Rush Enterprises Inc (RUSHB) 2016 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Rush Enterprises second-quarter 2016 earning results conference call. (Operator Instructions). As a reminder, this conference call may be recorded.

I would now like to introduce your host for today's conference, Mr. Rusty Rush, Chairman, CEO, and President. Please go ahead.

Good morning, everyone, and welcome to our second-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; Derrek Weaver, Senior Vice President, General Counsel, and Secretary; and Mike McRoberts, Senior Vice President and Chief Operating Officer.

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 risk and uncertainty, 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 $1.03 billion and net income of $10.8 million, or $0.27 per diluted share. Our results this quarter include a restructuring charge of $900,000 relating to dealership consolidations and real estate impairment.

As expected, continued softness in the energy sector, a choppy freight environment, excess Class 8 fleet vehicle capacity, and declining used truck values negatively impacted our financial results this quarter. In anticipation of these market conditions, we implemented significant and broad-reaching expense reductions throughout the first half of the year. These included personnel and variable expense reductions and the previously announced consolidation of Truck Centers in eight states. While we are beginning to see the benefit from our expense management efforts, we do not expect to realize the full results of these actions until later this year.

In the aftermarket, our parts, service, and body shop revenues were $328.7 million, down 7% over the same time frame in 2015. And our absorption ratio was 110.3%. Our results continue to be impacted by softness in the energy sector in the central United States. In addition, Truck Center consolidations that occurred in May and June and the overall decline in the Class 8 truck market further impacted by our aftermarket sales in the second quarter.

We expect our aftermarket gross profit per day average to remain at the same pace for the second-quarter performance -- like the second-quarter performance through the rest of this year. Despite market headwinds, we remain committed to our long-term strategic growth initiatives in the areas of all-makes parts, service technology, and natural gas fuel systems and believe we will begin to see results from these initiatives next year. In the interim, we continue to diligently manage operating expenses and aggressively pursue opportunities for increased aftermarket business.

In the area of truck sales, US Class 8 retail sales were down 23% over the second quarter of 2015, while our Class 8 truck sales decreased 45% over the same time period, accounting for 4.9% of the total US Class 8 market. Our Class 8 new truck sales were severely impacted by reduced demand from several of our large fleet customers, along with the overall sluggish Class 8 truck market this quarter.

In addition, an oversupply of Class 8 used trucks across the country, reduced demand for used vehicles, and less opportunity for exports have caused used truck values to decline at faster than historical depreciation rates, impacting both new and used Class 8 truck sales.

For 2016, ACT Research forecasts US Class 8 retail sales will be 201,500, a 20% decrease compared to 2015. We expect our Class 8 truck sales will continue to be impacted by market conditions and remain at current levels through year-end.

Turning to medium duty, we sold 2,792 Class 4-7 new trucks in the second quarter, down 4% from the same time frame in 2015, but accounting for 4.9% of the total US market. Our medium-duty business, while solid, was down slightly due to the timing of several large fleet deliveries earlier this year.

However, we continue to see demand for our ready-to-roll equipment from a range of market segments across the country, allowing us to meet customers' immediate demands. In the second quarter, we added four trucks to our product lineup in Las Vegas, Nevada, expanding our medium-duty offering across the southwestern United States.

ACT Research forecasts US Class 4-7 retail sales to be 230,200 units in 2016, a 5.5% increase compared to 2015. We believe our Class 4-7 new truck sales will remain flat with our second-quarter performance through the remainder of the year.

In closing, I am thankful to our employees for remaining focused on our customers, as well as our long-term initiatives, while managing expenses across the organization. Their commitment is sincerely appreciated as we work through this challenging time.

With that, I will take your questions.

(Operator Instructions). Jamie Cook, Credit Suisse.

I guess, Rusty, a couple of questions. One, as I think about the second half of 2016 and the comments that you made with regards to how you view Class 8 retail sales and medium in the back half of the year, and your comments on gross profit lead me to believe or concern that consensus in particular is a little too high, so your thoughts on that?

The other side of it is you did make some good progress in the quarter, in my opinion, on G&A. You are starting to see those benefits, so I don't know if that could offset that at all. My second --

(multiple speakers)

-- wait, two more. Second question is, any signs of oil and gas bottoming? And third, just broadly your view on 2017 as last month ACT lowered their forecast to a down year. Just wanted to hear your thoughts relative to how ACT is thinking. Thank you.

