Rush Enterprises Inc (RUSHB) 2009 Q1 法說會逐字稿

Thank you for standing by, welcome to the Rush Enterprises Inc. first quarter 2009 earnings results conference call. This call is being recorded. And at this time for opening remarks and introductions, I'd like to turn the call over to Mr. Marvin Rush, Chairman of the Board. Please go ahead sir.

Good morning, and welcome to our first quarter 2009 earnings release conference call. On the call today are Rusty Rush, President and Chief Executive Officer; Marty Naegelin, Executive Vice President; Steve Keller, Vice President and CFO; Jay Hazelwood, Controller of Rush Enterprises; and Derrek Weaver, our Chief Compliance Officer. Now Steve Keller will say a few words regarding forward-looking-statements.

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. Important factors that could cause 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 10K for the year ended December 31, 2008, and in our other filings with the Securities and Exchange Commission.

Now we'd like to give you an update on the first quarter. The first quarter proved to be another tough period for the trucking industry, and the overall economy. Class 8 retail truck sales in the US were down 31% from the first quarter of 2008, are on pace to be at the lowest levels since 1991. After market parts and service sales declined sharply during the quarter, and an overwhelming majority of our customer base, including over-the-road freight haulers, residential and commercial contractors, oil field service providers, and cement companies, severely reduced their capital expenditures for new equipment, as well as repair and maintenance expenditures. Additionally, the construction equipment market, in the territory we serve in southeast Texas, declined 34% compared to the first quarter of 2008.

Despite this extremely difficult environment we remained profitable. Our profitability is primarily attributed to our ongoing expense reduction efforts that began in the fourth quarter of 2007. Since then, we have reduced the same fixed store expenses more than 15%. These expense reductions helped us to offset the sharp decline in after market gross profit, and allowed the company to achieve a respectable absorption rate of 97.2 during the first quarter. Our balance sheet remains strong, the Company currently has $131 million in cash, and we expect positive cash flow from operations throughout the remainder of 2009.

Let's talk about the outlook for 2009. As expected, the first quarter of 2009 was one of the weakest quarters for the Class 8 truck sales since 1991, and we anticipate truck sales to continue at a slow pace throughout the second quarter. Based on our current outlook for truck sales, and the current level of after market sales, we expect the second quarter of 2009 to be more difficult than the first quarter. Currently, industry outlooks forecast 2009 US retail sales of Class 8 trucks to be 114,600 units, down 18% over 2008. However, we expect the 2009 Class 8 units to be into the range of 100,000 to 110,000 units. We also believe US retail sales of medium duty trucks could be off as much as 20% compared to 2008.

However, considering the average age of the fleet that is currently in operation, which is at a level last seen in the early '90s, and impending 2010 diesel emission regulations, we do believe that demand for Class 8 trucks will begin to increase during the second half of the year. While depressed used truck values and tight credit continue to impede truck sales efforts, we are seeing increased interest from some of our customers and are hopeful that it will translate into improved truck sales beginning in the third quarter.

While we cannot predict the bottom of the cycle with absolute confidence, we believe there are factors that indicate we are nearing the bottom of this downturn. Regardless of the timing to recovery, we remain confident in our strategy and our ability to execute it, and are prepared to withstand an extended market downturn. Furthermore, as a company, I believe we are better operators than we were two years ago, and are in excellent position for the economic recovery. We are now prepared to answer any questions that you have. Operator, please review the procedures for asking questions.

Yes sir. (Operator Instructions) We go first to Jamie Cook with Credit Suisse.

Hi, good morning, and congratulations in a tough environment. I guess my first question, I was sort of interested in your comments on you're starting to see some increased bidding activity and you now expect to pre-buy in, or you're cautiously optimistic we could see a pre-buy in the back half of 2009, which seems a little more optimistic than what you were saying last quarter. And at the same time you're reducing your 2009 truck forecast. So can you just walk me through what you're seeing, and how we should think about the first half versus the second half, and what gives you confidence that we would see a pre-buy?

