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Edited Transcript of RUSHA earnings conference call or presentation 23-Apr-20 2:00pm GMT

·31 mins read

Q1 2020 Rush Enterprises Inc Earnings Call NEW BRAUNFELS Jun 11, 2020 (Thomson StreetEvents) -- Edited Transcript of Rush Enterprises Inc earnings conference call or presentation Thursday, April 23, 2020 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Steven L. Keller Rush Enterprises, Inc. - CFO & Treasurer * W. Marvin Rush Rush Enterprises, Inc. - Chairman of the Board, CEO & President ================================================================================ Conference Call Participants ================================================================================ * Andrew Burris Obin BofA Merrill Lynch, Research Division - MD * Jamie Lyn Cook Crédit Suisse AG, Research Division - MD, Sector Head of United States Capital Goods Research, and Analyst * Joel Gifford Tiss BMO Capital Markets Equity Research - MD & Senior Research Analyst * Justin Trennon Long Stephens Inc., Research Division - MD ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good morning, ladies and gentlemen, and welcome to the Rush Enterprises, Inc. Reports First Quarter 2020 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Rusty Rush, Chairman, CEO and President. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [2] -------------------------------------------------------------------------------- Good morning, and welcome to our first Quarter 2020 earnings release conference call. On the call today are Mike McRoberts, Chief Operating Officer; Steve Keller, Chief Financial Officer; Derrek Weaver, Executive Vice President; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Vice President, General Counsel and Corporate Secretary. Now Steve will say a few words regarding forward-looking statements. -------------------------------------------------------------------------------- Steven L. Keller, Rush Enterprises, Inc. - CFO & Treasurer [3] -------------------------------------------------------------------------------- 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, 2019, and in our other filings with the Securities and Exchange Commission. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [4] -------------------------------------------------------------------------------- As indicated in our news release, we achieved quarterly revenues of $1.3 billion and net income of $23.5 million or $0.62 per diluted share. We also declared a cash dividend of $0.13 per common share. In the aftermarket, our annual parts, service and body shop revenues were $428 million, down 2.4% over 2019. Our absorption ratio was 114.3%. This decline in our aftermarket revenues can be attributed to the softness in the market and the significant decline in the energy sector. Regarding truck sales, we sold 3,078 new Class 8 trucks, down 13.5% from the first quarter of 2019. Our truck sales accounted for 6.3% of the total U.S. Class 8 market. This is the result of an industry-wide slowdown in Class 8 truck sales, although refuse, construction and stock truck sales remained relatively healthy. Our used truck sales decreased 15.3% year-over-year. Our results in January and February were down slightly from the same time in 2019. We experienced a much more significant decline in used truck sales due to the COVID-19 pandemic in March. Medium-duty, our Class 4-7 new truck sales were 3,264 units, up 24.9% year-over-year and accounted for 6% of the U.S. market. These solid results were primarily the result of activity from grocery and food service customers in addition to stock truck sales across the country. In most areas of our business, the COVID-19 pandemic had limited impact on our financial results in the first quarter. However, this does not reflect the significant impact we believe this pandemic will have on our company going forward. We're continuously monitoring the impacts of COVID-19 on the economy and our industry, and we are taking appropriate steps to preserve our financial stability during this pandemic. Rush Truck Centers are classified as essential businesses and remain fully operational across our dealership network, though some hours of operation have been modified. We are complying with all CDC guidelines in federal and state and local orders to protect the health and safety of our employees, customers and the public. Turning to the aftermarket, our parts supply chain has remained largely uninterrupted today, but we did increase our parts inventories to support an extra 30 days of demand. The investments we've made in our strategic initiatives over the past few years, in particular, technologies such as online parts ordering, web-based communication, equip us well to support social distancing measures and capture sales in this tough operating environment. With 2,400 service bays and 500 mobile service units, we're as prepared as ever to support our customers with expedited service in a safe environment. Many of our customers have reduced their operations and it's too soon to tell when their businesses will fully reopen. We expect COVID-19 pandemic will negatively impact our aftermarket results in the second quarter. All our truck manufacturers have temporary suspended at least some of their global production