In regards to our performance in the second half of the year when it comes to truck sales, as I said I expected heavy duty to remain fairly flat. Now I didn't give my thoughts on where the year might end up. That 200,000, that was ACT's thoughts, right?

Yes.

So, as I look at it, that's -- I am probably going to be a little softer than that, okay?

Okay.

I just see backlogs declining further as we go. You look at the order intake numbers, and it is catching up and I do think there are production cuts going into effect. Now that being said, we're still eating away inventory levels there, too, which obviously affects retail sales.

So, I think we will be flat with our Q2 deliveries, pretty much. That's just my take on it. But I, for sure -- where we had, like, I think, 53,000 and 52,000 the last two quarters, I think, in US retail sales, somewhere around that 105,000 number, I think it might be -- it may be closer to 190,000 than 200,000. That's what I think.

Okay.

You might get some pickup towards year-end, and your comment on G&A, yes, I'm real proud of what we have done G&A-wise. If you strip out S, as you know, I always look at really G&A and strip S out because that is really totally brand-new truck sales, right?

Yes.

We're down basically about -- including the store closures, which didn't have full effect in the quarter, we are down 10.9%, right, when you look at it sequentially. But same-store basis, we're off 6.1%, okay?

Okay.

So, that's a good job for our people, right, in managing. And I do believe we still have more in there, okay?

Now when you ask about guidance, one thing I am a little bit concerned about, while I expect to maintain the same run rate from a parts and service perspective, we have been having, because we did not get the pickup we normally do seasonally, in March, April, May, June. It has been pretty flattish, went down, then back up, it has just been bumping around -- allocated from working days and are pretty average. The back half of the year does have three less working days in it, which equates to roughly less than $6 million of gross profit, so that will be something, along with holidays, et cetera. While I expect to maintain the same run rate, I do believe that it is going to be difficult to achieve the whole total being the same.

At that time -- and counter to that, I expect expenses, as I said, to continue to do a better job of managing expenses in the back half of the year. So, what was the second question again, Jamie? I got (multiple speakers)

The second question was any bottoming of oil and gas, and third was 2017.

Yes, oil and gas bottomed, in my mind. I think I said on the last call I felt we were getting into the bottom from a parts and service perspective. We have already been in the bottom from a truck sales perspective. There are no truck sales, okay?

But from a parts and service perspective, for sure we have bottomed, okay? And you would expect -- if you look, if you watch, it is nothing big. But I have been watching rig counts for the last six weeks and they are coming up eight rigs a week or nine rigs a week or 10. It is just going to slowly keep picking away.

Inventory levels are coming down. There is not going to be any big boom. But I would hope as we get out -- but completions are coming up, also, because there are so many uncompleted wells. I would hope we'll start to see a little bit -- it is not going to be something that is going to take us up over the top, but start to see some little better performance from a parts and service perspective in the oil and gas regions in the back half of the year, really the back quarter of the year, somewhat, if this trend of the last month and a half continues, right?

2017 outlook, the thing about it is we're coming into selling season, right? We're coming into order intake season once we get through the summer. And I have been asked this a couple of times and I said give me until I see what happens in October, November, and December, right? I mean, I can throw a dart on the wall for you right now, but it is going to be very interesting because these are usually our big order months, the fourth quarter of the year, right, as everybody's ordering up.

Depending -- and especially -- it may be pushed out even further this year, given the short lead times, okay? Sometimes it starts a little sooner, so it is going to be harder to get a read on because customers know that getting a truck is going to be almost add water and stir, right? You're not going to have these six-month lead times to get vehicles that we had two years ago, if you'll remember. So you don't have that, so you are going to have to really get a read on that, but if you want to throw a dart on the wall, 170,000 US retail at best.

Okay.

Because the backlogs are coming down and there is no way -- once we get through this, I just don't see how it picks back up greatly into something much better. We're eating away at inventory levels, so they are eventually going to get in line, and if your backlog is down, it doesn't really bode that well for 2017.

Okay. All right, great.

And used truck values. And, again, Jamie, used truck values. I have talked to you before and I have said used truck values; they are not changing. Used truck values are still declining at a more rapid rate than normal depreciation cycles, okay?

Okay. (multiple speakers). Any color on sequentially or year over year in terms of what you're seeing?

