Rush Enterprises, Inc. (RUSHB) Q1 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the Rush Enterprises, Incorporated First Quarter 2016 Earnings Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Rusty Rush, Chairman, CEO and President. Sir, please go ahead.

Good morning everyone and welcome to our first quarter 2016 earnings release conference call. On the call today are Marty Naegelin, Senior Vice President; Steve Keller, Senior Vice President and Chief Financial Officer; Jay Hazelwood, Vice President and Controller, and Derrek Weaver, Senior Vice President, General Counsel and Secretary. Now, Steve will say a few words regarding forward-looking statements.

Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 2015, and our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved revenues of $1.1 billion and net income of $2.4 million or $0.06 per diluted share. As expected, increased capacity from 2015, new record Class 8 truck sales depressed used truck values and continue softness in the energy sector negatively impacted our financial performance this quarter. As a result, we’ve implemented broad and significant expense reductions. During the first quarter we took measures to reduce our personnel and variable expenses by approximately $6 million per quarter. Additionally we have recently announced our plan to consolidate 12 Navistar Division locations and to existing dealerships that are operating close proximity to each other. Majority of these consolidations will take place in May and June. We’ve also consolidated one location in our Peterbilt Division into a nearby location in Texas. When complete we expect these consolidations will result an additional annual expense savings of approximately $11 million. We will continue to closely monitor the current business environment and will make expense credits that we believe on that best interest for our customers and shareholders. In the aftermarket, our parts, service and body shop revenues were $342 million and absorption ration of 106.4%, continue decline in the energy sector adversely affecting our parts and service business in the first quarter. We will now offset portion of loss revenues with general vehicle maintenance and repair activity on the Western and Southeast coasts, which are benefiting from the improved economy and related construction. We remained diligent in our efforts to pursue incremental aftermarket revenues initiatives all-makes parts, rapid parts call centers, mobile services, telematics and expanded RushCare services. Turning to truck sales. U.S. Class 8 retail sales were down 6% over the first quarter, while our Class 8 truck sales decreased 34% over the same time period, accounting for 5% of the U.S. Class 8 market. Overcapacity of fleet trucks, low used truck valuations and choppy freight environment have caused many fleets [indiscernible] new Class 8 purchases and we believe this trend will continue through the year. For 2016, ACT research forecast U.S. Class 8 retail sales will be 207,000 units, down 18% compared to 2015. Given the challenging market conditions impacting large fleets and softness in energy sector, we expect our Class 8 new truck sales of 2015 could decrease more than ACT’s current forecast. We do believe our used truck inventories were firmly valued given these conditions. Our Class 4-7 new truck sales reached 3,271 units in the first quarter, up 22% over 2015 and outpaced the U.S. medium-duty market which increased by 20% over the same time period. Rush’s Class 4-7 new truck sales accounting for 5.7% of the total U.S. market. Our strong medium-duty business was the result of a stable demand across the country in a range of market segments, large deliveries, several lease and rental fleets and continue to be for work-ready inventory to support construction in Florida and California. ACT research forecast U.S. Class 4-7 retail sales to be 220,850 units in 2016, a 1% increase compared to 2015. We believe our Class 4-7 new truck sales remain on phase with the U.S retail market. Selling, general and administrative expenses increased in the first quarter compared to the fourth quarter 2015 doing employee benefits, payroll taxes as well as the restructuring charge relating to the closing of certain dealerships and disposition of excess real estate we took. We expect our selling, general and administrative expenses to continue to decrease throughout the remainder of 2016. In the area of growth, we completed ongoing facility construction, renovation and expansion projects in California, Colorado, Ohio and Texas, enhancing service capabilities across our network. And we open a new Peterbilt location in Kentucky. We also launched Rush Service – RushCare Service Connect, the technology platform which allows customers to receive real time repair status updates. We expand [indiscernible] momentum compressed natural gas fuel system product offerings. In closing, I’m grateful to our employees for remaining focused on our customers and working to launch new initiatives while managing costs across the organization. Their dedication is greatly appreciated as we work through this challenging market segment. With that, I’ll take your questions.

Thank you [Operator Instructions]. And our first question comes from Neil Frohnapple from Longbow Research. Your line is now open.

