just floating around in that 1 to 2 point range.

Okay, that's encouraging. Thanks, guys.

Chaz Jones.

Another nice quarter. On the Denver acquisition that you mentioned, could you remind us on the medium-duty front what nameplates that you acquired there?

In Denver we actually picked up a nameplate we've never -- we've got a Ford Isuzu deal. It was driven -- we're excited about getting Isuzu and Ford franchises there, but it also provided us more facility. It is one door down from us, about 300 yards away from our existing facility, so we get some leveragability out of that and we were looking for more shop space in the Denver market. So without having to go out and build a whole new store and go through the whole thing, that gave us what we were looking for plus a couple other nameplates.

At this time we only had one nameplate and that was the Peterbilt nameplate in Denver, so we were aggressively looking for medium-duty nameplates. Because remember, that medium-duty business is a different market, as I've always told everybody, than the Class 8 market. It's more of a price point market. So you have to have that breadth of product to hit those points because not all manufacturers get all sectors of that market.

Have you had any more success selling one nameplate over the other? I know you sort of have a portfolio now in the medium-duty business.

We still -- obviously there are growing pieces of our -- nameplates that are growing, but the ones that we've sold the most of in the past, the Peterbilt and the GMC nameplates, still carry the load. But obviously the Hino nameplate is coming on extremely strong and the Isuzu nameplate and those are really -- and the UD nameplate at the same time. Those are coming on and becoming a larger piece of the whole pie than what percentage wise they have been in the past. And I'm sure if we continue to add more of those that will continue -- it will evolve that direction.

Okay, and then lastly -- maybe if I could circle around to the acquisition front. Any bias here looking forward in terms of are you going to be trying to acquire more medium-duty type dealerships or Class 8's or is any acquisition on either front -- just kind of the strategy here?

Pretty much what we have shown over the last couple years. We will continue to add more medium-duty nameplates, you can rest assured of that. Looking for maybe another market or two. And just to continue to fill out our geographic network. We've still got room to grow in the Southeast and we hope to be able I'm sure to announce some things in that area in the future. We will continue to look to fill out what we've always said was our contiguous geographic growth from East to West across the Southern part of these United States.

Okay, great. I appreciate the commentary.

Andrew Obin.

Yes, a couple of questions. I missed the beginning of the call, so I apologize if I'm asking the questions you've already answered. On the performance of the Houston John Deere dealership, why are the sales going up so much?

Andrew, this is Marty. We conscientiously have focused on building marketshare in that territory. I think you've heard on previous quarterly conference calls that we had a desire to build our marketshare in that territory and we've done that by expanding our sales force, putting out marketing programs. You'll notice there's been a slight margin deterioration. That's been by plan. We've more than it up for it as you can tell though by volume. So we have very much been working on building marketshare in that territory.

How much of it reflects the efforts by John Deere rediscounting and marketshare building just by corporate versus your strategy?

Actually our market share performance is -- let's break it into two pieces. You have directs, which John Deere sells directly into the territory, which are principally rental companies, and then you have dealer marketshare. Our directs for the year are actually down from John Deere and our dealer marketshare is outpacing that. So what you see in total marketshare is more dealer driven than it is John Deere manufacturer driven.

Are you seeing any impact -- and I understand that you have a different market than the rest of the country -- are you seeing any impact from the slow down in residential construction?

No, Houston is still strong. You've got to remember, Houston is -- no matter what we say, it is still an oil and gas based economy. So it remains strong and we expect it to remain strong.

And just on the balance sheet, a question on the balance sheet. Looking at the buildup in receivables on the asset side, what drove the quarter-over-quarter increase there?

Principally truck deliveries. Trucks are delivered at the end of the quarter, Andrew. You'll book the receivable and then that cash is collected within a couple days. So the cash position at any point, snapshot in time, is largely driven by whatever truck deliveries are at the end a period. And most of our larger customers do take trucks throughout the month and book them towards the end of the month.

So does that imply that there will be pretty significant cash generation in the fourth quarter as the service (indiscernible) get unwound or will there just be more receivables just because you're going to rush a lot of trucks into the field?

I think it's going to continue, Andrew, because your fourth-quarter deliveries will be significant as well. I'm not saying cash won't build. Yes, cash will build in the fourth quarter, but at the same time you've got a bunch of unfinanced real estate that we've been working on expanding. There's about $13 million in unfunded real estate sitting on the books today.

We obviously will be working towards funding that at completion date. We don't like to interim finance real estate properties. We like to complete the transaction and then go and finance the real estate. So that has an impact on cash flow. And then secondarily, as you're delivering a large number of trucks into December you'll also have a large receivable at the end of the year we would expect.

