Rush Enterprises Inc (RUSHB) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Rush Enterprises, Inc. first quarter 2016 earnings results. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Rusty Rush, Chairman, CEO, and President. Sir, please go ahead.

Good morning, everyone, and welcome to our first quarter 2016 earnings release conference call. On the call today are Marty Naegelin, Senior Vice President; Steve Keller, Senior Vice President and Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Derrek Weaver, Senior Vice President, General Counsel, and Secretary. Now Steve 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 10-K for the year ended December 31, 2015, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved revenues of $1.1 billion and net income of $2.4 million or $0.06 per diluted share. As expected, increased capacity from 2015, near-record Class 8 truck sales, depressed used truck values, and continued softness in the energy sector negatively impacted our financial performance in this quarter.

As a result, we have implemented broad and significant expense reductions. During the first quarter we took measures to reduce our personnel and variable expenses by approximately $6 million per quarter. Additionally, we have recently announced our plan to consolidate 12 Navistar division locations into existing dealerships that are operating in close proximity to each other. The majority of these consolidations will take place in May and June.

We have also consolidated one location in our Peterbilt division into a nearby location in Texas. When complete, we expect these consolidations will result in an additional annual expense savings of approximately $11 million. We will continue to closely monitor the current business environment and we'll make expense cuts that we believe are in the best interests of our customers and shareholders.

In the aftermarket, our parts, service, and body shop revenues were $342 million, and our absorption ratio was 106.4%. Continued decline in the energy sector adversely affected our parts and service business in the first quarter, but we've been able to offset a portion of lost revenues with general vehicle maintenance and repair activity on the western and southeastern coasts, which are benefiting from an improved economy and related construction. We remain diligent in our efforts to pursue incremental aftermarket revenues in areas of all mixed parts, our Rapid Parts call centers, mobile services, telematics, and our RushCare services.

Turning to truck sales, US Class 8 retail sales were down 6% over the first quarter, while our Class 8 truck sales decreased 34% over the same time period, accounting for 5% of the total US Class 8 market. Overcapacity of fleet trucks, low used truck valuations, and a choppy freight environment have caused many fleets to delay new Class 8 purchases, and we believe this trend will continue through the year. For 2016, ACT Research forecasts US Class 8 retail sales will be 207,000 units, down 18% compared to 2015.

Given the challenging market conditions impacting the large fleets and softness in the energy sector, we expect our Class 8 new truck sales in [2015] could decrease more than ACT's current forecast. We do believe our used truck inventory is appropriately valued, given these conditions. Our Class 4 through 7 new truck sales reached 3,271 units in the first quarter, up 22% over 2015 and outpaced the US medium-duty market, which increased by 20% over the same time period. Rush's Class 4 through 7 new truck sales accounted for 5.7% of the total US market.

Our strong medium-duty business was the result of a stable demand across the country in a range of market segments, large deliveries to several lease and rental fleets, and continued need for work-ready inventory to support construction in Florida and California. ACT Research forecasts US Class 4 through 7 retail sales to be 220,850 units in 2016, a 1% increase compared to 2015. We believe our Class 4 through 7 new truck sales remain on pace with the US retail market.

Selling, general, and administrative expenses increased in the first quarter compared to the fourth quarter 2015 due to employee benefits, payroll taxes, as well as the restructuring charge relating to the closing of certain dealerships and disposition of excess real estate we took. We expect our selling, general, and administrative expenses to continue to decrease throughout the remainder of 2016.

In the area of growth, we completed ongoing facility construction, renovation, and expansion projects in California, Colorado, Ohio, and Texas, enhancing service capabilities across our network. And we opened a new Peterbilt location in Kentucky. We also launched RushCare Service Connect, a technology platform which allows customers to receive real-time repair status updates. And we expanded our Momentum compressed natural gas fuel systems products offerings.

In closing, I am grateful to our employees for remaining focused on our customers and working to launch new initiatives while managing costs across the organization. Their dedication is greatly appreciated as we work through this challenging market cycle. With that, I'll take your questions.

(Operator Instructions). Neil Frohnapple, Longbow Research.

Rusty, the growth in aftermarket in the first quarter was a positive surprise versus what we were expecting. So, just trying to get a sense of what you think for aftermarket revenue for the remainder of the year. Would you expect some of the initiatives you are implementing on the parts side to more than offset the impact of the store closures and weakness from the oil and gas markets? Just any thoughts on whether you can continue to grow the business in 2016 would be helpful.