Hi, good morning, gentlemen.

Hey, Neil.

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

Oh yeah. I mean Neil, if we’re looking forward – I mean when you look at it, we did have growth, now that was enhanced obviously with some acquisitions we did during the year last year, that’s not – that wasn’t growth from the same store perspective. Now as we go forward, I’ll be quite honest with you, as we’re here in April it is still a challenging environment and in growing challenges, let me tell you right at the moment what we’re seeing through the first few weeks of April already. And we’re right on top of it and we’re working on all the initiatives we have, at the same time, where I do believe that we have finally leveled out about now in the oil and gas side where we’re at I think we bottomed out. I do believe we’re seeing the other challenges pop-up across the country in April, to be honest with you, judging where we were at the first three weeks of this month. Now, obviously we’re monitoring it closely and looking forward to a big close in this month but at this time it seems to be spreading even though we bottomed out in oil and gas in parts of service perspective.

All right, that’s really helpful, thanks. And then could you just comment more on what you’re seeing in the used truck market, I mean do you think used truck prices have stabilized or do you expect that continue decline over the coming quarters given the increased supply that will likely continue to hit the market, and just any differences you want to call out between what’s going on with wholesale prices versus retail.

Sure. Really wholesale, there really has been a wholesale market, okay, there has been really no wholesale markets, so anything you get rid of – well, unless you just want to give it away but really that really hasn’t been a very stable wholesale market all the year. Retail market has picked up, okay, we have seen it pick up so obviously January it started off real for us, they picked up in February, picked up in March and we expect that to continue in April. From a valuation perspective, I don’t think we’re seeing the steep decline that we’ve seen in couple of hits we’ve taken since last summer, but at the same time it is declining or what I would call a natural depreciation cycle. So it is still coming off and the way I would look at is normalized depreciation cycle but not such a steep rate as it was earlier in the year.

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

You bet.

Thank you. And our next question comes from John Barnes from RBC Capital Markets. Your line is now open.

Hey, thank you. Good morning guys, thanks for taking the questions. Rusty, can you talk a little bit just about the cost reductions that you were planned and maybe provide a little bit of clarity as to the comment you put in your 10K about kind of the margin outlook as you put these cost reduction initiatives in place?

Well, let’s take in two pieces. Obviously as I mentioned in the first quarter we got – we started out on a reduction across the board in the organization. And then obviously we announced a restructuring while we’re consolidating some stores. From the first perspective when you look at it, if you strip out all [indiscernible] purely from an operating one, purely from an operating perspective including corporate. And I’m going to come back to Q3, it’s very hard to come to Q4 because there is a lot of closing entries and things are going as we finish up the year. So when you come back to Q3 and you look at it strictly from an operating, including corporate perspective we’re down about $6 million, okay, excuse me for the quarter, we’re about $6 million all in Q1, and we did not have everything in place, okay, a lot of that rolled in throughout the quarter. So I’m very comfortable in saying as we go forward you will see expenses continue to come down throughout the rest of the year, okay. They will continue to come down and as outside of the consolidation, the consolidation we believe will take out about a $11 million in expenses. And so when you include that in, I would like to think from a pure level I’ve always – I thought moving in as I mentioned on the call last time that we needed – I was comprised from mid-20 range from an expense perspective, from an G&A expense perspective. Now I’m comfortable, we’ll get that plus more, and then also with $11 million in consolidation expense savings, right and it will maintain half that business because the proximity of those stores that are there. So, we look for that there’ll be a pickup, but again that’s the second half of the year pickup that piece because most of that consolidation is going on and starting in May and June, okay, there’ll be a little [indiscernible] pass that but the majority 85% of it get done in May and June. I hope it gives you a little bit of color that’s where I believe we’re at.

