Good day, ladies and gentlemen, and welcome to the Rush Enterprises, Inc. Second Quarter 2018 Earnings Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Rusty Rush, Chairman, CEO, and President. Please go ahead, sir.

Good morning, everyone, and welcome to our second quarter 2018 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.

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 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, 2017, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved second quarter revenues of $1.315 billion and net income of $29 million or $0.72 per diluted share. Excluding the $10.7 million charge related to our ERP platform, we achieved net income of $37.2 million or $0.92 per diluted share. I am very proud of our company’s outstanding financial results in the second quarter and equally proud to announce our first ever cash dividend. We have confidence in the direction we are heading, we’ll remain focused on executing our strategic initiatives which continue to have a positive impact on our financial results. Our robust economy and strong activity throughout the commercial vehicle market, also positively impacted our results in the second quarter. Our decision to initiate a quarterly dividend is driven by the company's ability to consistently generate positive free cash flow combined with our capitalized growth strategy. We believe we can continue to invest in our strategic initiatives while paying a quarterly dividend and maintaining our share repurchase program. In the aftermarket, our annual parts, service, and body shop revenues in the second quarter were $423 million and our absorption ratio was 122.8%. Our aftermarket revenues increased by 15% in the second quarter compared to the same time period in 2017. Half of this growth was driven by our aftermarket initiatives and the other half by widespread activity in the commercial vehicle market. We continue to see headwinds from fewer international trucks and operation, but we're encouraged by the improvement we saw in parts and service activity in that sector in the second quarter. Due to the continued focus and progress on our aftermarket sales strategy and strengthened the overall economy, we believe our aftermarket results will remain strong throughout the second half of the year. Turning to truck sales, we sold…

[Operator Instructions] Our first question comes from the line of Jamie Cook with Credit Suisse. Your line is now open.

Nice quarter. I guess two questions. One, Rusty, could you just elaborate on some of the constraints you noted in the quarter, which hurt your Class 8 truck sales, how pervasive they were across the OEs and how much that impacted the quarter and what’s embedded in the back half? I guess that’s my first question. And then my second question you know you noted that Class 8 truck sales will accelerate in the back half of the year, it sounds like the parts aftermarket should continue to grow. So either for you or Steve I'm trying to think about that and the implications for earnings in the back half of the year. Is the $0.90 sort of run rate the way to start to think about earnings for a Rush in the back half of the year? Thank you.

Jamie you know I never talk call GPS, but we'll get to that first.

You can talk directionally.

I would, yes, directionally, most probably we’ll take it from the latter and we'll go back up or we’ll move forward, go backwards here. Directionally, yes, you have to look at it that way I would say. It'd be hard for me to say the things I've said in the release and tell you anything different right, I mean when you expect truck sales to accelerate and we expect to maintain, I don't know that we're going to maintain 15% because our comps get tougher, but I do expect to continue to be able to maintain double-digits anyway. The strategies we put in place from a parts and services were continue to take hold, and in fact you know I'm sure I'll get the question here in a minute, when you look at it from - I expect just to get widening margin I mean I expect we’ve got - you saw widening margins in the quarter, but I expect a lot of the investments we made should start to some of the expense. I should start to slow down a little and we should widen, you know widen the gap between the probably - we saw that sequentially from Q1 to Q2 already, when you look at it, year-over-year you know we had, well you could look at it and say well you spent a lot of that extra gross profit and we did, but we're sequentially seeing what we expected to see. They are starting to take all, all the investments that we put in. So you know those are important things to note and from a drug sales delivery, it was amazing you know I have talked to a lot of the OEMs that we represent and there has been constraints and it comes from all the small suppliers. Now that being said, I know that PACCAR was up and their production 20% or whatever yesterday. At the same time, we have just had a bottleneck, but a lot of that I think is going to be - is being pushed through right now. I think the bottlenecks are widening should I say. So, I don't say - there may be some constraints, but I don't think it'll be as much as we saw in May and really in May and early June. We saw - there was a lot of constraints, there was a lot of trucks that were being built that were short a few parts here and there, but they have - we are catching up. I believe with that piece and what I’ve been talked in the factory. So, you know that's why we talk about accelerated deliveries in the back half of the year.