You can say -- it depends on the [cycle]. Year over year, take a 2012 model or 2013 model or whatever, it is probably declining an extra -- say a 2012 model that normally would decline this much is probably declining -- it is probably down close to 8%, 10% more over the normal depreciation cycle than it normally would be.

Okay.

And that number is still growing, so without getting into the [exomatics] and not dollars and stuff, that number is still growing and we're still looking for a bottom, to be honest with you.

Okay, cool. I will get back in queue. I appreciate the color.

Bill Armstrong, CL King & Associates.

You mentioned that large fleet customers reduced demand. Are you seeing them really just cutting back across the board or perhaps did you maybe lose some market share? Are they going elsewhere or is this just them hunkering down and really just waiting to see conditions getting better?

I would tell you I can't say that maybe -- of course, I pick up other customers, too, but you are always sometimes losing a couple. But 80%-plus, plus, of what I just mentioned is people just not buying, a lot of it affected with used truck values and some that overbought, so -- that don't need to continue to refresh. But a lot of it has to do with used truck values, right?

If you've got a plan in place and then values drop on you and you have got an issue inside your balance sheet as to where you are at, from a valuation perspective it is hard to go trade unless somebody wants to figure out what to do with that extra money.

So, it's both. It is not a loss of customers. I can think of our top five that maybe we're not doing as much business with this year. One of them, we might have lost a little, but it would be the smallest one of the five, okay? So 85%, 90% of it is just a matter of people are not purchasing for one reason or the other.

Right, got it. And getting back to the rig count discussion, you have indicated in the past that your parts and service business responds pretty quickly to changes in rig count. Obviously, we have had a little bit of an upswing over the last couple of months. You're looking right now at about flat, kind of a flat run rate for parts and service. Do you think there might be some upside to that if we continue to see the rig counts recovering?

I don't know that I want to jump out and say that. I'm hoping there will be some, but it's not going to be dramatic, I don't believe, because we are talking about rig counts up eight units this week and this this week. We are not talking about jumps of 50 units or 50 rigs going into service or consistent weeks of 30 rigs going into service. We are not seeing that.

But I would like to believe that there may be possibly some uptick in it. As I mentioned, the only downside to all of it is this year, the way this year laid out with having a leap-year year, et cetera, and the way the calendar laid out, I had three last working days in the back half of the year. When I say that, Monday through Fridays, not that we are not open on Saturdays, but truly those are much more prosperous days. I have three last of those days to work in than I did the first half of the year, so that's going to be a little bit of a deterrent.

At the same time, I hope what you are saying does come to fruition, but I have a feeling if it does, it is going to -- we need a few more -- a couple more months of this to really see any real uptick in it, okay?

Right. Okay, that makes sense. Thank you.

Brad Delco, Stephens.

Rusty, I was trying to do some math on your, call it, your [190] expectation for this year. It seems like it assumes some improvement in market share in the back half of the year. Is that based on visibility with some of those larger fleet customers you have or how should we expect market share, I guess, to trend in the back half of the year?

I would expect our market share is as the overall market goes down, if I am staying flat, it is pretty easy to figure out. But mine will be up, okay, when you look at the overall market share, right? So, that's good math on your part, Brad.

But I back into a 6% number. Does that seem out of line?

Yes, I think you are backing into where we are looking at, right? That's what we believe, too. We have seen the bottom of our market share, okay? If you think it's easy for me to come out here and say 4.9%, you are wrong, but I understand it. But I also understand I believe it's an aberration and we will get back to more historical levels of the last couple years.

And then, I guess I would imagine, and Steve hadn't given the breakout yet of the gross margins per truck line, but I would imagine heavy-duty margins were strong. You saw nice improvement in parts -- or in your truck sales gross margin. How would we expect that to trend in the back half of the year? I guess if the improvement in market share is a function of more fleet customers, that would probably pressure that number. I am just trying to put A and B together here.

Right, it may not be the fleets I spoke about, but yes. That could be a little bit of market share -- market -- margin pressure, because our margin was high, but we had really no fleets hardly in this second quarter. But we do have a few more fleets coming in, not the ones that I was referring to that I missed that are not buying this year, but a couple -- other conquest accounts that are showing up to help maintain the same -- where we have been, to be honest with you. So I -- maybe markets -- margin is slightly down, slightly. Not dramatically, but slightly.