Neil, if we're looking forward, when you look at it, we did have growth. Now, that was enhanced, obviously, with some acquisitions we did during the year last year. That wasn't growth from a same-store perspective. Now, as we go forward, I will be quite honest with you, as we are here in April, it is still a challenging environment. And it's growing in challenges, let me tell you right at the moment, what we're seeing through the first few weeks of April already.

And we're right on top of it and we're working on all the initiatives we have. At the same time, where I do believe that we have finally leveled out about now in the oil and gas side; where we're at, I think we've bottomed out. I do believe we're seeing other challenges pop up across the country in April, to be honest with you, judging where we're at the first three weeks of this month.

Now, obviously we're monitoring it closely and looking forward to a big close in this month, but at this time it seems to be spreading, even though we bottomed out in oil and gas from a parts and service perspective.

All right. That's really helpful, thanks. And then could you just comment more on what you're seeing in the used truck market? Do you think used truck prices have stabilized, or do you expect them to continue to decline over the coming quarters given the increase of why that will likely continue to hit the market? And just any differences you want to call out between what's going on with wholesale prices versus retail.

Sure. Wholesale, there really hasn't been a wholesale market, okay. There has been really no wholesale market, so anything you get rid of -- well, unless you just want to just give it away. But really, there really hasn't been a very stable wholesale market all year. Retail market has picked up. We have seen it pick up some. Obviously January it started off in a real trough, and it picked up in February and it picked up in March. And we expect that to continue in April.

From a valuation perspective, I don't think we're seeing the steep decline that we've seen a couple hits we've taken since last summer. But at the same time it is declining over what I would call a natural depreciation cycle. So it is still coming off of what I would look at as a normalized depreciation cycle, but not at such a steep rate as it was earlier in the year.

All right, very helpful. Thanks, guys. I'll pass it on.

John Barnes, RBC Capital Markets.

Rusty, can you talk a little bit just about the cost reductions that you have planned, and maybe provide a little bit of clarity as to the comment that you put in your 10-K about the margin outlook as you put these cost reduction initiatives in place?

Well, let's take it in two pieces. Obviously, as I mentioned in the first quarter, we started out on a reduction across the board in the organization. And then obviously we announced a restructuring where we're consolidating some stores. From the first perspective, as you look at it, we were -- if you strip out all the usual stuff and look at it purely from an operating perspective, including corporate, we are about -- and I'm going to comp back to Q3. It's very hard to comp to Q4 because there's a lot of closing entries and things that go on, as we finish up the year.

So when you come back to Q3, and you look at it strictly from an operating, including corporate, perspective, we are down about $6 million. Excuse me, yes, for the quarter. For the quarter. We are about $6 million off in Q1. And we did not have everything in place. A lot of that rolled in throughout the quarter. So I am very comfortable in saying as we go forward, you will see expenses continue to come down throughout the rest of the year. They will continue to come down. And that is outside of the consolidation.

The consolidation, we believe, will take out about $11 million in expenses. And so, when you include that in, I would like to think from a pure level, I've always thought -- I thought going in, as I mentioned on the call last time, that we needed -- I was going to try to cut in the mid-20s range from an expense perspective, from a G&A expense perspective. I'm comfortable we will get that, plus more. And then also the $11 million in consolidation expense savings. And that we believe we'll maintain or half that business because the proximity of those stores that are there.

So, we look for that to be a pickup. But again, that's the second half of the year pickup, that piece. Because most of that consolidation is going on starting in May, in June. There will be a little bit of a trickle past that, but the majority, 85% of it, will get done in May and June. I hope that gives you a little better color as to where I believe we are at.

Okay, yes. Yes, that's great. I appreciate that color. And then my other question is when you go through something like this and take this kind of cost out, is there any risk in any of the initiatives you've got going on, especially on the parts side, where you've made some pretty big predictions as to the size of that potential market and wallet for you. Is there any risk that that has to extend down now, that getting that in place takes a little longer than expected?

I've never expected it to get all done this year. This was always -- the startup is always the hardest part. Once you get it rolling, you know. We are still headed aggressively down that path. And have no -- I am not going to -- no, I have no plans to totally -- could it slow it down and hinder it a little bit? Yes, it's possible. But we are still very -- I'm very protective of those initiatives and the investments that are surrounding those initiatives to continue to invest in that, at the same time cutting expenses. Because I believe that long-term that's where the leverage and the growth in the organization and one of the big plays that we have going on should come from.