And then just a follow up, I mean even [indiscernible] noted yesterday you know visibility into 2019 is better than, how we are - how they we're sitting last year. So, in terms of your customer conversations, I'm just wondering how you're thinking about 2019 and do you have - what your customers are saying, I would say both on the vocational as well as line of side? Thanks. And I'll get back in queue.

Both, right now our activity which we believe were running strong, and a year similar to - that we're seeing here in 2018 we believe 2019 just as ACT does, because we're already into 2019, right. There is no - when I look at our backlog, it's not going to get delivered all here in 2018, there's just no way. People have to remember just because it gets produced doesn't mean it gets delivered to the end user, right. Typically - a lot of times being specially in the vocational side, it can take us 60 days to 90 days to get that in the hands of the customer. So, some of the trucks that we'll build in October will flow in that the manufacturer will build and build me for will flow into the first quarter of next year. So, even more than the OEM, I think you have to look at it, we're filling up 2019 faster than the OEM is okay, because of the lag time, because we are the last one - we're the last person in the food chain, because we deliver the truck to the end user. So we are feeling better and better all the time about 2019 and I see nothing, and there has been no commentary, I mean and I’ve see not obviously any commentary from any customer in any of the businesses or markets that we delve into that has been negative. So, it's hard for me to sit here and paint - folks can paint what they want, but I'm telling you from the street level, we're not seeing anybody it’s negative about it or down on the future you know in 2019. I'm not going to go out proud of 2019, but I'll say, I do feel very confident in 2019 when I look at it from a truck delivery perspective, and obviously you know we've spoken about our strategic additions, we think we're going to continue to see those, we have more coming down the pipe, and we'll continue to see those takeover and continue to drive our parts in service operations.

Our next question comes from Mike Shlisky with Seaport Global. Your line is now open.

A quick question on the dividend. I don’t want to put any words in your mouth here, but is it fair to say that when you started dividend now, that's really a way of saying you know if the Class 8 market does eventually turn downward let say in 2020, your earnings and cash flow is not all that connected to the new Class 8 truck market, and you aren’t at a peak in your earnings this year or next year, and actually all the parts which has a much longer tail, is that a fair message you're trying to send?

Mike, you said it wonderfully. How is that? Obviously, continuing to shift our earnings more towards the parts and service side of the business, which is everyone, knows is the more stable piece of the business, right. We believe as we've cash flow modeled out the next five years regardless whether Mike - and by the way if and when the truck market will go down someday, we all know that. And I think that's the reason behind the shift in the organization over the last few years. Our gross profit that we're focused so heavily on the back ends of the business, because that is the more stable piece. So, as we get modeled, we see nothing is going to interfere with us to be able to continue both with the share repurchase program and obviously continue the dividend program, it’s here to stay.

I also wanted to get, secondly, a sense of the balance in the used truck market now and over the next couple of quarters. It sounds like in the quarter your used sales and units were up nicely, I think it’s 18% in the press release is that correct?

Units and margins - margins are really high too. So…

So then is it fair to say that your inventories then were down; you got to reduce them in the quarter. Can you maybe share any initiative that you are taking to keep those inventories under control and perhaps how you feel about where the inventories will be a year from now with so many trucks probably I mean soon being traded in between now and then?