And not to say the bottom of -- not to Q4, let's say. It won't be that low because we're up a point -- 1.3 from Q4 of last year, so it is somewhere in the middle there.

Okay, perfect. And then, maybe, I am going to try to pin you down on -- you mentioned something about not realizing the full benefit of the consolidation yet, and you said back half of the year. Maybe back towards Jamie's question, if we're thinking flat heavy-duty, flat medium-duty, flat parts and service, trying to get a sense of does that mean lower G&A and higher earnings or improved absorption? And is that a third-quarter or a fourth-quarter event?

It will probably be, I'm going to say, over both, okay? Spread over both.

So, we will see G&A down (multiple speakers)

Q4 without a doubt will be the best G&A quarter. It typically is. If you go back and look at us historically, we typical buckle down as hard as we can in Q4 and a lot of your taxes and things run out in Q4. That's just seasonal. So Q4 will be the best G&A quarter.

She was trying to get me -- she was talking about a consensus, right? Well, I usually don't comment on that. My comment would be if we remain flat, we're not going to make everything up saving our way. As I would say, you can't save your way to greatness, but we can affect where we are at, but only to certain levels in performance.

But I would -- if we can stay flat in those areas, maybe slightly down in total overall gross profit from a parts and service perspective, given the last working days that are there, we should be able to more than make that up, plus a little something (multiple speakers) with some good management, just some doggone good G&A management, and the Company is exposed -- highly focused upon that right now.

No, no, you guys definitely demonstrate you're doing a good job on that front, so keep up the good work. Thanks, guys.

Neil Frohnapple, Longbow Research.

As a follow-up to Brad's question, Steve, are you able to provide the gross margin breakdown by truck type in the quarter?

Yes, heavy-duty was 7.3; medium-duty was 6.0; light-duty, 5.4; and used, 9.2.

Got it. And then, Rusty, can you comment on used truck sales trends? I think you mentioned last quarter you had seen a pickup slightly in March after a slow start to the year. Wondering if that continued at all or was that more of a head fake?

And I guess just as a follow-up, do you think that used truck prices are reaching a point in the market that could start spurring incremental purchases or is there something else you can point to?

Not right now. Not right now. I would tell you that sort of a head fake. It didn't continue to trend that way, for sure. March was better than January and February, but they were terrible. And we pretty much from a unit -- yes, we were just basically flat, I will be honest, from quarter to quarter. So, just a head fake.

It may be spread more evenly from a monthly perspective than the first quarter, but flat overall. So, we will take the head fake on the answer on that one from a volume perspective, and that's in spite of initiatives on our part to promote higher volume -- try to push volume out the doors.

It is just there hasn't been much -- the demand has been down. I think you will see that across -- anybody you ask, demand has been softer. And I don't see a lot of change in it right now. There is not -- like I mentioned, the export market the last year or so has pretty much dried up. Unless something opens there and we get some -- I know June was a better freight month, we hear, but one month does not make a year and a trend line, okay?

And we still had overcapacity. Those issues just didn't disappear in the last 60 days. Sometimes people are looking for everything to disappear that quickly, but it takes a while to turn that ship. Or it takes -- the market has to reach -- go backwards a little bit to get to an equilibrium before you get a pickup in it, and I don't see anything there that says used truck values are going to get any better anytime soon, especially when you look at the supply side.

The next couple of years, we're going to come into years where we sold a lot more used trucks that will be coming back, and so supply side is not going to get -- it is only going to grow over the next couple of years. So, we're going to need a better market overall. There will one day be an inflection point, to your question, Neil. There will be an inflection point to where used will make a lot of sense. Late-model used will make sense versus the price of new, but at this moment in time, I don't see it in the near future.

And then a follow-up, Rusty, that's helpful color. You mentioned your inventory levels on the used side are at appropriate levels, but it is your sense that industrywide that we are still --

We've still got a little bit of a glut. I said mine are valued properly. I can probably take -- you want an appropriate world? I would probably take my total inventory down a little more. But that's the problem. Every deal you're on right now, you are in the middle of managing this. When you have done this as many cycles as I have, you know where you're at. The clock goes all the way around. It is 360, right? And you know where you're at in this piece of the cycle, and everybody has a trade. Everybody wants to trade a vehicle.