I hope that gives you a little clarity. The answer is, no, I'm not going to slow down. Could it be slightly --? We are not going to table anything. Could there be a little bit of -- could it slow down a little bit just because of what's going on as we manage expenses and cut some things? Yes, but we are not going to cut those direct expenses. There could be some indirect slowdowns from it, but there won't be any direct cuts to those initiatives. Okay?

All right. All right, very good. And then lastly, just on -- you made the comment about you feel like the valuation of your inventory is appropriate, given where current prices and demand are. What would have to happen for there to be another hit? Are we talking another 5% reduction in used truck values? Are we talking another 20%? And what would happen -- what would occur to make you have to write down new deductible (multiple speakers)?

If you had an overnight 10% or better reduction, yes, I would probably have some issues. 5% doesn't bother me that much. Remember, we've got our inventory levels down also. We were running around 2,500 units say, October of last year. We are at about 2,000 units now. We are 20% down in inventory at the same time, too, so that helps to manage it also. But at the same time, we are still out there in the marketplace, and you have to be. It's just you have to monitor it very, very closely. I'll put it this way: any transaction that includes over 50 trades gets run through my desk. How is that? So you can blame me if something goes wrong, okay? I'll take the heat.

All right. All right. Hey, listen, nice efforts on -- I know it is challenging out there. Nice effort.

Thank you. I appreciate it, John. Don't worry, we will get it put together. We always have.

Joel Tiss, BMO.

I wonder, from your perspective, can the overcapacity and overproduction be fixed in 2016? Do you think there's enough effort going on? Or does it seem more like it's likely to drag into 2017?

I think there might be some drag. I don't (multiple speakers), you know. Joel, you have been around a while. These things don't change overnight. You've been in this business long enough, you know how it works.

Calling me old?

(laughter) Well, that's pretty much, for you, that's a term of endearment.

Are there any signs that energy, the supply/demand of vehicles out there, is starting to come into a better balance? Or that is going to take time, as well?

That is going to take time. I would say, as I said, the one thing I can say is that I do believe, from a parts and service perspective, we took some hits in the first quarter. We had many mobile people, technicians, that were still out there that came home in the first quarter. But I do believe that has flattened from a service perspective and we are bottomed. I've seen maybe just slight trickles here in the last few weeks. I've heard about that -- it may be a little bit, a little here and there comeback. But nothing that I can hang my hat on.

But I do believe it bottomed from a parts and service perspective. Truck sales? I haven't seen those in a year. So I really and truly (laughter), not sure when they come back. There just hasn't been a lot out there in the oil and gas sector. We did -- we still had, if you remember last year in Q1, we had bleedover for what we thought was truck sales that carried over from 2014 into 2015's Q1.

And then, as I said, I attribute probably 1,800 or better units we lost in two through four into the oil and gas sector. And pretty much those have been gone and the cube is still continuing to be gone. And I will let you know when they come back, but right now we don't -- I don't foresee it, I'll be honest with you.

And then lastly, with you guys as pretty much the best operators in the business, your competitors or other dealerships must be feeling a lot of pain. Is there an opportunity to continue to consolidate the industry? Or do you think it's better to just focus on your business now, and you'll worry about that later?

I think we are a little early in the cycle. It will show up, but it takes a little time. In certain parts of the country. The coastlines are doing well, but it's somewhere -- the Midwest has been tough, and obviously the oil and gas sector has been tough. But at the same time, we have opened up six brand-new, large locations here recently. So immediately -- by the way, when you're looking at our expenses, those brand-new stores flow right in. You don't get all the revenue upfront. So you got brand-new stores, and over the last year with Cleveland and Columbus and Cincinnati, and San Antonio and Denver and Odessa. So that expense line starts right away.

So even when we are cutting expenses, remember, we had a flow in of growth because of the size -- we doubled, tripled the size of some of those locations. So, I'm not here to say -- parts of the country are still fine. It's just certain parts, and I am seeing here in the first part of April -- and I'm not ready to give you a total read on it -- we see some softening in some other areas. And I'll just have to -- but it's real early innings. But the thing I can tell everyone is the fact that we will make adjustments where needed. That's all I can tell you. As we continue to measure and monitor the market very closely.

That's great. Thank you so much.

Jonathan Chin, Private Management Group.

With used values coming in, can you maybe talk about the lease and rental business, maybe changes in behavior? And then can you just remind me if you need to -- if you guys do adjust or change assumptions like on a mark-to-market basis on residuals? That will be it. Thanks.