Fantastic, thank you very much.

Jerry Heffernan.

Thank you very much for a good quarter here. Does the switchover to the ultra low sulfur diesel fuel, some have commented on seeing an immediate fuel degradation or fuel efficiency degradation. I was wondering if this is going to have any effect for you in regards to service as far as any tuning requirements or extra stop-in to adjust trucks to handle the new fuel coming out.

Well, Jerry, I've heard a few spots of that. It's a little early in the game to really tell on that, but I hope so. That would by my comment. Creating more service work for us is not a problem, so we'll be happy to accommodate anybody that needs help. But I think it's a little early to get a read really on what the effect of low sulfur fuel is going to be on pre '07 engines. I'll tell you what, I wouldn't mind circling back with you here in a week or two and let me get in touch with a few customers and see what they have to comment on it though.

Okay, but this time no one has come out and made any suggestions for perhaps new or different filters or oxygen adjustments or anything like that?

Not to my knowledge, no, Jerry, there haven't been.

Okay. Guys, could you talk about your expectations through '07 for the margins in the used truck market? I would imagine it's going to be a kind of fairly interesting dynamic as we go in. That the new pre '07 engines are gone but you would still have a fairly lively used truck market for the pre '07 engines I would believe. Tell me what you think may happen with the margin situation there.

Well, I think it's something that can go a couple directions. I think it's going to be something that unfolds as we go through it. It's obviously going to be driven by the acceptance of the '07 engine and that acceptance will drive demand. And of course demand drives margins, supply and demand drive the margin side of that equation. So if there's some push back from the market, a lack of acceptance of the new '07 engines regardless of manufacturer for whatever reason, then I would tell you that you would probably look for some strong demand obviously from that perspective.

Now you also have to remember, it's a supply/demand issue. I always jump away from being driven by engines. Let's talk about market. And it's always predicated on what the prior markets were three and four years back. So over the last couple of years we were coming off of markets in '01, '02 and '03 which were the trucks that were really turned in for trade in '04, '05 and '06. Well, those years were 170,000 to 180,000 unit years. Now you crank into '04 and I believe it was about 240,000 and you get over 300,000 for '05. And then you get this huge year we've got this year in '06, so that will have some effect also because of probably more supply in the marketplace.

So I know I'm not directly answering your question, but I don't know at this time that I can directly answer it. There's still a few unknown things in front of us as we get involved in this new '07 engine. And like I said, if there's any pushback against this engine, that 240,000 market doesn't scare me and I would expect that demand would be strong for used trucks. But again, that will unfold in front of us.

Fair enough. Thank you very much, guys.

Michael Christodolou.

Good morning, gentlemen. I wanted to inquire about two other things related to the Class 8 pre-buy phenomenon. About three weeks ago a Wall Street analyst who isn't on this call did a Class 8 dealer survey -- or he doesn't follow Rush, let me put it that way. He did a dealer survey and came across a PACCAR dealer who's got a number of sites across the country with a heavy Midwest exposure. That dealer said he was seeing some customers cancel up to 25% of the remaining '06 engine trucks (technical difficulty) and they were contemplating going back to PACCAR for some OEM relief. And was wondering if you're seeing any cancellations at all of '06 engine trucks and what is the relief mechanism under the dealer contract?

Well, I don't know if there is such thing as a relief mechanism, but I would tell you we're not seeing the same thing. Nothing out of the ordinary. Remember that when you order a sold unit, not every unit always ends up. Things change in people's business. I don't care if it's this year, last year, the prior year, the future years to come -- there's always things that can happen. But we're seeing nothing out of the ordinary as far as customers taking units.

And I think you can look at the deliveries we had this quarter and hopefully the deliveries we have in the fourth quarter that will show that. So I have not seen that from a personal perspective, not out of the ordinary. And there is really no relief that I'm aware of. There's no such mechanism such as that. It's up to the dealer and the manufacturer to work together to find a new home for that equipment if someone backs out of taking the product.

Okay. Well, it sounds like this may be more of just a Midwest or regional issue given what's going on with the auto bill.

It may be more of a regional or it may be more of a dealer issue too. You've got to look -- I'm not sure who you're speaking about, but that may be more dealer driven instead of regional driven. I'm not sure.

Thank you, gentlemen.

At this time we have no more questions.

Thank you very much for listening to us and if you've got any questions, please give us a call. Have a good day.

Thank you. This call has been concluded.