Well, as you can go back in the last couple of calls, I've been concerned about where we would be here later in summer from a used truck inventory perspective. But what has happened is because of long lead times as I test on in the release the long lead times for new trucks and the activity that’s out there for customers, they're not willing to wait six months, so the market for a late model used truck is typically turned in by the first guy, the first carrier 400,000 mile, 500,000 mile truck has been extremely active, that mark has been extremely active. So, it has picked up the slack for what I thought would be a large - it’s picked up the supply, there is no question the supply growth was coming at us and it will continue to come. But for now, obviously the market is taking care of itself and you can tell that by our activity and our inventory levels you touched on that are pretty flat from where they were in Q1. So, we're comfortable with that. Used truck is a profit center too right, properly run used trucks are very good profit centers for you, not just the hindrance. So obviously you look back in the last couple of years, you can see they've been a very nice profit center for us and there as good as they've been right now. So, we realized that eventually that will probably I look forward for a year. I don't know if this continues a year from now, but at this moment, we're taking advantage of it and it's getting as a jumpstart on all these used trucks that are coming back. So, we're not going to start piling up that's what I'm saying. They should have already started what I said that you won't be building inventory and we should have already started building used truck inventories of used truck sales were typically where they were a year ago from now. But we are maintaining and not building, so that's a good thing when you look at it from a long-term perspective from me.

Our next question comes from Brad Delco with Stephens Inc. Your line is now open.

You provide us a lot of good color already, but maybe on the kind of your outlook for trucks in the back half of the year relative to what we've seen in the first half. I know the strength in your business is broad-based, but can you give us a little bit more detail on how much of this is kind of construction, how much is energy, how much is over the road so that that typically impacts price for truck and margins as well? So, some color there it would be helpful.

Sure. Well, obviously you can tell by margins were pretty much maintained right from where we’ve been and I’m always a little more conservative when I’m talking as when we keep doing a better job and I anticipate, so I’ll take it coming out that way. I do expect the back half to be a little bit more freight over the road mixed business, but I was expecting it to be up, right. So, the accelerated - I really don't want to tell you a number, I've got a number in my head, but when I look at what I think we'll deliver by year-end again because there's a few constraints out there, but it was - it's going to be up and the fact that we are up most likely will be the over the road business, okay, from what I can tell by looking at the backlog. But we're still strong in all sectors, the one - we don't - this year even though energy is still solid, we're delivering less energy trucks than we did last year, why because we had a couple of big deals and we're still doing deals, we had a couple of very large deals in 2017 and our largest over the road customer, even though they're both - two large deals that we're not having any deals that size. We had in 2017, we don't have in 2018. Both customers are buying trucks, don't get that wrong, but they loaded up in 2017, right. At the same time, it's much more broad-based. We're going to deliver more trucks. I mean we now be at the 25%, I told everybody that we are going to half that by year-end up here in Rush because we had a couple large deals last year that we don't have any 1,500 truck deals this year. We’ve got 100 of trucks deals, but not 1,500 a couple last year that were like that. So, that means so we're up and you look at it like that, it's for me that's better, because it's broader based across all markets. And I mean, it's hard for me to say one's better than the other that I will say the pickup of the back half would mean the overall business, because the others have been strong really started in 2017. Construction continues to be strong, also as many mixer trucks that we have 10 years this year. Energy as I said won't be as many, but we had a large deal here before, but we're still selling into it more broad-based. Revenues still very strong across the board. So I just - I mean I know I'm rambling on here a little bit, but it's hard for me to find a negative. Okay.

So it seems like it was a broad-based, just a little bit more component of freight or over the road versus what you saw in the first half of the year.

Yes. The upside would be the over road business, and you'll find that the OEMs as well. They're building a much larger percentage of sleeper trucks this year, right. Well last year was more - was more vocationalized. If you walk to the factories, you will see a larger - lot more sleeper trucks being built than you did. And that's one of the reasons. If you go historically, some of the big, big guys you know they do these huge deals that we participate also, but we don't reduce with as many of those. That's where a lot of that's going on - that's what's going on, that's the big upside. The other is maintaining it very healthy. It was healthy in 2017, and all the other segments were healthy in 2018, and we anticipate talking to customers that will be healthy in 2019 too. When you look at in the housing starts and things like that, we don't see anything slowing down in 2019, kudos to everybody.

Second question, I think you kind of alluded to it with a question earlier and then in the release as well. I think you've hired 300 techs, I think you've hired 100 part salesman. So that's a margin investment, right. Can you put in the context what kind of margin drag that may be, and what it would look like once these guys matured?