Sure Jamie. Well first I think you've got to define what is a pre-buy. You can't compare just pre-buy of '09 with say of an '06 pre-buy. So if you look at where we're running, if you look at Class 8 US deliveries in the first quarter, they were only about 22,500. So obviously that's on a 90,000 run rate. We expect it to be maintained around that same level in the second quarter, so that gets you roughly 45,000. So when you say pre-buy, if you pick up 20% over that you see it's a little better, but absolute numbers are not going to be that strong. So to get to 110,000 obviously you go sell 65,000 or so in the second half of the year. So you need to quantify it into absolute numbers and not get caught up in historical pre-buys we've had in the past.

But regarding why we think that, there is more activity out there. There's been more quoting going on at this moment, and I do believe that some customers will replace. It will be tempered a lot, having to do with used trucks, you've got to keep that in mind, because no one is really growing their fleets out there at the moment and there's no expansion from construction or really any vocational market perspective right now. So a lot will be tempered by, as I said, the used truck values that are out there, and also credit. But I do believe there will be a slight pre-buy. I'm not going to define it as pre-buy as I said, like historical pre-buys have been.

Okay and can you just, in terms of the types of customers you're seeing, the increased bidding activity -- and then you mentioned the used truck market a little, can you talk about what you're seeing in used truck values sequentially and year over year and how you think about sort of the inventory of inventory out there? Used truck inventory.

Well as usual, it's usually the large fleets that are the first ones to talk about purchasing in some situation like this. So I would say it's more in the large to mid-sized fleets that we're seeing the increased activity. We're not seeing it at the owner/operator level, really into the vocational markets so much. But I do expect, usually that will lag. Usually your smaller operators will lag behind the larger guys, and they're more dependent upon credit than say the large guys, they don't carry the balance sheets of some of your larger customers.

As far as used trucks go, we obviously are down. Used truck values are down, there's no question about that, which also inhibits the ability to trade, because obviously they've been depreciating their trucks at a certain rate, and you have a couple of downturns, like last spring when truck values went down and we've seen it happen later in the year last year. So it has had a profound effect on the values of used equipment. Year over year we're down about 17% from a used truck, the cost of a used truck, sales price.

And did that deteriorate sequentially?

I'm sorry?

Did the used truck values deteriorate sequentially as well quarter over quarter versus you saying we're down 17%?

Yes, slightly Jamie. I don't have it right in front of me right now, I don't have that number in front of me. But I would tell you probably 4% or 5%.

All right, and then my last question Rusty, your best guess at 2010?

Oh I've got to believe 2010, because of the way a pre-buy works, the first quarter will be better than this year's first quarter. Because there's carry over of old engines, with the new EPA laws it's when the engines blocks are stamped by December 31. But I would imagine the second quarter will be very difficult. You know Jamie, 140, something like that.

Alrighty, thank you, I'll get back in queue, congratulations.

You bet, thank you.

We go next to John Barnes with BB&T Capital Markets.

Good morning guys.

Hi John.

Nice quarter, and let me be the first to thank you for the brevity in your prepared remarks, that was refreshing. Just kind of a quick and dirty on, you said some of the owner/operators, and maybe the vocational customers, are more dependent on credit. Have you seen, could you talk a little bit about your own growth and experiences with financing provided by Rush, and how much of that are you doing right now? And how much more can the balance sheet kind of handle?

Well first John, you've got to understand we don't carry the -- we talk about financing it's not in our balance sheet. We're a third party provider of financing, okay? We just assist customers in finding financing, so it's not reflected in our balance sheet. So don't get concerned about that. We carry very little, very little, it's less than 1% limited liability. Most everything is without recourse that we place. So as far as the credit markets go, they're still extremely tight. We've had to broaden the base of lenders that we use. Historically we've relied more on two or three lenders, but because of the way the credit markets are now, we've had to broaden our base. We're probably using, across the country, 25 to 30 different lenders. Almost niche credit marketing should I say, to get people financed.

Can you talk a little bit about the decline in just the parts and service business, and kind of what your expectations are for here? Do you think -- maybe the equipment, I know miles are down, I get that part of it. But do you think the equipment is now being under maintained and either leads to, one, kind of the bump in demand in new equipment? Or two, do you think there's all of a sudden a bubble being created in the parts and service that could be maybe a little stronger than originally forecasted in the back half of the year?