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

I’ve never expected to get all done this year, this was always the – the startup is always the hardest part, once you get it roll and – but we’re still impaired because aggressively we’re down that path, okay. And I have no – I’m not [indiscernible] this, I have no plans to totally – it could have slow it down here a little bit, yeah it’s possible but we’re still very protective of those initiatives and the investment that are surrounding those initiatives to continue to invest in that at the same time cutting expenses, because I believe that long-term that’s where the leverage and the growth in the organization one of the big players that we have moving on should come from. So, I hope that gives you a little clarity, the answer is no, I’m not going to slow down, could it be slightly – we’re not going to table anything. Could there be a little bit of – it could slow down a little bit just because of what’s going on as we manage expenses and cut some things, yeah but we’re not going to cut those direct expenses. There could be some indirect slowdowns from it but there won’t be any direct cuts to those initiatives.

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

If you had an overnight 10% or better reduction, yeah I probably have some issues, okay. 5% doesn’t bother me that much. Remember, we’ve got our inventory levels down also, I mean we’re running around 2,500 units say October last year and we’re at about 2,000 units now. So, we’re 20% down inventory at the same time too so that helps to manage it also, but at the same time we’re still out there in the market place. It’s just you have to monitor very, very closely. I’ll put it this way, any transaction that includes over 50 trades gets run through my desk, how is that? So you [indiscernible].

All right. All right, hey listen, nice efforts on – I know it’s challenging out there, nice effort.

Thank you, I appreciate John. No, we’ll get it put together. We always have.

Thank you. And our next question is from Joel Tiss from BMO. Your line is now open.

Hey guys, how is it going?

It’s going good, Joel.

That’s good. I wonder from your perspective can the overcapacity and over production be fixed in 2016, you think there is enough effort going on or does it seem more like it’s likely to drag into 2017?

I think there might be some drag.

Yeah.

You know, Joel, you’ve been around a while, these things don’t change overnight. You’ve been in this business longer now, you know how it works and…

Calling me old?

Well, that’s pretty much for you as a [indiscernible].

Are there any signs that energy, the supply demand of vehicles out there is starting to coming to a better balance or that’s going to take time as well?

That’s going to take time. I would say, as I said the one thing I can’t say is that I do believe from a parts and services flat perspective, we took some hits in the first quarter. We had many mobile [indiscernible] that were still out there that came home in the first quarter, but I do believe that has flat okay, from a service perspective and we’re bottom, okay. I’ve seen maybe just slight trickles here in the last few weeks, I’ve heard about maybe a little bit – a little here and there come by but nothing that I can hang my hat on, but I do believe at bottom from parts and service perspective truck sales I’ve seen those in a year. So really truly, not sure when they come back, that just hasn’t been a lot out there in the oil and gas sector. I mean we did – we still had – you remember last year in Q1 we had bleed over of what we thought was truck sales that carried over from 2014 into 2015 Q1. And then as I said, probably 1,800 units we lost in Q4 in the oil and gas sector and pretty much those have been gone and still continue to be gone. And I’ll let you know when they come back, but right now we don’t – I don’t foresee it I’ll be honest with you.

And then lastly, I mean with you guys it’s pretty much the best operators in the business, your competitors or other dealerships must be feeling a lot of pain is there opportunity to continue or consolidate the industry or you think it’s better to just focus on your business now and you worry about that later?

I think we’re little early in this cycle, it’ll show up, it takes a little time. I mean it’s – certain parts of the country right, I mean the coast lines are doing well but it’s somewhere – the Midwest is being tough and obviously the oil and gas sector is being tough. And at the same time, we’ve opened up six brand new large locations here recently so immediately - by the way when you’re looking at our expenses, those brand new stores flow right in, okay, you don’t get all the revenue upfront. So, you got brand new stores over the last year in Cleveland and Columbus and Cincinnati and St. Antonio and Denver and Odessa so that expense line starts right away. So even when we’re cutting expenses, remember we had a flow in of broke because of the side we double, tripled the size of some of those locations. So I’m not here to say, parts of the country are still fun, it’s just – certain parts I’m seeing during the first part of April and I’m not ready to give you total read on it, we see some softening in some other areas and I just have to – but it’s really early. The thing I can tell everyone is the fact that we’ll make adjustments we’re needing, that’s all I can tell you.

All right.

As we measure and monitor the market very closely.

Well that’s great. Thank you so much.

You bet.

Thank you. And our next question comes from Jonathan Chen from Private Management Group. Your line is now open.

Hey Rusty, hey Steve.

Hi.