Right. We obviously see is dragging margin percentage, but what it is dragging is absorption a little bit, absorption is not rising as fast as you would expect given the growth in gross profit and revenue. But when you have those 300 technicians, we grade technicians level 1 to level 5, five being the best, right. They don't show up as fives, okay. So you've got to train those people. Our training builds through the roof this year, okay and things like that, but they're not fully bringing all the hours or producing the hours that they will as they get more experienced and get the level in their skill sets go up, right. So you're spending money there. You hire an extra 100 plus by the way, ASRs as we call, parts of service sales people. Well, you're not going to get your full bang for your buck for 12 months or more. So those - we haven't made - if you're going to look at they're not making money. They're growing every month, because they're market, their gross profits and they're getting more share and growing and growing their clientele, they don't just walk in, they get new special accounts and they go after them and they have to build those relationships and they - and it grows and I guess the best way to put it. If you look Q2 over Q2 of last year, okay normally if you remember what I've always told you. I said when we did gross profit in parts and service we're going to spend money. You don't just pick up parts and deliver parts and sell the parts and turn wrenches without investment, okay. Is not, this isn’t Star Trek and Beam Me Up Scotty, okay. This is more like you…

Your point about 50% I think incremental margin that's the change in your parts and service gross profit versus EBIT change or what are you quoting in terms of your 50% closer number?

Brad, it's the G&A, it's the G&A expense change versus the change in gross profit from one period to the next. We try to keep $0.50 of that spend 50 or rest he was saying is Q2 2017 versus 2018, we spent $0.78 because all of that investment most people you mentioned on your question, but sequentially Q2 to Q1, we are back to that ratio that we intend. So that kind of tells you those guys are starting to produce more gross profit and the expense was already in them, already in layered down.

Yes.

So, it’s headed the right directed.

Yes, the expense starts day one, gross profit that go up of day one. It's an investment and that was your point with your question to begin with. And so, we feel good about what we saw in Q1 and Q2 and we expect to be able to maintain that. And we’ll keep making other investments, but I think those people investments are just starting to pay off right now.

And one more point that we really started making investments in those people during Q3 and Q4 of 2017, and that's when we started bringing on those net adds of techs and ASRs. So they were not in the expense run rate in Q2, 2017, and they are fully loaded in Q2, 2018.

Our next question comes from Faheem Sabeiha of Longbow Research. Your line is now open.

So I'm just wondering if you can provide a little more detail around the incremental used truck demand. Is that showing up across the board in sleepers, day caps and vocational trucks, our fleets of all sizes opting for late model trucks instead of new? And just any other color around the amount of substitution that you're seeing right now?

Well, I wouldn't say fleets are all up, that’s a little too inclusive. But yeah, its broad-based. I mean first up, the non-sleeper market has been hot anyway. I mean construction activities have been extremely strong, oilfield activities, especially in the regions that were in Permian Basin, et cetera have been extremely strong. So that's been already going on. The over the road sleeper business is the one that we've seen affected where folks that may take six months to get a truck and they have got business to do, they're not waiting six months. It maybe - it's that second-tier guy mostly and they’re not taking away that much, so I don’t think from the new trucks, but because when you look at the volumes, but they are increasing the demand for use, because they got a contract out there and they can't wait six months, right. They see the opportunity and with the quality of the second - and with the quality of truck that goes into that second tier buyer is immensely greater than it was 10 years, 15 years ago. So, the truck can get the job done and folks just they want to get on - they want to get on a road start making money, right. So, a lot of - it was already there in the non-sleeper stuff, but you’ve seen it in these sleeper stuff is what you seeing an increase in.

And can you talk about the benefit the higher used sales will have on your aftermarket business in the near-term?