I believe the back half of the year could be strong than what we're seeing, definitely should be stronger than what we're seeing here in the first and second quarter. As I said, the age of trucks, they're as old as they've been since the early '90s right now, the age of the fleet is. So the problem is there's just a lot of excess capacity, whether you're talking about over-the-road, whether you're talking about construction, whether it's mixer trucks, oil field trucks, crane trucks, everything. There's excess capacity out there, and as we stated in the release, if a customer's got 30% of his fleet parked on the fence, or more, and something breaks, you don't necessarily fix it. You're in a survival mode, you just pull one that's parked against the fence and use it instead. So that's pretty much, simply stated, the way it is right now. It's just a very difficult environment for everyone out there, no matter what vocation or what sector you're in, and that's reflective in the downturn in parts and service.

Given that downturn in the first quarter, it's kind of the first time in a while that you've seen any degradation in your absorption rate, and this kind of decline. Are you having to realign the infrastructure in your parts and service business? Or is this a means of technicians are tough to come by, you want to hold on to them, and you jut work them fewer hours and incur a bit of the pain until this business comes back?

Well technicians remember, all our technicians are basically commission paid. So it really doesn't have much of an effect on the technician base. The technician base may shrink some because the volume of work is there, but it shrinks some. They just don't make as much money, simply stated, because there's not as much opportunity to make. And as it gets tighter it right sizes itself, to be honest with you, because of the way they're paid. Now from an expense perspective, we've cut out same store year over year G&A was down 10% from a same store perspective. I think it's 6.6 with the acquisitions in there, but we're down 10%, and that's after we took it down in the first quarter last year from where it was in the fourth quarter overall in '07.

So I expect absorption to continue to be difficult here in the second quarter. I can't sit here and tell you that absorption is going to get better, if anything it would get tougher here as we go into the second quarter, from what we can see right now at this moment.

Is that more because of the comp, or is it more just because of what you just talked about?

It's just everything I've just talked about, it's what's going on out there in the world right now.

Okay. And then lastly I would imagine that other independent dealerships are probably feeling this pain, maybe a little bit more than you are. Could you just talk about what you're seeing on the acquisition front, additional dealerships available, whether they're PACCAR or non-PACCAR.

Well John I normally don't want to get into too much detail about that, but obviously given the environment it is pretty easy to deduct the fact that there will be more opportunities as we get, especially as we get into the summer here I believe. Because I look for second quarter, as I said, to continue to be extremely tough. I look for deliveries not to increase, and I don't look for many dealerships, points of service operations, to get any better. So, the longer pain is inflicted, probably the more opportunities that will arise.

Very good. Guys, again, nice job on the quarter. Thanks for your time.

You bet, thank you.

We go next to Bill Armstrong, with CL King and Associates.

Good morning. I had a question on the parts and service gross margin. It was down about 250 basis points year-over-year. I was just wondering what was causing that? What's your outlook for gross margin, going forward, in parts and service?

Well, that is obviously caused by keen competition right now. There is less parts and service business available so competition, obviously, affects margin. And that's what it's caused by.

Its outlook is roughly to remain, roughly, where it was at in the first quarter. I would not look for it to pick up in the second quarter. If volumes begin to increase, we hope, later in the year, in the second half of the year, then I would look for margins to increase also.

You're talking about price competition, basically?

Yes.

Yes; are you able to get any cost concessions from your suppliers, of parts?

Well, I wouldn't say -- it's pretty much across the board, I think, when you talk about cost concessions from the manufacturers that produce most of the parts. So, I can't specifically state that we're getting any special price considerations there, no.

Okay and then just one sort of a housekeeping question; in your medium duty trucks sold, the 754 units, are buses included in that and, if so, how many buses were sold?

There were 128 buses in that number, okay? Of that 754, there were 128 buses.

128, okay. Thank you.

You bet.

We go next to Chaz Jones, with Morgan Keegan.

Yes, hey guys; how're you doing this morning?

Pretty good, Chaz.