With used values kind of coming in, can you maybe talk about the lease and rental business, maybe changes and behavior, and then can you just remind me if you need to – if you guys do adjust for change assumptions like on a mark-to-market basis on residuals? That’ll be it, thanks.

Well, lease and rental business we’re still projecting to have a decent year in lease and rental better than last year, how is that. We’re still looking forward to having a better year than last year in lease and rentals that we took some hits in the oil and gas sector and lease and rental sector. I will say this, when you speak about market-to-market, we’re very comfortable with our residual values, we’ve historically always run out of portfolio in a very conservative nature towards the majority of [indiscernible] what we make is gain on sales. We’ve never had a year of loss or gain on sale, so I think I would say that were testified to the fact that we’re very comfortable with our residual values as we’ve set them then we’re not going to move the market just because there is one little down turn here or there. The overall portfolio, because it’s a blended portfolio so I’ll put it once, we’re very comfortable with the overall valuation inside the portfolio is where it needs to be.

Thanks.

You bet.

Thank you. Our next question comes from Jamie Cook from Credit Suisse. Your line is now open.

Hey good morning. I guess a couple of questions, one, Rusty, it doesn’t sound like M&A is on the table at this point you think it’s too early if you look at some of the other truck OEs or components players, the stocks have rated, your stock continues to be under pressure and hasn’t rerated like the other names. So in that environment given your balance sheet how do you think about share repo and we haven’t done much on the share repo side, so maybe you or Steve if you could address that? And my second question is, you talked about parts obviously in the – it was held by acquisitions but on a same store sales basis or in an organic basis, can you just talk to how much business was down?

Sure.

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

Sure, let me see, let me take all of those [indiscernible] Jamie. So, let’s start from the back and work forward, how is that?

That’s good.

2017 – I’ll be honest, [indiscernible] I have less on 2016. As I told you before we might put a quick two on the front for U.S. retail sales I would have taken it, as I told you on the last call, I need more weight under that right now from the Class 8 perspective. It was 53,000 units delivered in Q1, okay, that’s not going to grow as we go forward in my mind. When you look at where the order intake has been by 2016 and I’ll get you to 2017, I do not expect, I expect – well it was 200 when I talked to you on February and probably more like 190 now, okay.

Okay.

So, and we started at 53 in the first quarter. When you look at the – when you strip out the last two months and you strip out export in Mexico, the order intake number was like 13.8, 13.6 and 12,000 something for U.S. and Canada, that’s not going to get you where you need to, obviously as backlogs continue to decline and get eaten up, we’ll find out how strong and how real those backlogs are and then go forward, okay. I don’t see 2017 mean a huge bounce year either, to be honest with you.

Could it be flat?

Yeah, it could be flat.

I mean you think flat down – you know, I mean flat down modestly?

Yeah I think flat down modestly, I don’t see a 130,000 units in this retail but I see [indiscernible] was going on but I can see 175,000 units.

Okay.

I mean I was going to tell you this is my gut man, I don’t have all these charts and graphs that’s gauging on but have being through these [indiscernible] a few times, my gut tells me that this is not just some big – I’m not going to sit here and tell you that I’m going to project it to grow in 2017, I just can’t see it, I can’t – you still could have more used truck pressure, okay, valuation pressure because when you’re coming out bigger markets. And so there are going to be a more used coming in, freight is still choppy out there right now and I just saw an ATA report yesterday that March was the biggest decline since 2012 sequentially, it’s 4.5% something like that, it’s just choppy. And so, it’s over supply of trucks and…

Okay.

I was looking everybody’s rates and the rates are being pounded pretty good out there from what I hear. And from a broad market perspective, there’ll be – you’ll always find areas that’ll have, this is great here, but from an overall broad market perspective customer rights are getting lot of pressure. So I just don’t think those things goes well. When you look at them, when you all sit here and try delivering a [indiscernible] but I’m not that way, it’s taken for what you see.

Okay. And then my other two questions were simplistically what into parts business do you want to an organic basis and then repo.

Yeah, parts of service was off 3%, Jamie in an year.

It was up 3% on an organic…?

Off.

Off, off yeah that makes sense, okay 3%. And what would that have been, what’s that relative to the fourth quarter or whatever if you could just remind me.