Well, I don't know if there is a benefit, the used truck, I mean it's going to get into the - it's going to get into the market one way or another. Sure, it's going to help, because it's out on the road running, but those they're always going to have a second life. I don't know if there's a - it’s just gets back on the road quicker, right. We're turning them faster. So, our turns are quicker, so I guess you could look at it that way and say, hey, we’re going to give the opportunity faster, you're not holding it 90 days or over 60 days or less. We typically - used truck inventories, we typically try to turn less than 90 days because they don't - they are not like a bottle of wine, they don’t getting better with age. So, you've got to - you got to get a return, I prefer 60. But we always managing, so if I guess the faster you get on the road, the faster it might be parts and service work, we can look at it like that.

Our next question comes from the line Andrew Obin with Bank of America. Your line is now open.

Just the question about the folks you guys hired, so you did say that it’s going to take 12 months for them to sort of earn their key. But you know look the market is sort of telling us that the truck cycle is over, the economy is rolling over. Let me ask you this question, if you and your truck deliveries for some reason are down next year, do you think you can still utilize these folks and do you think you can still grow parts and service business given the initiatives you have?

The answer is yes sir. Okay. There's no question in my mind that we can’t. You know, I'm not going to sit here and guarantee 15% of it done, but our initiatives are not tied to new truck sales. I think people get confused and it drives me. I sit here and watch how every things reacting this morning and yesterday I'm like, are you kidding me. You know I don't think people will get that - first of all, the truck cycle, I think you're going to see truck sales run through next year. I believe that personally, all right. But that has no real effect on our strategic initiatives with parts and service. We're going after share folks. Okay. We're going to after share and we're going after it hard and fast. You know, we're not, that's what we've set down in this past, a couple three years ago and we're starting to see, you know, I know we've got a great market, but I think we be seeing you know the uptick even without a great truck market. I mean last year, it was a $200,000 market, laying around that number little less. We saw that to start kicking off in Q2 of last year. Go back and look at the growth rates in 2017 over 2016, because they have built so many more trucks. It was because our investors were taking hold. And I still believe that we’ll continue to grow our parts and service business. Can we do the same? Look I can't wait to show you our truck markets are up 25%, we make more money about that, all right, because our initiatives were. I'd love to do that one day. We'll see if we can do it, but it will be interesting on…

Just a follow up question on that, just you've been sort of upgrading your ERP system, I've also noticed that your parts and service margin was a little bit higher than we were modeling. Can you just talk about your experience what tangible benefits do you have from ERP system upgrade in your operations. And is there a possibility that there is some margin runway for your parts and services going forward? Thank you.

We had a pretty good margin quarter. Now I will tell you that the margin in the quarter was a mix more, we had a service mix in there was only because you know that’s a parts and service, and parts margins are X and service margins are a lot higher in the 60s mid 60s, and parts margins in mid to high 20s - mid 20s. So, we had the service mix was a little more than parts mix, so that's one of the reasons it was up. The platform that we replaced or DBM, which is our Dealer Business Modules is what we’ve really replaced. And it went extremely - and we knock on wood that it was it was the smoothest transition we ever had, but didn't do it till the end of May, and then Memorial Day weekend, right. So we have seen probably a little bit of performance pick up in the system yet some of the initiatives that we're investing in which is outside that, okay, these are the initiatives, and I'm not going to get into them there, because it’s proprietary information, but some of the initiatives that we're investing in are still coming down the pipe. So is it possible? Yes, it's possible, Andrew. But I'm not going to sit here and sit and take for sure say that we're going to grow margins. But I surely don't expect margins to go backwards, because we got to remember, what we've gotten out of the system. We believe that our business system is the most data rich system it’s out there. And we're harnessing that data. It’s been a long painful 10, 11, 12 years ago spend, okay, but I know that our system provides more data. Now how we leverage that data. That's what we're doing, okay. We're leveraging data that we've had that I have more confidence that our systems got more than any of our competition. And now, we're learning how to leverage that data and take it and use it right. And take it and push it into the financial numbers. As I said we - I think the results of the last five quarters in a row now show that. And we just - we feel good about taking it going forward too. You know that's all I can tell you, and continue to learn and leverage it more and more and more and allow us to understand our customer, understand the business, understand more key metrics that we believe will continue to help us show the results we're showing on that side of the business man.

Let's help the markets efficient and long-term, good luck.