I just want to get back to, and not to beat a dead horse here, but just on the absorption outlook, you know, Rusty, generally speaking, sequentially absorption improves first quarter to second quarter, just, I guess, on a seasonal basis. But certainly, you had some bearish commentary as it related to earnings sequentially. You kind of expected heavy duty truck sales to be flat, sequentially, so, it sounds like to me, and again, just to clarify, that you expect after market parts and service to kind of further deteriorate from what we saw in the first quarter.

Yes; I don't want to be an alarmist or anything there, Chaz, but at the same time, I do expect slight deterioration. It's still really too early, to be honest with you; this is a day-to-day process out there right now. But what I can see, so far in April, that it is still extremely difficult.

We have been in a trough, really, well, we've been in a trough. Revenues and gross profits were down last year. We managed to increase absorption 1% last year, obviously, through the expense reductions. And we continue to monitor expenses heavily. That's the only way we've been able to keep -- you know, when you look at a downturn, in same store, of about 11.1% and almost a 16% gross profit, year-over-year from the same store perspective, that is a difficult hill to climb.

We have managed expenses, as best we can, to at least keep absorption up where it is because, as you know, that is the key ratio inside of everything we do.

So, to answer your question, possibly a slight deterioration but it's still too early in the quarter for me to say. We're just in April right now.

Sure. No, and you guys, without question, have done an outstanding job on the expense side over the last, call it, 18 months. I guess it begs the question, if we go back to that 140,000 heavy duty number in 2010, can you do it on this expense base?

There would have to be some expense, possibly added but, obviously, you've got to remember because the [S-piece] would go up for sure.

Sure.

(Inaudible) piece would go up without a doubt. On the G&A side, we would do our best to manage it as close to where we're at right now. But obviously if you had the support for more parts and service, you might have to add a little. But obviously, you would want to add as little as possible.

But, I guess it kind of begs a question, you guys are probably leaner and meaner, if you would, for lack of a better phrase, coming out of this downturn than you have been in the past?

No question, Chaz. I mean, when we do come out of this, we're very excited; very excited, about the possibilities for the organization.

And then maybe one last one, quickly? The lower tax rate, was that related to alternative fuel vehicles in the quarter?

Yes, no question. If you really look at G&A and tax rate, our effective tax rate, really, right now is up to 39% because earnings, we, historically, have been the last couple of years around 37.5%. But our effective tax rate is 39%.

It was 30.2% in the quarter but that was reflective of about $361,000 of alternative fuel related tax credits, which also, remember, raised G&A, likewise, as the offset to that.

Yes, that's what I was going to ask. So, G&A would've been even -- SG&A would've been even lower?

Right. You know, people get caught up in the taxes but we consider that operational money, okay?

Right.

Because obviously, it was related to the sale of trucks.

Maybe let me sneak in one more quick one? You said you'd seen some increased bid activity. Has any of that been fueled by incentives?

Well, you know, yes, some of it. The bid activity, I would tell you no but there is some bid activity that has. But, we approach this [Deere] project very aggressively here at Rush. But we're still not sure how that's all going to shake out, with all the grants that have been applied for, both from a truck sales perspective and from a retrofit perspective in the after market, whether it's for [DPS] planers or APU units. But obviously, that's still to be decided in the next 60 days.

But we have approached it aggressively. I wouldn't want to get anybody's hopes up, because you're not sure how the government's going to handle all that. But we're right in the mix of all of it, you can rest assured.

Okay, great. Nice quarter, guys.

Thanks.

(OPERATOR INSTRUCTIONS) We go to Alan Seymour, with Columbia Management.

Yes, I'd like to get some thoughts a little bit more on this, what I would call a cannibalization on the parts side. Sort of like the aircraft guys that have, you know, air frames in the desert and they go grab spare parts from.

Sure.

How do you think that's going to work out? And what are the kinds of things that you might look for, to say that that will be at an end?

Well, increased activity from a freight perspective, you've got to look at freight tonnage. You know, obviously, you've got look at construction starts, you know, housing starts, commercial starts, things like that.

Those are the main things. When the economy starts clicking again, then that capacity is utilized. And it's not just sitting on the fence. Those are the simple things out there that will drive it all.