When you are in a growing market, like we were in 2015 and 2014, you don't have as many trades to deal with. You've got a higher used truck market. Right now, everyone has a trade. Well, if I don't take trades, I don't sell new trucks, so I have to balance in between making sure I do the best I can to keep the valuations proper, even if I'm having to hold inventory a little longer than I want, because it is going down faster. It's a tricky slope to ski down, trust me. But if it was perfect, I might take a couple, 300 units out right now, but I've got to continue to be able to trade for stuff. I got to make sure my values are right.

So it is the game we all play and it is just that part of the cycle right now, but trust us. We have done this a few times in our lives and I'm sure we will figure out a way to manage through it. As you know, we took a write-down in Q4 last year, and right now we believe we're still managed to proper valuations. We look at everything every quarter and check our valuations and make the proper adjustments.

Right, okay, thanks very much, guys.

(Operator Instructions). [Gary Haffernon], Linde, Hansen & Co.

Rusty, I would like to stay on the used truck inventory valuation and just wanted to press the topic a little bit. And knowing that as a shareholder, I've been with you on more than one 360-circle on this before, we have had periods where we thought we had the used truck inventory valued properly. Unfortunately, in the next period, used truck values keep on going down and we find ourselves having to take a write-off or a reevaluation hit.

Why is it that we think that we are properly valued today or we have a good handle on this, despite the fact that your comments are saying, hey, you know what, the used truck value is still falling pretty fast? We have run into a problem with this before.

Well, let's step back a minute. If you go back and look, you have been an investor, where in Q4 you'll see I took a write-down in Q4, correct? I look at it -- what you got to understand is I look at also levels are down. Go back to year-ago levels were at 2,500 units, not 2,000 units or so.

So, first off, the inventory is down year over year. I took a write-down in Q4, and by the way, I look at it every quarter and make adjustments, not just the ones you see. It is just those stick out sometimes, right? There are adjustments inside every quarter we do. We reevaluate our inventory every quarter. If it gets where it is too much, then I bring it up.

Other than that, we look at it every quarter, make adjustments every quarter, and don't think we didn't do it at the end of Q2. But I don't discuss that because that's part of normal operating business every year, every quarter. So, that's why I believe we are properly valued, to be honest with you.

Fair enough. Very good. In regards to parts and service, we have been going through a period here now for a couple quarters where the purchase of new is dropping off. Used truck values are going down. My way of describing this, the truckers are like a deer in the headlights. I am not sure what's going on here, and they freeze. We also know part of the parts and service revenue is associated with new truck sales, right, when they ask for some upgrades or just setting them up before they go out the door.

In regards to this business coming back, or we start to see a pick-up in used truck sales, shouldn't we see a pick-up in parts and service first as people start to feel confident again or I got to make sure everything is up in running order here because I see things coming back?

Let's take a look. If you look at the earnings release that I put out last night, the press release, it said year-over-year revenue, parts and service revenues, were down 7%. You want to break that into its pieces, basically it is $38 million, of which $29 million was related to oil and gas stores and another $8 million was related to store closures. So that gets you pretty close to flat with everything else, within a couple million bucks.

So, that's really where most of that is coming. Now it hasn't picked up, but if you want to strip it apart and look at it, that's really where the downturn has been.

So, that means a lot of it is still -- so that means we probably -- now remember, truck sales are way down, right, and there are 4,000 -- there's like 4,000 something Class 8s. So we probably picked up a little business in some areas because, as I've always told you, probably closer to 10%, and that can vary depending on the mix of trucks, of our gross profit from parts and service, comes from the sale of a new truck, which I said. You are adding on this, you are adding on that. You just phrased it yourself.

But obviously certain market segments, construction trucks, oil and gas, that type of stuff, produce more of that business. So, that was already gone last year, so I'm going to basically tell you we are probably pretty flat across the whole country. Now, certain areas are up, the center of the country, Illinois.

Sure, sure (multiple speakers) there is going to be different parts that are up and different parts that are down. (multiple speakers).

As we are looking for an inflection of the business, would it be reasonable to look to parts and services flat now, stripping out the parts that you mentioned, saying, you know what? When we start to see that growing, that would be our first sign that the customer is starting to feel a little bit more confident and starting put a little bit more money back into their fleets.

Yes, you can say that. We haven't seen any growth in that. We are pretty flat across the whole country in that, like you were saying. When you strip oil and gas, you strip closed stores, year over year we are pretty flat.