No kidding. Look, I - cycle things, but I mean that's - look at the performance it's all I can tell you where the growth really is for us, that's all I can say.

That’s what we’re been saying, hopefully the market will agree with that. Thanks Rusty.

Hope so. Thank you, Andrew. I would hope so. It's a little frustrating at times I can tell you.

Our next question comes from the line of Mike Baudendistel with Stifel. Your line is now open.

I just wanted to ask you, Is there any update here Tom and I think you said once that 80% of your gross profit comes from the Peterbilt dealers, is that changed at all recently

Well, I don't know that. Well that’s 80%, well. I think I think when you thought that it was more about a return from a net profit perspective is what I used to talk about. I don’t know it’s changed a whole lot. But I see the chances of it changing how is that? We're working towards those headwinds that I’ve talked about that. And by the way, you wrote a very nice note that fell right in line with what I just said a minute ago, so I appreciate that. At the same time, we’re still - yes, there's no question that the hidden diamond for me and the organization is they have star division, okay. It really is, because they're getting their feet back on the ground and with Volkswagen coming in, who knows if they're going to buy a larger piece, where everyone thinks they will. I think those are all great things and we're working our way through the headwinds as I spoke about a minute ago and then every day that goes by when you go further fast it right. So - and those were all - but you also got to remember, those were a lot of acquisitions done in a time of duress, okay. So those organizations took a pounding. It was hard to get people to work on international stores back in 2014 and 2015 and with respect, but we were going through the lot of hard aches with the max words, not because of what's going on now but our exit at that. So we're building back our bench strength there also, but we're doing a good job of it. It's just - again it’s not an add water to stir deal, right and it’s not like switch, which you got keep investing and we’re investing and I do believe again that is the hidden diamond inside the organization is the level performance continues to rise on that side of the house and it is through back not maybe the rate we’ve got going on, on the other side right now given the headwinds, but that still out there to catch, that rabbit is still out there to get. So, we’ll keep pressing forward that organization is getting stronger by the day.

Also I just want to ask you, I mean, it sounds like the demand has been pretty broad-based on a wide range of customer types I mean, can you talk a little bit about is the energy customers - are the energy customers having a disproportionately positive impact on the company this year and can that be sustainable if so?

No, I would not say that. I would say - as we look at our parts and service sales, let’s break it two sectors, trucks and parts and service. I know we're going to deliver less trucks to the sector because, well, a couple of large transactions in last year. Okay. So, we’re going to deliver less trucks there in energy sector, and our parts and service business was flat year-over-year more or less. Okay. When you look at what we were doing in Q2 of last year and what we did in Q2 of this year, so the contribution was not up, it's good, okay, let's don't question that it's a good contribution, but it wasn’t up year-over-year. When I - you can't - there is not much you can attribute to these results, to the energy being what rose the performance of the organization is more broad-based across the other segments and really across our strategic initiatives. As I said in my remarks, we believe that about 50% as it is, and this is no science. We've got the best measuring tools, we've got but from a parts and service perspective, but we believe that about 50% of it came from our initiatives. And I've watched it go up - you go back a year ago I’d say, well, we’re getting traction, then I'd say well, 20%, 25%, then 30%, 35% and then we said 40%, 45% and right now it's 45% to 50% I'm saying and it is right at that number. The best we can tell is coming from, which we expect that to continue, but no, energy to answer your question, did not drive the higher performance this quarter, it was a good parts and service or just like it was last year, but truck sales were down in the in the energy sector this year.

And just I also want to ask you on this, you’re hiring your 300 techs. I mean it sounds like you hired the techs who did not have previous experience in doing what they're doing, and you're training them yourselves. And how long does that take for someone like that to be productive and what's the typical retention rate and can you put that 300 in the context of how many techs you have in total?