I do expect freight tonnage is still going to remain difficult but when you start looking at inventory levels, they're extremely low out there right now. So at some time, these inventory levels, you would think, have to be replenished. But of course, that's going to be driven by demand, at the same time. And once the consumer gets back in the game, I would expect demand to rise sometime later this year.

And as you know, there's one thing about the trucking business. We're always the first one in and we're the first one out. So, we look forward to that happening later this year.

But again, just demand and freight tonnage are the most important things in housing starts, things like that, to look at. So, it'll be late this year, I would imagine, but sometime this year.

Great, thanks.

You bet.

We'll go to Basili Alukos with Morningstar.

Hi guys, good morning.

Good morning.

Thank you for taking my call. I just have a couple questions about capital expenditures.

Sure.

As far as what the outlook is for this year, from a percentage say and then absolute basis.

Okay, historically our maintenance Cap Ex runs about $12 million or so a year. We have, going on right now, a couple of construction projects that, actually, we used probably about $5 million on a couple construction projects in the first quarter. And then, we'll probably need to be another $12 million to $15 million spent throughout the year in finishing these projects we've got going on in a couple of areas.

Other than that, the main Cap Ex, of course, that we've spent but it's offset by a dollar-for-dollar financing, is our lease trucks. That is the majority of what we spend on a yearly basis. But that's dollar-for-dollar, you know, financed.

I would tell you, we're looking, probably, with maintenance and the remainder, of the year, somewhere around the low twenties, construction projects that we've got to finish out.

Now remember, eventually those construction projects, real estate, we will take and finance back at 80% of value, or what we've put into them. But we don't do interim financing; we just pay it them as we go.

Okay because, like, looking back, historically, it looks like that number is, at least Cap Ex, has kind of increased. But I'm wondering if that deals with more acquisitions and, obviously, acquisition is a separate line item but then, kind of retrofitting or updating any of those dealerships that maybe were purchased.

How does that -- going forward, do you plan on any more acquisition in dealerships?

Again, as I told John Barnes earlier, obviously, from an acquisition perspective, the longer this downturn continues, the more opportunities that should arise. We will look for that inflection point when we believe we can -- when it would be the right time to execute on some acquisitions.

Great and then a follow up question on the bus question, as far as the selling price for buses. How does that compare to just normal, medium duty trucks?

It's a little higher. It's one of the reasons our average sales price is up. A bus usually runs in the, I want to say, $85,000 range, a school bus does. So, actually our medium duty unit cost, I'd have to pull that sheet here; it was up from $56,000 to $64,700. So, with the average bus, I just pulled up, is $89,000. So, obviously, you can see that's one of the reasons that drove up.

And remember, one other thing about medium duty trucks is, they've all got bodies on them. So a lot has to do with mix of bodies and things like that, what markets you're selling them into.

Great; thanks a lot.

You bet.

We'll go next to Rhem Wood, with Stephens Inc.

Hey guys, I think most of my questions have been answered. Just one; interest expense line. That came down a fair amount, sequentially. I guess it relates to low floor plan inventories? How should I think about that for the balance of the year?

Well, a lot of it has to do with the rate environment there, Rhem. But inventories are down, I think, around $40 million. And so, obviously, that has some effect. If rates were to stay where they're at currently, since none of us can predict that, I would expect it to continue to trend down.

Obviously, there's not much earning capacity with the cash, either, that we have. So that's off set some; if you go year-over-year, rates are down further, actually, than what the interest line expense is. But that has to do with, you know, obviously there's no return on your cash either at this moment.

So, if rates stay flat to where they are now, short-term rates, then I would expect it to continue to trend down, along with inventories.

Great. Thanks so much; appreciate it.

You bet.

((OPERATOR INSTRUCTIONS) We go to Michael Christodolou with Inwood Capital Management.

Good morning, gentlemen. Rusty, I think at the beginning of the call, you mentioned that, in your market area, Class 8, heavy duty truck sales were down 34%. And yet, yours, rather, were down 18%. So, did I hear that right? And, it looks like you're gaining share in the downturn?