facilities, causing uncertainty about the availability of new truck inventory. ACT Research recently adjusted its Class -- U.S. Class 8 retail sales forecast to 127,500 units in 2020, a 54.8% decline over 2019. Our representatives are actively reaching out to customers and prospects to explore every possible sales opportunity. Many customers are delaying purchases due to uncertainty about the economic impacts of the pandemic. We expect the COVID-19 pandemic to have significant impact on new Class 8 truck sales in the second quarter. Regarding Class 4-7 truck sales, ACT Research is forecasting U.S. retail sales to be 147,500 units in 2020, a 44.8% decrease compared to 2019. We anticipate that medium-duty sales will also be negatively impacted as those sales generally track with the overall economy. We are taking an aggressive approach to write-downs to new and used vehicles and believe our inventories are positioned well to meet market demand. In the first quarter, we suspended our stock repurchase program and renewed a $100 million line of credit. I have reduced my salary by 25%. Members of my executive team have reduced their salaries by 10%. And our Board of Directors reduced their annual cash retainer by 10%. We are also reducing expenses and delaying other expenses and delaying capital expenditures. While we are doing everything we can to address the challenges we are facing, there will undoubtedly be a significant negative impact on our business due to the COVID-19 pandemic. That said, our employees and I take pride in being an essential business and supporting our customers through this difficult time. It is important that I thank them for their unwavering commitment to our company, our customers and to keeping themselves and those around them safe and healthy. With that, I'll take your questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question comes from the line of Jamie Cook with Crédit Suisse. -------------------------------------------------------------------------------- Jamie Lyn Cook, Crédit Suisse AG, Research Division - MD, Sector Head of United States Capital Goods Research, and Analyst [2] -------------------------------------------------------------------------------- I hope you guys are wealthy -- sorry, well and healthy. It sounds like everyone is doing... -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [3] -------------------------------------------------------------------------------- I'll take all of the above. -------------------------------------------------------------------------------- Jamie Lyn Cook, Crédit Suisse AG, Research Division - MD, Sector Head of United States Capital Goods Research, and Analyst [4] -------------------------------------------------------------------------------- You'll take all of them, sorry about that. Anyway, good to hear your voice, Rusty and Steve. I guess just my first question, obviously, COVID didn't really impact the March quarter. Can you talk about trends you're seeing in April, both on the truck sales side as well as the aftermarket side, and how you think aftermarket will hold up this year just with COVID-19 and your strategy to increase your aftermarket business? And then I guess, last, last question. What do you think is a reasonable time for the OEs to get back up and running in terms of production? I think PACCAR said they hope to be up and running by the end of the second quarter. I mean how do you think production ramps, I guess, in the second or third quarter, if you have any insights? -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [5] -------------------------------------------------------------------------------- Sure. Sure. Well, I'm going to take it in reverse order real quick, Jamie. As far as -- from the manufacturer perspective, it's different for all of them, right? Because -- and I don't want to get into their plans exactly. That said, I expect, on the PACCAR side, I expect them to be up and running here in the first part of May. I think that's their intentions. A lot has to do with the supply chain, I'll be honest with you. I think both manufacturers are prepared to get up and running, but there's the sub-suppliers, and I think there's some issues across the board with Mexico and some other places that folks are working through. I think that's probably the biggest issues that they have right now besides, obviously, smaller order boards, okay? So when they do come back, I would expect rates to be down -- bill rates to be down, but that's indicative. There's no difference than what we would expect normally in this type of time as part of the cycle. But I would say, within the next week to 2 weeks, you'll have them up and running. And I believe -- and how that goes forward, I'm going to tell you, we saw where the orders were in March, and I don't anticipate much difference in April. So we'll -- I think it's going to be hand to hand. It's going to be hand to mouth and hand to hand, however we want to look at it going forward. It's really hard to project. I mean if you look at ACT's numbers, I mean, yes, 127,500, but that's 104,000 run rate in the last 3 months, okay? That's retail. So that's the lowest run rate since '09. It's lower -- 97,000 in '09, it was 110,000 U.S. retail in 2010. So and I -- so I'm in line. I'm in line with him, I guess, will