The 300 is a net add. Unfortunately in our industry, the technician position tends to be the highest turnover position just like the truck driver position does for the over the road customers. It depends. I would tell you some of the ones we're getting them, that's a net add, right. So, that's going to be after what you've lost, right. So, after the folks who have left you during that period, so we feel really good about that. So, but the majority of them were having a lot of good stuff working with the OEMs and their tech schools and stuff like that. They're coming up - no, they're coming up pretty solid, but they do take training. They're not at their level. But they're not coming in at like ground rule, so, maybe there are level 2, and relative to that level 1 to level 5, but they’re may be closer to level 2. But taking technician up to a level 5, that can be about three to five years I'm guessing. We have five years probably and we’re going to guys around the table really five years to getting all the way up to a level 5 technician. This takes experience. So, like you’re going to school, you’re going to college, right, you’re going to school. It just takes more. You learn, you learn, you prosper and you grow, and you grow, and you build upon - it builds upon itself, right. Your knowledge base continues to build. So, they're going to continue to get better. And trust me, that's why I said earlier, it’s been a lot of money on training. I was looking at some of the expenses. And then you've got to make sure as there, they may not be able to produce a…

[Operator Instructions] Our next question comes from the line of Joel Tiss with BMO Capital Markets. Your line is now open.

This is Elliott Simon on for Joel. I know you guys forecast the drop for the market share. What’s that?

I said it’s an upgrade.

It’s an upgrade, no, not better than Joel. I know you forecast to job, but market share in Class 8 truck sales slipped to 5.3% this quarter. How do you guys kind of think about that, do you think it will kind of flatten out from here or more for the just over the road fleets make up a great percentage versus…

Yes. Whenever you have the big, big carriers over the road business gets really high as when you get big numbers, we typically don’t run as higher market share because we have one broad based business. That doesn’t mean I’m not going to rattle in, but there are many over the road carriers that we sell, but when you are super large ones buy thousands and thousands, we may not be participating as much in that. So, our share will go down, I would - as I look out to the rest of the year, our market - our share shouldn’t decrease any more, it might go up for a couple of ticks. But, the deliveries will go up there, the biggest 251,000 - where we are supposed to be 112, that means we had delivered another 138,000 versus a 112,000. We should maintain or grow it slightly. I know it's not our 6% like we are usually typically getting, but on a 200,000 market we're going is a broad base. We're going to get our 6% plus when you get to this 250 or plus range. We're going to deliver more units, but we're not going to be able to keep pace typically because those big deals, right those large, large deals. But we're going to be up for the year, I expect this to be at - we were up with 7% or 8% so far this year, I'm hoping we're about 10%, 12% for the year done. So, we'll maintain we're not going to go any lower from a market share perspective and hopefully pick up because our deliveries are going to pick up. I'm not giving you a percentage, but I expect them to pick up X. I expect our deliveries to pick up in line or better with 138,000 as projected for the back half of the year. Does that make any sense?

Our next question comes from the line of David Mack with J. Goldman. Your line is open.

I was going to ask about the share as well. Because I know that Joel was curious about that. So I'm going to move on to capital allocation question. I know the stock is not the most active trader. Should I take anything from the dividend announcement that you don't plan on being as opportunistic with the stock or do you still see a path for buybacks as well?

No. We are - as I said earlier, we will continue both. I still have as you not may know since the first of December, we allowed $40 million spent that put another $35 million spent, do repurchase and we are still spending that money as we speak. We're just spending it wisely. We might - if the market continues to do what it's doing in my stock, I might accelerate that, but yes we're going to continue to repurchase. We're not stopping. We could support the cash flow, free cash flow of the organization. First and foremost, let’s get this right. Let's get if I could get this straight. The first thing we're going to do is invest in our company and grow it. To be the first and number one thing we're going to do. Second, we're going to do a dividend and third we're going to repurchase and we have enough free cash flow to do that and still build gas. So, as we project out, we believe we're in good shape to handle all three of those objectives. So, I wouldn’t worry any - about we're not stopping repurchase programs.

Thank you. We have no further questions at this time. I would now like to turn the call back over to Mr. Rusty Rush for any further remarks.

Well, I appreciate your time this morning, ladies and gentlemen. And we will be talking again in October. Thank you all very much.

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