No. The 18% was the projection from ACT for year-over-year, okay? That was the total year; that was their projection, from '09 on '08, okay? Our markets, when I look at it, we were down 16% in units for the quarter. The overall US retail deliveries were down 31%. I said 22.5%; they were 22.4% something; I don't have it right in front of me, for US retail deliveries. Yet, ours were only down 16%, compared to the 31%.

I mean, you are gaining share, right? Given the geographies that you're in, those economies, maybe you're doing a little bit better than some of the--.

That would be what you would deduce from that, yes.

Okay. Where do you think you're gaining it from? I mean, clearly, there are a lot of private operators out there who are, I'm just guessing here, what, not as well capitalized? And they're probably skimping on their parts and service staffing and so that the service level's declined? Is that kind of how that's playing out?

Yes, I think you've got to remember, we're talking these percentages. But these absolute numbers are so little, to begin with, that a couple of hundred trucks here or there skews it, that 13 point difference, or something, you know, for the 16% to 31%, a 15 point difference. So, don't get caught up, sometimes, in percentages. We can look at the absolute numbers.

I mean, I feel good about it but I don't want to take too much credit for a couple hundred trucks' difference, okay?

I understand. And just in terms of Class 8 used truck prices, you mentioned they're down 17%. Are you seeing any additional or particular pressure on the used Class 8 trucks that have the discontinued cat-engines in them?

No, I have not seen so much because most of the used trucks that we're dealing with are still pre-'07 engine emission requirements. So, it's the '07 year models and back that we're trading for. We're really not trading for '08 models and up. So, I haven't seen that much pressure on that, no.

Great. Thank you very much.

You bet.

((OPERATOR INSTRUCTIONS) We'll go to Gary Linhoff with Ironworks.

Thanks. Rusty, can you tell us what do you expect to invest in your lease fleet this year? The total dollars?

Roughly $35 million. And again, like I said earlier though, that's financed dollar for dollar.

Okay, and do you expect to see any pick up in leasing activity in front of the 2010 engine?

You know that's, a lot of times that's a little difficult, because a lot of these are five, six, seven year leases, and they're on a perpetual roll out. So they're really not structured, especially given the used truck environment, trying to take somebody out early in the lease is going to be more difficult given the valuation of used equipment coming down. Now if we were in a different part of the cycle and used truck valuations were going up, then you could look at maybe taking some people out early, of their leases, but it will be difficult to take people out of their leases early this year.

Okay, great. Thank you so much.

You bet.

We'll go to Barry Haynes with Sage Asset Management.

Thanks very much. I had a couple of questions related to financing type issues out there. One is, could you just comment on sort of your receivables/bad debt experience, and if you're seeing any degradation there? Secondly just the availability of financing in general to your customers. As you mentioned it was third party, but what's the availability like now or last month or so versus earlier in the first quarter and late last year? And then finally, again while the financing is third party, and so this doesn't effect you directly, but in terms of what you're hearing out there in terms of customer stress or any bankruptcies, kind of consolidation or not within your customer base, any comments there. Thanks.

Sure. From the receivable perspective, you've got to remember we sell off our receivables, the majority, 98% of our receivables are sold off, more than 95%, I don't have it right in front of me. So our exposure, and that's a non-recourse basis, so our exposure to that is very limited. So you have to keep that in mind. Secondly, though there is some deterioration, we still monitor and track it, and obviously in this environment there's going to be some deterioration in paying, in profits of pay. But I can tell you the whole overall receivables, when you see parts and service shrink like it has our overall receivables that we sell off come down too. Because the customer piece is the biggest piece that's down for us right now, well internal also, what we do. But it's down. But our exposure, again as I said, is minimal given the fact that we have historically sold off our receivables for 17 years now.

As far as third party financing on trucks, it's been really very difficult since the fall of last year. Now I will say that, that in the last few weeks, just the last couple/three weeks, I think it is loosening up some. I know of a couple of large finance companies that may be looking to, I don't want to say get back in the game, but take a more normalized stance as they've seen their portfolios stabilize. Their delinquency rates have stabilized, so I would look for financing to continue to get better from here, not get worse, as far as from a conditioning perspective, as far as advances, as far as terms, things like that. Not necessarily scoring, not credit scoring, but as far a advances and as far as terms go, I would look for them to get back to what I would consider more normalized conditions.