be my answer. Back to your other question, how are we -- where are we at? Well, I'm not going to get out as fast further fast in the second quarter than what I've lived in right now, to be honest with you. Obviously, truck sales are going to be less across the board from a Class 8 perspective, with the factory shut down in 6 weeks, it sort of stops, even though we're the tail on the dog. That does -- you got that gap you've got to make up for. Now while, with that being said, we have stuff that was in process and delivery that is being delivered. But there will be that gap, no question, because stuff was being -- so it's hard for me to give you an answer. It will be down. I'm still trying to get my arms around how far down because I've started back to work. If you asked me one question -- asked me that question 2 weeks ago, it'd probably be a different answer than it is now because I thought we were going to be back to work sooner at the factories than then. So it's been put off at all the factories. Everybody's given 1, 2 week -- typically a couple of weeks. Then when we look at it, we may give another week or 2, and that's what we've gone through 3 times. So that has a direct impact on what we're going to deliver, right? So because they're not building anything, my end process delivery starts running out than I've got in the pipeline because we always have that because we are that retail guy on the end. So obviously down, it's hard for me to give a number right now for Q2. It really, really is. Once they get up and running, I can see the flow and how many they're building and what we're getting of our backlog, I'll be able to give more. Down? Yes. Significant? No, it's not going to be cut in half or anything, but it's going to be down. I would expect it to be down significantly in Q2 just based on the factories not being in production. For now the most important being, parts and service, right? When I look back, when we looked at it when all this started taking place, I decided we had 2 Marches, all right, and took March and split it in 2 months, okay? Because there was the back half of March, and there was the front half. They weren't the same month. But it has -- gradually, it wasn't. It didn't steeply drop, but it's gradually decreased. And if you've asked me a week ago, I might have said something a little different than this week. But I would tell you right now, and I'm hoping that we're finding a bottom, but I haven't -- I can't answer that for sure because how long -- what am I looking at, 1 week or 3 weeks of stability, right? I'm looking for a couple more weeks. I feel pretty stable from last week to this week. I mean we're talking about -- I'm just -- I've given you what I'm feeling here. I feel pretty stable from week to week, parts and service-wise. But if I'm going to tell you, give you a range of what it's off from the Q1 quarter, I'm going to tell you, a daily run rate from Q1 is somewhere -- I'm going to range it somewhere between 11% and 14%, something like that, all from Q1 run rates right now on the parts and service. I hope it's bottomed. But I -- call me in a couple of weeks before we get in the quiet period, and I'll tell you what I think, I'll get on those mic, and I'll be happy to give anybody updates as we go along. But no, you can't call me. But obviously, that's where I think we're at, okay? I think right now, and I'm hoping that what I've seen, but I don't -- there's no guarantees, right, because this is -- I'll get into my description. This thing is working its way through the system. Remember that construction was still going on. That didn't mean new projects are being let. All retails shut down. So you've got different market segments doing different things. Where retail may be starting to come back as things start opening back up, other segments may be going down that were still running. So it's -- I'm going to have to really -- I know I'm giving you a broad answer here, but really, that's the facts. Its different market segments are doing different things. I expect some to start coming out of it as we open back up. I expect some others to start declining. It's all I've got. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- Your next question comes from the line of Justin Long with Stephens. -------------------------------------------------------------------------------- Justin Trennon Long, Stephens Inc., Research Division - MD [7] -------------------------------------------------------------------------------- So I wanted to shift gears a little bit to G&A, and I was wondering if you could provide an update on how you're thinking about the cuts we could see going forward as you react to this downturn and maybe a little bit of color on when those cuts should start to kick in. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [8] -------------------------------------------------------------------------------- Well, they're going to start kicking in, in this quarter, okay, without a doubt. But we're in the process still of doing them. So as we're looking at them, as I said, the businesses, we had already made some prior, as you know, like in November, we've done some stuff earlier, but that was preparing for a normal market, not for this normal cyclical sort of the cycle stuff that we deal with. We're in the midst of them right now. I've got some goals from a G&A. I mean G&A was off about 1 point over last year in the first quarter, okay, which doesn't sound like a lot, but it's -- when you consider the normal inflationary pieces that we have last year, et cetera, et cetera, our personnel base is down from where it was a year ago, and it will continue probably to -- we'll probably have some more reductions around there, just given the overall market. To give you a little color, I'm hoping to range it, $15 million -- average $15 million maybe in Q2, out of G&A, a little less, somewhere between -- let me range that to, say, $12 million to $15 million of G&A out of Q2 from Q1. And we will be attempting to do maybe a little bit more, but some of that's going to roll in, won't all be effective, it starts to get it all effective in Q2. But we will be extremely diligent in managing to the market as we always have. And I'm comfortable we'll be managing -- we won't be able to make all the lost revenue up. There's no question about that, okay? I can't take all the meat off the bone. That being said, we've shown in past cycles that we do know how to manage through it. And even in '08 and '09, when I reflect back on that, we managed through it and remained profitable every quarter. And I'm hoping we're able to do something along those lines. It's just -- me telling you a number is very difficult in this environment. I just go on our past performances, and we will do everything reasonably right to manage to the market that we're dealt with. But it's really moving, guys. It moves, it moves a lot. We measure it daily, right? Just because I see a little stability for the first 3 days of this week doesn't mean that it's stabilized, but it's just stable off of last week. So I'm hoping, but we'll just -- we'll keep managing and -- but those numbers on your G&A comment, I'm sure that I was pretty comfortable with those, and we'll attempt to get more. -------------------------------------------------------------------------------- Justin Trennon Long, Stephens Inc., Research Division - MD [9] -------------------------------------------------------------------------------- Okay. That helps. And then maybe to follow up on customer mix. I know you've got a lot of vocational exposure on the new truck side. But how are you thinking about your exposure to small and medium-sized fleets that are likely to be in some pretty significant financial distress in this downturn? Is there a way to help us think through that risk as it relates to both new truck sales and your parts and service business? -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [10] -------------------------------------------------------------------------------- Yes. I mean, obviously, those guys are going to get hurt worse, right? They don't have the big contracts, the large contracts, the dedicated -- to as many trucks to dedicated hauls, things like that. It's going to be more market segment-driven, I think, as much as anything. But over the road, there's no question those guys are probably going to suffer here over the next quarter or so. We're still seeing business. I think one of the things I'm hoping is that by the factories shutting down, that our stock truck sales will fulfill some of that, right? So we can use our inventories to fill in there. But there's no question the small guy is going to get hurt worse than the big over-the-road guys. We check regularly across the board with every -- with our large customers and our small ones. I mean we're in contact on a weekly basis with -- because we have a backlog that's not just all big fleets. It is small unit -- small customers, too. And so far, with a few minor exceptions, it seems to be holding together fairly well. Now that's the backlog. But we're -- the intake is going to be the issue right now, and I think everybody is on a little bit of a hold pattern from an intake perspective until they get their arms around -- as everything starts opening back up and things start moving in a more -- or normally -- in a more normal fashion. But there's no question the little guy will get hurt worse. I think, fortunately, we do a lot of business with small customers, but we also have a lot of large customers. So I'm hoping that, that will help us. Typically, in a down market like this, we take share. I don't -- you can go back to '16, go back to '16, you can go back to anytime, we take share typically. Our market share, as you can see, was up in the first quarter. And I would hope it continues to be up across the latter -- the back half of this year. So I feel good about that. The parts and service business, so basically the same answer. Those guys are going to be the guys that take it harder. And you get people -- people just spend what they need, not what they want right now. And that's what -- we're seeing a lot of that going on. When you look at average size of tickets, et cetera, you look at how many tickets are done every day, but you also look at average size. And obviously, we're seeing some impact from what people are buying. They're buying what they need, not what they want. -------------------------------------------------------------------------------- Justin Trennon Long, Stephens Inc., Research Division - MD [11] -------------------------------------------------------------------------------- Okay. That helps. And then maybe just a last one for Steve. Obviously, the energy market has just rolled over substantially recently. How much energy exposure is left in your parts and service business when you look at the first quarter? -------------------------------------------------------------------------------- Steven L. Keller, Rush Enterprises, Inc. - CFO & Treasurer [12] -------------------------------------------------------------------------------- Probably -- certainly less than 5%, probably 3% to 4% of the volumes from the energy sector. -------------------------------------------------------------------------------- Justin Trennon Long, Stephens Inc., Research Division - MD [13] -------------------------------------------------------------------------------- Okay. Great. I'll leave it at that. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [14] -------------------------------------------------------------------------------- Real quick. One of the things that's good about that, if you remember the company 4 years ago, we had like 15% exposure, okay? So even the results we posted in the first quarter, it's got 3% or 4% of energy. So I'm proud of the organization for the shift and the -- and how we've diversified our customer base across where we used to be 3 or 4 years ago. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- Your next question comes from the line of Joel Tiss from BMO. -------------------------------------------------------------------------------- Joel Gifford Tiss, BMO Capital Markets Equity Research - MD & Senior Research Analyst [16] -------------------------------------------------------------------------------- Hey guys, how is it going? -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [17] -------------------------------------------------------------------------------- Going pretty good, Joe, all things given. -------------------------------------------------------------------------------- Joel Gifford Tiss, BMO Capital Markets Equity Research - MD & Senior Research Analyst [18] -------------------------------------------------------------------------------- Yes, exactly. So I wonder if there's any way to kind of characterize your customers -- not your customers, the truck manufacturers, their rush to get back up and running really just to fill the backlogs that are already out there versus production rates as we go into the second half, like adjusting production for what the future order run rate is going to be. You know what I mean? -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [19] -------------------------------------------------------------------------------- Well, I mean, I know they'll do what they always do, and they'll make those adjustments as they go forward. I mean it was almost -- with 7,000 units in April, Class 8, it's like April wasn't there. And medium wasn't anything either. So -- and now -- excuse me, I mean March, I didn't mean April. I meant March. Now we're in April, and I know not much has changed when it comes to -- from an order intake perspective there, it's way off. So I'm sure when they go back to work, there's no question the build rates will be down. I'm not going to get into what their build rates will be. That's their business, okay? I mean I may know what -- I know what their goals are, but that's for them to talk about, not for me to talk about because that's internal information of theirs. So it will be -- it's down, I have to believe, given the size of the market. Most people are going to be down from their peaks. I mean got to be down 50% or something, I would believe. You got some backlog. But I'm not -- but again, that's going to be theirs to give. I mean I would expect from peak builds to be significantly -- I think when you look at what retail sales are going to be and you quantify that to what they were building back when retail sales were 277,000 or whatever they were last year, you can probably back into the number. -------------------------------------------------------------------------------- Joel Gifford Tiss, BMO Capital Markets Equity Research - MD & Senior Research Analyst [20] -------------------------------------------------------------------------------- Yes, because it seems -- a little curious why they're such a rush to get back to work. And then, Steve, can you talk a little bit about if there's any balance sheet impact of being more aggressive on the truck -- on used truck write-downs? -------------------------------------------------------------------------------- Steven L. Keller, Rush Enterprises, Inc. - CFO & Treasurer [21] -------------------------------------------------------------------------------- I mean balance sheet impact, not necessarily. What we're trying to do is kind of stay ahead of this. We're already in a tough used truck market. And with what's going on, we expect volumes to be soft in Q2. And these things, they certainly don't appreciate, so trying to strike that balance between what was already a tough market and not give it away, but when the market picks up, have them priced at the right point to move them. So we felt it was necessary to -- we always have reserves. That's a continuous process here, and the margins we report to you have those reserves inside of them. And what we're communicating is that we went over and above our normal reserve matrix and policies because of the situation we're in. So we hope that we can get back to our normal 8% to 10% margins, but we can't tell you that definitively right now. We may have a couple more quarters in this lower-than-average run rate. They were 5.7% in Q1, which we tell you, historically, we shoot for 8% to 10% on used truck margins, and that's going to unfold as the next -- as we see what happens in the next few quarters. So we're trying to avoid and stay ahead of the curve on that, and we could have some more mid-single-digit margin -- used truck margin quarters as this year unfolds. But there's no real balance sheet impact. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [22] -------------------------------------------------------------------------------- No. But our balance sheet, as Steve mentioned, we feel good about. We're double reserved, how about that, given the environment, okay? -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- (Operator Instructions) Your next question comes from the line of Andrew Obin with Bank of America. -------------------------------------------------------------------------------- Andrew Burris Obin, BofA Merrill Lynch, Research Division - MD [24] -------------------------------------------------------------------------------- How are you doing? I may tell Joe why some people might want to go to work, but maybe it's a different discussion. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [25] -------------------------------------------------------------------------------- Yes, there is a niche out there. There's something to balance that act, right? -------------------------------------------------------------------------------- Andrew Burris Obin, BofA Merrill Lynch, Research Division - MD [26] -------------------------------------------------------------------------------- So just a question, I just want to clarify, for parts and services, the way you report them, you did say that oil and gas is now 3% to 4%. Is it the same for parts and services as well? Is parts and services still more overweight to oil and gas? -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [27] -------------------------------------------------------------------------------- I think yes -- you mean to say truck sales? Because you said parts and service both times, I thought. But anyway, truck sales... -------------------------------------------------------------------------------- Andrew Burris Obin, BofA Merrill Lynch, Research Division - MD [28] -------------------------------------------------------------------------------- No, no, no. I just said parts -- yes, the service business, which is more profitable, that's what I'm trying to figure out. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [29] -------------------------------------------------------------------------------- Okay. The service business. Well, it's -- typically, we're weighted both sides. It's balanced between parts and service. But right now, at 3% to 4%, I mean, I don't look at it going up. The good thing is it's like sleeping on the floor. When you're that low, it's hard to fall out of bed and hurt yourself. So when you're only at 3% to 4%, so -- it's not far to 0, that's what I'm saying. So I think, Andrew, other than to tell you it's that low, and we got -- I kept thinking it declined as far as it could for the last 4 quarters, and it just -- it declined more and more. And we've got a little bit of activity, but again, that's a 3% to 4%, and that was in the first quarter. I'm not sure where it is in this quarter. It could be 2% to 3%, for all I know. This quarter, probably closer to 2%, I would guess, given that -- I made a lot of money the other day when they paid me to take a bunch of barrels of oil. So I just don't see much of a downside to it from where we're at right now, to be honest with you. -------------------------------------------------------------------------------- Andrew Burris Obin, BofA Merrill Lynch, Research Division - MD [30] -------------------------------------------------------------------------------- No, that makes a lot of sense. Could you just maybe give us color? Because you are the largest truck distributor in the country. You're touching a lot of geographies. You're touching a lot of industries. Could you just take us around the country and give us what differences you see around the country and also what industries stand out to you, both in terms of positive and negative? -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [31] -------------------------------------------------------------------------------- Okay. Well, that's a big question. Take you around the country, I guess we'll start east and go west, that's where the sun comes up. Florida, been decent, okay? I wouldn't call it -- I'm just going to rank them in area and just tell you, roughly, Florida has been, if you look at it compared to everywhere else, it's been holding its own fairly well. There's a lot of infrastructure building, a lot of stuff going on in Florida prior to all this. So with everything that was going, with the increase and how many people were moving -- actually, from your state down to Florida, right, there was a lot of that going on. So there was a lot of building and construction going on over there. -------------------------------------------------------------------------------- Andrew Burris Obin, BofA Merrill Lynch, Research Division - MD [32] -------------------------------------------------------------------------------- Maybe they like to work and don't like paying taxes. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [33] -------------------------------------------------------------------------------- That's -- well, come on to Texas, too. We'll be -- that's the way we run the state. But so pretty good there. As you move up into, I don't want to call -- in, say, Atlanta, a little tougher, in the big city there, just a little tougher, big medium-duty town, okay? So a lot of stuff not moving with all this, everything shut down. You're going up in the North Carolina and stuff, decent, not -- I would say Atlanta more hit harder than North Carolina. Ohio, pretty tough. Pretty tough up in Ohio right now. Indiana, holding in decent. Indianapolis, holding pretty decent. Chicago area, pretty hard hit, but maybe not as -- I'm going to -- it's a lot like Atlanta. I know I'm just giving you a broad description because you're asking me. Texas, depends on where you're at. In the Houston area, we're holding in okay. Dallas, holding in okay. I mean we're off, but relatively to everybody else, not off maybe to each other. Obviously, West Texas, the Permian Basin, South Texas, hit pretty hard. No traffic going to Mexico, no oil, so hit a little bit more difficult there. Colorado, decent, but I would put it in not hit the hardest. It's not hit as hard as, say, West Texas or South Texas. California, holding pretty -- holding fairly well in spite of everything, I'll be honest with you. I mean we've seen the hits out there, but it held on a little longer before -- even with the ports and even with those issues. Our business is really well very diversified out there. It really is. So in Arizona, not as bad as, say, in Atlanta. Phoenix isn't as bad as, say, Atlanta or Chicago area or something like that. So there you go. What was the rest of your question? -------------------------------------------------------------------------------- Andrew Burris Obin, BofA Merrill Lynch, Research Division - MD [34] -------------------------------------------------------------------------------- Just the same. No, this is fantastic, and it's very valuable to get it real time because I know you guys have some of the best systems in the industry. Just the same thing, but maybe which industries stand out in terms of strength or weakness as you see them or end markets. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [35] -------------------------------------------------------------------------------- I mean a lot of what we're delivering from a truck perspective, construction has held in there. I'm concerned about it because it's projects that were already let, right? Refuse has held in there. There's a lot of garbage. A lot of people staying at home, so there's a lot of garbage being made out there right now. When you look at municipal, we're big in the bus business with Navistar. We also have some mover stuff in the state of Texas. Bus business, hit. School bus business is what I'm talking about, hit extremely hard. Schools aren't -- they're not in. Municipal, all the cities are shut down. Other than road contracts and things like that, you don't have much going on in municipalities. Why? Because, the sales tax revenues are down, and that's what they depend upon. So municipal has been hit fairly hard. And obviously, I don't have to go into oil and gas. You understand that. So the construction markets held in. I'm concerned about it because it's the projects that were already on the board, and I do believe that pipeline is shrinking up some. I know it is. You can -- you all find the stats on it. So that's why we're all anxious. Once we've got as healthy as we can be and to start easing ourselves back, easing ourselves back, so I'm trying to get back to some normalcy. But that's where I'm at, Andrew. -------------------------------------------------------------------------------- Operator [36] -------------------------------------------------------------------------------- I am showing no further questions at this time. I would now like to turn the conference back to Rusty Rush. -------------------------------------------------------------------------------- W. Marvin Rush, Rush Enterprises, Inc. - Chairman of the Board, CEO & President [37] -------------------------------------------------------------------------------- Well, folks, we appreciate your participation this morning. We look forward to talking to everybody in July. I wish everybody the best of health as we all do the right things. I mean I'm big on the right thing. We've been doing the right things here at Rush as best we can while providing an essential business. Basically, as I tell my people, we are the backbone of this economy and the truck business. And -- but we're doing our best while maintaining all of the proper -- doing all the proper things. But we're there for you, I can promise that, doing our job. Thank you very much, and we'll see you soon. Talk to you in July. Bye-bye. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may all disconnect.