Yes.

Now (multiple speakers) 5% to 6% range, that was -- 5%, 6%, 7% range, that is a normal same-store year-over-year growth rate for us when you look at everything. But, right, so (inaudible) can say it is off, but we are basically flat. So, yes, if we start seeing that, that could be an inflection point, but I'm not seeing it right now, I can tell you that (multiple speakers)

I understand that. I know where we are now. I'm thinking ahead, looking forward.

I understand. You are looking forward. You're trying to know when to get in. Go ahead.

I am already in. Can you comment on the status of financing in the industry? And if you wouldn't mind, a quick comment on a press release I had seen about you partnering with a new finance company?

The finance business is -- this market is still pretty -- it is like it has been. There is still a decent market. We are not having really that much trouble getting good credit priced. We haven't seen -- I have heard people. I have seen those sign here. Somebody has told me. I've read an article or two about it, it is getting a little bit tighter. We have not seen the effects of dramatically or anything of that coming forward. I haven't seen a lot of people pulling out of it or anything like that right now.

So, my answer is no. We are still about where we were last quarter or the quarter before when it comes to the portfolio of finance companies that we -- our third-party lenders that we use. So, in regards to --

Yes, we added one, but that is not unusual. It just so happens that Marlin is a public company and they wanted to put out a press release letting the world know that they were in the heavy equipment truck business and they were partnering with Rush.

But our top three for a long time have been [LG] who is now [BMO], PACCAR, and probably Wells Fargo are the top three providers, and we probably broker for another 30 or 40.

Little pieces here and there.

And they all have their niches in the market and Marlin fits into that portfolio of offerings for us.

Okay, okay, I appreciate that. And Rusty, if you would, the last question I have is on capital allocation. The press release indicates that you spent $20 million on share buyback, and if you -- and certainly as you're -- if you're trying to reduce your overall inventory, that should be a positive cash flow scenario. And we also know from past cycles when things get a little tough, it is when certain dealerships reevaluate their desire to be in the business long term and acquisition opportunities can arise.

So, can you tell us for the next 18 months how you see your capital allocation decisions panning out and prioritize it a bit?

Obviously as I look at our capital allocation the last quarter, pretty good quarter. You can tell that we just finished spending all that real estate money. As I have told folks, we spent a couple of hundred million in real estate over the last couple years. That doesn't mean we are not spending money on real estate, but that big push of real estate came to an end. We still pick up cash nicely on the balance sheet, along with buying back $20 million in stock, so we were very happy with that outcome in Q2.

When you say getting inventory, selling trucks does not relieve -- pump any cash as it is financed dollar for dollar with BMO now -- it used to be GE -- on a floor plan, right? So other than the spread that goes to profit, it really doesn't have -- that is the only part of a truck sale that has an effect on cash. The rest of it is 100% financed or at BMO on a flooring line.

If you talk about acquisitions going forward, I haven't seen much yet, but being -- gone through this cycle enough times I am sure the calls will be coming.

So, we are looking to continue to build cash throughout the rest of the year. I think you'll see that. In our projections, the cash will continue to build throughout the rest of the year, so we will be set and in good shape if something does come along that makes sense for us from an acquisition perspective. So, we feel good about that piece and how we will be sitting.

When that happens, when that inflection point, when the phone starts ringing I don't have an answer. It hasn't started ringing yet, but I would -- I expect by the end of year as people continue to get squeezed out -- there was still some deliveries, a lot of deliveries made. It may not have been a lot of mine in the first half, but there was still a lot of retail deliveries on a $200,000 run rate delivered in the first half.

But that's going to be coming down, and those opportunities will probably start showing up, and in 18 months, probably in the next -- probably within six -- I would say between six and 18 months from now, the phone will ring a lot, okay?

Okay, and how do you prioritize share repurchase in this 18-month period?

For now, I will speak through the end of this year, I have $40 million approved with the Board, and I am probably about $5 million more in this quarter into it, so we're about $25 million has been repurchased already and we anticipate repurchasing the other $15 million by 12/31.

Okay, great. Thanks a lot for the time.

Thank you, and at this time, I'm not showing any further questions on the phone line.

Okay, great. We appreciate everyone's attendance on the call this morning and we look forward to talking to everyone in October with our Q3 results. Thank you all 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 great day.