Sequentially let me put – we were actually up a little sequentially and I think [indiscernible] pretty flat, Steve what was that?

Yeah, we were up.

We were up slightly, I don’t have that right in front of me, up 3% okay. We were up 3% compared to Q4…

Okay.

But we were off 3% compared to year-over-year.

Okay.

We were still running a lot more in the oil and gas business in the first quarter last year than we are now. As I said I think that this quarter bottomed out…

And that’s what gives you the confidence that you’re bottoming, because you saw the sequential increase?

I saw the sequential, the only concern I have is I look around and what I’ve seen the first three weeks of this month and I haven’t gotten a great flavor of field for you, I’ll be honest. But we seem to be a little more broad in the center of the country soft in this April, so I’m going to measure and monitor very closer. I don’t see much seasonal pickup as I typically see right now, I’ll be honest about it [indiscernible]. I don’t see it in the first three weeks in April and I’m hoping we can grow strong, it’ll surprise me here as we finish out the month but I don’t see – I don’t have the same seasonal pickup field that typically get once the sun pops out and pop two months spring and we get into summer, right, which we will be. I don’t see it now, maybe it’s a little late, we’ll just watch it and measure and monitor it but like I said, the oil and gas stuff has bottomed. Those stores I think bottomed and are started climbing back as they made adjustments to their business models, they’re not going to climb back to where they were without oil and gas but they made adjustments, they’ve gone out and captured other types of businesses and I feel they’re bottomed and we’ll grow sequentially from where they’ve been.

Okay.

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

Repo, repo.

Repo?

Share repo, buying back your stock, why aren’t we [indiscernible] relative to the rest.

You will see that this quarter, Jamie, okay, we’re going to undertake – that was going to be undertaken this quarter, okay, and probably rather quickly, okay.

Okay, okay. All right, that’s helpful, I’ll get back in queue. Thank you.

And we have a $40 million share repurchase approved [indiscernible] and we are going to undertake that starting soon.

So okay, that’s good color, I appreciate it. Thank you.

You bet.

Thank you. And our next question comes from Rhem Wood from BB&T. Your line is now open.

Hey, good morning.

Good morning, Rhem.

First, Steve – Rusty can you talk a little bit about pricing in the market, I mean what you’re seeing on the new Class 8 side as they want to be an aggressive especially with more of your competitors with some extra inventory? And then can you talk about how you think you can kind of – what you can do on the margin side, especially on the new Class 8 side going forward?

Well, margins are going to stay – I believe our margins are going to stay similar where they’ve been. Right now I think they were blending in more like six, seven in Class 8 were in the first quarter. So I think that’s we’re hoping to keep them there. It’ll depend on [indiscernible] mix of business sometimes, how many small business and how much big fleet business we do right. So we’ll just have to see where the deals come out, right, obviously the ones [indiscernible] 500 a time, so a lot had to do with mix of business. I do see a competitive landscape is finding – people are starting to get more aggressive in pricing, okay. So that could put some pressure on us, obviously and I think it will, okay, there is no question that we’ll feel some pressure but we’re going to do our best to maintain, but we do get a bigger mix of fleet business and you’ll see that margin come down somewhat, but we’ve always maintain a pretty steady margin. I don’t see it rising, I should say that to be honest with you but at the same time, I do see about more competitive landscape out there and mostly OEMs more.

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

No, but it’s going to be – where is it, let me give you one, 107%, it was slightly higher than 106.4% because obviously it was off but we’re going to take in some expense cuts. As we said, business was off 3% when comparing to last year but we are undertaking quite a bit more – you’ll see more expense cuts continue to role in as I said, expenses will continue to go down throughout the remainder of this year with the initiatives we have undertaken and continue to take more effect.

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

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

Okay, so it looked more like it’s on a year-over-year basis I guess?

Yes.

Okay. All right, thanks for the time.

Sure.

Thank you. And our next question comes from Kristine Kubacki from Avondale Partners. Your line is now open.