The lease and rental business, we are still projecting to have a decent year in lease and rental; better than last year. How is that? We are still looking forward to having a better year than last year in lease and rental, because we took some hits in the oil and gas sector in lease and rental last year. I will say this: when you speak about marking to market, we are very comfortable with our residual values. We have historically always run our portfolio in a very conservative nature to where the majority of what our gains -- what we make is gain on sale.

We have never had a year of loss of gain on sale. So, I think I would sure -- that would testify to the fact that we are very comfortable with our residual values as we have set them. And we are not going to move them, mark them, just because of one little downturn here or there. The overall portfolio, because it is a blended portfolio, it's not all put in at once. We are very comfortable that the overall valuation inside the portfolio is where it needs to be.

Thanks.

Jamie Cook, Credit Suisse.

A couple questions. One, Rusty, it doesn't sound like M&A is on the table at this point. You think it's too early. If you look at some of the other truck OEs or components players, the stocks have re-rated. Your stock continues to be under pressure and has not re-rated like the other names. So in that environment, given your balance sheet, how do you think about share repo? And we haven't done much on the share repo side. So maybe you or Steve, if you could address that. And my second question is you talked about parts. Obviously in the -- it was helped by acquisitions, but on a same-store sales basis or on an organic basis, can you just talk to how much -- what -- how much the business was down?

Sure.

And then my last question just relates to your broader view on the OEs. Where are they in terms of production cuts and how would you handicap 2017 if you had to? Do you think we are down again? Thanks.

Sure. Let me see. Let me take all those. We will get them all in here, Jamie. Let's -- we will start from the back and work forward. How is that?

That's good.

2017 -- I'll be honest, I am soft, as I said a minute ago, I am less on 2016. As I've told you before, if I could put a crooked two on the front for US retail sales, I would've taken it. I told you that on the last call. I lean more way under that right now from a Class 8 perspective. There was 53,000 units delivered in Q1. That's not going to grow as we go forward, in my mind. When you look at where the order intake has been -- I am talking about 2016, and I'll get you to 2017 -- I do not expect -- I expect -- where I was at 200 when I talked to you all in February, I'm probably more like 190 now. Okay?

Okay.

And we started at 53 in the first quarter. When you look at the -- when you strip out the last two months, and you strip out export in Mexico, the order intake number was like 13,800, 13,600, and 12,000-something for US and Canada. That's not going to get you where you need to be. Obviously as backlogs continue to decline and get eaten up, we will find out how strong and how real those backlogs are at the OEMs as we go forward. Okay? I don't see 2017 being a huge bounce back year either, to be honest with you.

Could it be flat?

Yes. It could be flat.

I mean, do you think flat, down -- you know what I mean -- flat, down modestly?

Yes. I think flat, down modestly. I don't see 130,000 units [in this] retail, but I see -- I wouldn't -- that's the way I'd tell it right now. And a lot depends upon what's going on, but I can see 175,000 units.

Okay.

I'm just going to tell you, it's just my gut. I don't have all these charts and graphs to gauge it on, but being through these cycles a few times, my gut tells me that this is not just some big -- I am not going to sit here and tell you that I'm going to project it to grow in 2017. I just can't see it. You're still going to have more used truck pressure, valuation pressure because we are going to be coming off bigger markets, and so there's going to be more used value -- used coming in. Freight is still choppy out there right now. And I just saw the ATA report yesterday that March was the biggest decline since 2012, sequentially. It was 4.5%, something like that. It's just choppy. And so, there's an oversupply of trucks.

Okay.

You can just look at -- everybody is at rates, or the rates are being pounded pretty good out there, from what I hear. From a broad market perspective. You will always find areas that will have, oh, this is great here; this is great. But from an overall broad market perspective, market customer rates are getting a lot of pressure. So I just don't think those things bode well when you look at them. We can all sit here and try to live in a pie-in-the-sky world, but I'm not that way. And just take it for what you see.

Okay. And then, my other two questions were simplistically was the -- what did the parts business do on an organic basis and then repo?

Yes. Parts and service was off 3%, Jamie, in OEM.

It was up 3% on an organic basis?

Off.

Off, off -- off, yes, that makes sense. Okay, 3%.

Off 3%.

And what would that have been -- what is that relative to the fourth quarter or whatever, if you could just remind me?

Sequentially, let me pull it -- we were actually up a little sequentially, I think. I am going to have to pull it; we were pretty flat, Steve, weren't we?

Yes. We were up.