Delinquencies, when you ask about what's going on from the third party financing with our customers, it's been difficult I know for a lot of finance companies, and they've had to work with their customer base. There could be more bankruptcies on the horizon, no doubt, if this thing extends further out into the, through the whole year. If we get some type of pick up in freight tonnage, it seems to have stabilized in the last 30 days or so, but it's still down. So if we can get some type of pick up there, I would expect it to -- but you've got to remember a lot of our customers have downsized their fleets too, to try to stay in line with the freight tonnage going down. So I know I haven't totally answered your question, but I think the answer is by the economy, not so much by me. But I know everybody's made adjustments and I know financing institutions have worked with the customer base, so let's jut hope we start to get some type of pick up in freight tonnage as we get into the year.

Great, I appreciate that color, thank you.

You bet.

We'll go to a follow up with Rhem Wood with Stevens Inc.

Just a quick one, what do you have remaining on your buyback?

We had a couple of million dollars, we bought back 18 out of the 20 we had out there Rhem, but we're not actually out aggressively trying to spend that couple of million bucks. We've pretty much decided we were comfortable with what we already did.

Great, thank you.

There are no other questions at this time. I'd like to turn the call back -- actually we have a follow up from Basili Alukos with Morningstar.

Hi guys, just a question about the stimulus, I know you'd mentioned "if Congress doesn't mess it up", but what kind of effects would you expect as that money flows in, what kind of impact would you expect it to have on your sales? And if so, in certain areas?

Well I said earlier I don't want to get anybody all excited about it, because I'm not real sure, we're just into this and it happened so fast. But we aggressively approached, and hired consultants, and went out to assist our customer base in understanding it, and to apply for these grants. How it comes out in the wash, I can't tell you. But I can tell you, I would have to tell you from any dealership group in the country, we attacked it aggressively.

It just so happens, I don't know if you saw some of the press releases that were on our site, but we had just had, in conjunction with that we happen to have a very large, what we call green event in southern California, actually had it in Anaheim stadium, had over 150 customers there that represented over 100,000 units. That we were trying to assist in understanding the stimulus package, understanding hybrids, understanding L&G, understanding C&G, understanding every piece of this, because it's a learning experience for all of us, us included.

We're learning as we go. But I do know that the manufacturer for the PACCAR, from a green perspective, we believe is very much out in the forefront from the green perspective. If you look at areas, you ask the areas, well southern California and Texas from a Houston, a Dallas perspective of a Los Angeles perspective, obviously there's more attainment dollars, there's more dollars going to be thrown at those areas because they're non-attainment areas.

So we would feel good about our opportunities in the future, I just can't sit here and quantify it for you at this time. But we're aggressively approaching it, and we'll just stay in that mode.

Great. And then I guess dealing with the big three, they've been in the news so often, what kind of exposure would you say if there was a bankruptcy from GM or Ford, and how would you expect that to impact future revenue?

First thing you'd have to start at, you look at our manufacturers, from a sub-supplier basis if there was a bankruptcy or something like that with General Motors, the supply chain that make all the other components that go into trucks are also usually tagged to automotive. So the biggest effect for me, I would think would be on the supply side. And then also from a freight tonnage perspective. We know how much automotive effects freight tonnage, so that would affect our customer base, which the trickle down obviously would get to us too eventually. But I can't sit here and quantify that for you. But those would be the two things I'd worry about most.

But not a material degradation in results you would think? I mean I know it's obviously too early to tell, but I'm just trying to see if it's even worth asking the question or not.

You know, it would be difficult for me to quantify that for you. But anything that affects our customer base is going to eventually affect us. So quantifying that would be very difficult. The only other thing is we still have GM franchises and one Ford franchise, so we might be affected from that perspective and from the GMC medium duty part.

Okay, great, I appreciate it.

You bet.

And with no questions remaining, I'll turn the call back to Mr. Rush for any additional or closing comments.

Thank you all for listening, if you've got any questions feel free to give us a call. Have a great day.

Thank you guys, thanks folks.

And that does conclude today's call, again thank you for your participation, have a good day.