Hey good morning, guys. Most of my questions have been answered, but I just want to drill on a little bit on oil and gas and I know we’re kind of coming off of it unusual cycle but you were kind of getting back to the price of WTI where maybe we see some rigs being deployed, not sure if that’s going to happen but based on kind of the age of the equipment and what you hear from customers, if we do see some of that activity to pick up, how long would it take to see some aftermarket activity coming your way?

Yeah, we’ll be right here with them, okay. If we start – if they start drilling again and you would see that – I would see that our service work would pick up pretty immediately. There wouldn’t a lag really in between, because obviously some of that equipment that has been set will need to be – not refurbish, refurbish maintain, getting ready to go and to be honest, supporting the job sites, right, like we always have in the past. So it’d be pretty immediate – if you see rig counts do price they start it underway that we will be out there, but I don’t see that happening right at the moment, I’ll be honest. I haven’t looked the last two weeks, three weeks ago and I know a rig count [indiscernible] three weeks, but we would get an immediate effect from it.

Okay, no I know they’re still trending downward but I’m trying to helpful. I appreciate the time, thank you.

Me too, I’ll be with you. I do think it’s going to take some stable and continued – not with some 60 days number, it’s going to take six months number to get people pretty moving in my minds, [indiscernible] six month number of somewhere above $40, around that dollar market of oil to get some people moving.

Okay, thank you very much.

You bet. You’re welcome.

Thank you. And our next question comes from Barry Haimes from Sage Asset Management. Your line is now open.

Thanks. Hi Rusty. I had two quick questions, one is, could you just characterize what you’re seeing fleet versus medium versus small trucking companies? You might think that given the rates and yielding uncertainty that the smallest would be the most renascent but I’m just curious if you’re seeing differential behavior by size? And then second question, if you look at any market share shifts you’re seeing in your business Navistar versus [indiscernible] versus the other guys out there just wondering what you’re seeing? Thanks.

Sure, I mean I think it’s pretty broad. It’s hard for me to really define one segment that this is early in the choppiness that – this rate pressure has only been over yet. It’s really been this year, right, rates still maintain pretty good through last year, okay, it was pretty solid up until the last six months or so. I mean spot rates started going down at the summer last year but most of contracts ran through the year, it’s when everything got moving again here. But I can really pin point very one area that I think it’s pretty much broad across the whole sector. I think we’ll watch – we’ll continue to monitor and we might see some shifts as we go forward as to who is taking the hardest but we’re currently probably the biggest inhibitor besides rates right now is valuations of used trucks. There are plenty – there is plenty – there is just too many trucks in the market place and the used truck valuation are the biggest overhang for some people trading our equipment they need to, I’ll be honest. Then when you look at as far as manufacture, it’s pretty much maintaining I think where we’ve been, I haven’t seen the first – the latest numbers out but I haven’t seen a huge shift from where it was last year to be honest with you. [Indiscernible] I don’t think.

Okay, great. Maybe just one quick follow-up, you’re mentioned Rusty that a couple of other areas of the business you’ve seen some incremental weakness in April. Any categorization by end market or geography or is it – I’m just curious if there is any theme to it? Thanks.

No, I really – not really, I’ll be honest, I mean I didn’t – I saw a little bit, not on the coast in the Southeast, but a little bit in the Southeast, a little bit up in Ohio, Illinois area right now. But look, it’s early in the month and I don’t want to scare folks, but I’m a very open book as to what’s going on. So we will continue to measure and monitor and make the adjustments where necessary. I think some of it maybe in the Illinois area, some of those consolidations were written in that area so there maybe a little [indiscernible] from those consolidations at the same time that might be one of the reasons. And some of those consolidations were in the Southeast in Georgia too, so there may be some shock inside the network and there may not be as much overall broad hit is what – pressure is what I’m seeing, just maybe in those focused in those areas. So let’s hope it all washes out when we get through May and get through these store consolidations. And I think the store consolidations are going to be really – well, it’s painful thing to do and it’s not something we enjoy doing. I do believe it’s dictated to be done because most of them was on the Navistar side and there were a little bit of locations that when you really look at all the revenue inside of all of them in this room with close proximity to other locations and the increases in technology and mobile services and the way we can take care our customers, they made a lot of sense from our perspective.

Great. Thanks Rusty, I appreciate it. Good luck this quarter.

Thank you.

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

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

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