We were up slightly. I don't have that one right in front of me, sequentially --.

Up 3%.

Up 3%. Okay? We were up 3% compared to Q4.

Okay.

But we were off 3% compared to year-over-year. Because we were still running a lot harder in the oil and gas business in the first quarter last year than we are now. As I said, I think the first quarter bottomed out.

And that's what gives you the confidence that you are bottoming, because you saw the sequential increase?

I saw the sequential. The only concern I have is I look around at what I've seen in the first three weeks of this month, and I haven't gotten a great flavor or feel for it, I'll be honest. (laughter) But we seem to be a little more broad in the center of the country, soften this April. So I am going to measure and monitor it very closely. I don't see as much seasonal pickup as I typically see right now, I will be honest about it as I always am.

I don't see it in the first three weeks of April. And I'm hoping we can close strong and surprise me here as we finish out the month. But I don't see -- I don't have the same seasonal pickup feel that I typically get once the sun pops out and we pop through mid-spring and we get into summer, which we will be. I don't see it now. Maybe it's a little late. We'll just watch it and measure and monitor it.

But like I said, but the oil and gas stuff has bottomed. Those stores, I think, have bottomed and are starting to -- are going to start climbing back as they've made adjustments to their business models. They are not going to climb back to where they were without oil and gas, but they have made adjustments. They have gone out and captured other types of businesses. And I feel they have bottomed, and will grow sequentially from where they have been. (multiple speakers) Okay?

I am just going to have to measure and monitor some of these other areas very, very closely. And what was the first question?

Repo, repo.

Repo?

Share repo. Buying back your stock, why aren't we given where your stock has been relative to the rest?

You will see that this quarter, Jamie. We are going to undertake -- that is going to be undertaken this quarter. Okay? And probably rather swiftly.

Okay. Okay. All right, that's helpful. I will get back in queue. Thank you.

We have a $40 million share repurchase approved at the last Board meeting, and we are going to undertake that starting soon.

Okay. That's good color. I appreciate it. Thank you.

Rhem Wood, BB&T.

First, Rusty, can you talk a little bit about pricing in the market, what you are seeing on the new Class 8 side? Is anyone being aggressive, especially with one of your competitors with some extra inventory? And then can you talk about how you think you can -- what you can do on the margin side, especially on the new Class 8 side, going forward?

Well, margins are going to stay -- I believe our margins are going to stay similar to where they have been. Right now, I think they were blended in more like six, seven, in Class 8, were in the first quarter. So, I think that's -- we are hoping to keep them there. It will depend on -- a lot of that has to do with mix of business, sometimes, too. How much small business and how much big fleet business we do. So, we'll just have to see where the deals come out. Obviously the onesie-twosie business is more profitable than selling them 100 at a time or 500 at a time. So a lot will have to do with mix of business.

I do see the competitive landscape is finally -- people are starting to get more aggressive in pricing. So, that could put some pressure on us, obviously. And I think it will. There is no question that we will feel some pressure, but we are going to do our best to maintain. But if we do get a bigger mix of fleet business, then you will see that margin come down somewhat. But we've always maintained a pretty steady margin. I don't see it rising, I should say that, to be honest with you. But at the same time, I do see a bit more competitive landscape out there amongst the OEMs at the moment.

Okay. Thanks. And then, did you guys give a same-store absorption ratio?

No, but it is going to be -- where is it? Let me give you one. 107. A little bit -- slightly higher than 106.4, which obviously was off. But we've undertaken some expense cuts. As we said, business was off 3% from compared to last year. But we have undertaken quite a bit more -- you'll see more expense cuts continue to roll in, as I said. Expenses will continue to go down throughout the remainder of this year with the initiatives we have undertaken continue to take more effect.

Okay. And then, last, on the interest expense, it was up a little bit in the quarter. Was there something unusual in that? And how should we model that, going forward?

No, there wasn't anything unusual in that. Modeling going forward, as business slows down, we look for our inventory levels to drop. A significant portion of that is related to our truck inventory and floor plan. So, it's just tied in with that. So I would look for it to decrease from this Q1 run rate as inventories come down with the softening truck market.

Okay. So, look more like it did on a year-over-year basis, I guess?

Yes.

Okay. All right. Thanks for the time.

Kristine Kubacki, Avondale Partners.

Most of my questions have been answered, but I just want to drill on them a little bit of oil and gas. And I know we're coming off of an usual cycle, but we are kind of getting back to the price of WTI where maybe we see some rigs being deployed. Not sure if that is going to happen. But based on the age of the equipment and what you hear from customers, if we do see some of that activity to pick up, how long would it take to see some aftermarket activity coming your way?

If it picks up, we will be right there with them. If we -- if they start drilling again, you would see our -- I will see -- our service work would pick up pretty immediately. There wouldn't be a lag, really, in between it. Because obviously some of that equipment that has been set will need to be refurbed -- or not refurbed; refurbished, maintained, getting it ready to go. And we will have to be out supporting the jobsites, like we always have in the past.

So, it would be pretty immediate if that started -- if you see rig counts and stuff do rise, that start and are underway, that we will be out there. But I don't see that happening right at the moment, I'll be honest. I haven't looked the last -- well, two weeks, three weeks ago, it wasn't. I know the rig count was down last time I checked Baker Hughes' rig count deal a couple of weeks ago. I haven't looked in the last, I don't know, three weeks. But we would get an immediate effect from it.

Okay. No, I know they are still trending downward, but I'm trying to be hopeful. Appreciate the time, thanks.

(Laughter) me, too. I'll be with you in the hopeful part, okay? I just think it's going to take some stable, continued -- not just some 60-day number. It's going to take a six-months number to get people moving, in my mind. You're going to have to have a six-month number of somewhere above $40 -- around that dollar marker of oil to get some people moving. (multiple speakers)

Okay, thank you very much.

Barry Haimes, Sage Asset Management.

Had two quick questions. One is, could you just characterize what you are seeing fleet versus medium versus small trucking companies? You might think that, given the rates and all the uncertainty, that the smalls would be the most reticent. But I'm just curious if you are seeing differential behavior by size. And then second question, if you look at any market share shifts you're seeing in your business -- Navistar versus PACCAR versus the other guys out there -- just wondering what you are seeing. Thanks.

Sure. I think it's pretty broad. It's hard for me to really define one segment this early in the choppiness. This rate pressure has only -- has really been this year. Rates still maintained pretty good through last year. It was pretty solid up until the last six months or so. Spot rates started going down in the summer last year, but most contracts ran through the year; it's when everything got moving again here.

But I can't really pinpoint, Barry, one area that I think is pretty much broad across the whole sector. I think we will continue to monitor it. We might see some shifts as we go forward as to who's taking it the hardest. But we are currently -- probably the biggest inhibitor besides rates right now is valuations of used trucks. There are plenty -- there's just too many trucks in the marketplace, and the used truck valuations are the biggest overhang for some people trading their equipment that need to, I'll be honest.

Then when you look out as far as manufacturers, pretty much maintaining, I think, where we've been. I haven't seen the first -- the latest numbers out. But I haven't seen any huge shifts from where it was last year, to be honest with you, for any of the manufacturers, I don't think.

Okay, great. Maybe just one quick follow-up. You were mentioning, Rusty, that a couple of other areas of the business, you've seen some incremental weakness in April. Any categorization by end market or geography? Or is it -- I'd be curious if there's any theme to it. Thanks.

No, really, it was -- not really, I'll be honest. I saw a little bit, not on the coast in the Southeast, but a little bit in the Southeast and a little bit up in the Ohio-Illinois area right now. But look, it's early in the month and I don't want to scare folks, but I'm very open book as to what's going on. So we would continue to measure and monitor and make the adjustments where necessary.

I think some of it may be in the Illinois area. Some of those consolidations are in that area, so there may be a little shock going on inside my organizations from those, from consolidations at the same time. That may be one of the reasons. And some of those consolidations were in the Southeast, in Georgia, too. So that may be some shock inside the network, and there may not be as much -- overall broad hit as what I've -- pressure as what I'm seeing. It just may be focused in those areas.

So, let's hope it all washes out and we get through May and get through these store consolidations. I think these store consolidations are going to be a really -- while it's a painful thing to do, it's not something we enjoy doing, I do believe it's dictated to be done, because most of it was on the Navistar side. And there were little bitty locations that, when you really looked at all the revenue inside of all of them, and those were the close proximity to other locations, and the increases in technology and mobile services and the way we can take care of customers, it made a lot of sense from our perspective.

Great. Thanks, Rusty. Appreciate it. Good luck this quarter.

Thank you. And I'm showing no additional questions from our phone lines. I would now like to turn the conference back over to Mr. Rusty Rush for any closing remarks.

Well, I appreciate everyone joining us this morning. We look forward to talking to you I guess it will be, what, in July on our second quarter earnings release call. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.