Rush Enterprises, Inc.
Q3 2013 Earnings Call Transcript

Published: 23 Oct 2013

[Operator:]

Good day, ladies and gentlemen, and welcome to Rush Enterprises Third Quarter 2013 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Rusty Rush, Chairman, CEO and President. Sir, you may begin.

[Rusty Rush:]

Welcome to our third quarter earnings release conference call. On the call today with me are Marty Naegelin, Executive Vice President; Steven 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.

[Steven Keller:]

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, 2012 and our other filings with the Securities and Exchange Commission.

[Rusty Rush:]

As you have read in the news release, our net income was $15.2 million or $0.37 per share on gross revenues of $913 million this quarter. We're very pleased with our revenue growth, but we will continue to see higher overall G&A expense given the pace of acquisitions over the next several months along with significant investments we're making in technology and human resources to support our larger organization. And we're also accelerating the roll out plan of our business operating system which will also impact expenses. We did see an increase in truck sales this quarter although certain market segments remain challenging. Our Class A retail sales were up 26% and our Class 427 retail sales were up 24% over the last quarter with both accounting for more than 5% US market share. Navistar is gaining market acceptance with its SCR engine strategy and this momentum resulted in increased truck sales for our Navistar division this quarter. We expect our truck sales to continue at their current pace for the rest of the year. We mentioned last quarter that we believe 2013 US Class A retail sales could fall short of forecasted levels. Recently, industry experts reduced the Class A forecast for 2013 to 188,000 units and we're anticipating that 2013 will end about 5.5% below 2012. Industry experts also reduced their US Class A retail sales forecast for 2014 to 215,000 units. With signs of economic improvement continuing, we expect Class A truck sales to increase next year. We're also encouraged by the activity we've seen in the segments of the medium duty market which is expected to reach 193,500 units next year. After-market revenues were strong and our sourcing rate remains above 114%. We expect demand for maintenance and repair to continue into 2014. We believe our purpose is to keep customers up and running when and where they need us with our expanded network of service points, growing portfolio of solutions and technology that improves diagnostics and customer communication. Let's talk about growth. We completed two acquisitions this quarter

[Operator:]

Thank you. (Operator Instructions). Our first question comes from Chaz Jones from Wunderlich.

[Chaz Jones:]

Hi, good morning guys. Nice quarter. Just want to start off by asking what's your confidence level that we get to 188,000 this year, and then maybe, Rusty, just kind of a take on how you kind of expect next year to sort of progress as we move through the year?

[Rusty Rush:]

Well, I am confident in the 188,000. As I mentioned in the last quarter, I thought 198,000 was the little -- 197,000 is where we are at, it was a little bit strong. So the 188,000 sounds about right to me. As for as next year, given all the -- I have got a lot of communication with a lot of customers over the last 60 days, and I do believe that number -- I am pretty confident in that number; I'm confident in at least the 210,000 number so, but obviously it will accelerate throughout the year. I would expect it to be a back -- I don’t want to say back half loaded but a little heavier in the back half than the front half, maybe 45% front half, 55% or so back half.

[Chaz Jones:]

Okay. And then I guess my next question was that I recognize that mix always play a big issue, but how quickly do you think we can expect operating margins to begin to rebound? Obviously, this quarter revenue was up nicely, but operating margins kind of continue to run on a consolidated basis in the low 3% range. Is there something in terms of mix or along this lines that is going to turn around operating margin as we kind of look out here the next couple of quarters?

[Rusty Rush:]

Well, as I have talked about the last three quarters or so the organization has changed immensely in the last three years. We concluded our acquisitions in the middle of January, we were going from up to 2400 employees to 6000 employees in 106 locations and the infrastructure that it takes we have reached a tipping point here about a year ago. So the infrastructure it takes to support that obviously as I have mentioned we had to increase our G&A. We're stronger in corporate support, to support an organization of that size. At the same time, we believe we're just about there from that piece. But I think the exciting piece when you look at it is there's probably based on 2012 revenues, acquisitions of over $600 million and those are Navistar acquisitions which were with a depressed market share. So there's a lot of leveragability we believe there to continue to add increased revenues. So as we get in I would tell you that the middle of next year, I think you should be able to see what you're looking for in that, Chaz.

[Operator:]

Thank you, and our next question comes from Neil Frohnapple from Longbow Research.

[Neil Frohnapple:]

Rusty, you noted you expect truck sales to continue at their current pace for the remainder of the year. Is this comment relevant for both heavy and medium duty deliveries for the fourth quarter?

[Rusty Rush:]

Yes, I would say that's across the board.

[Neil Frohnapple:]

All right.

[Rusty Rush:]

And a lot of things, you remember you can't get too exact on these numbers. Timing has a lot to do with everything but I would expect what we can see, and I'll be honest with you. I was just told an order we're taking this morning for few units that we'll probably try to deliver before year end, but then some other thing it moved out depending on bodies and things like that. But the pace we're seeing is very similar to what we've seen in the last few months right now.

[Neil Frohnapple:]

Great. And Rusty, you mentioned you talked with a lot of customers over the last 60 days. What have you seen overall from your fleet customers? Is there a still a lot of hesitancy out there to pull the trigger on expanding their fleets at this point or --

[Rusty Rush:]

Yes, I think expansion fore sure. I think still there's some hesitancy there given new hours of service that went in this summer and things they're trying to get their arms around all that. But in spite of so maybe choppy reports that you've seen from a few elements and I still believe there are some other issues behind that. I still believe that freight is still decent. Okay, we're not going to say it's great but still decent. Rate is another issue though. Obviously, I do believe as you look across the board that they have not gotten the rate that I feel they deserved given the issues from, it's on the freight trucks they deserve given what they've had to deal with a little last several years from whether it's in hours of service, whether it’s the cost of equipment given EPA requirements over the last decade, etc. they have not gotten the rate increases they deserve. But I, I've got a hope and belief that they will come and we're going to reach to that point where they do start getting it. If people would start getting -- become more, maybe looking forward to some expansion of their fleets, but you also -- just remember Neil, especially on the beautiful side of the house 50% of what we sell or more is vocation. Its oil and gas. It's construction. It's residence. It's all those others, its crane. It's all the other different segments that we sell on that side of the house for sure. So our whole marketing, our strategy has always been to be very diversified on how we go to market. So while it does have a huge impact on our numbers, it is not our sole -- we are not solely based upon what the overall business is (inaudible).

[Neil Frohnapple:]

And one last one, you mentioned a pickup in Navistar deliveries. Is that stemming from more than Cummins ISX engine or you have seen a pickup from the 13-liter engine MaxxForce engine as well?

[Rusty Rush:]

More of the ISX, okay. We got to remember the ISX came out January 1. We really did not get any 13-liters during the May. They wouldn't start, so there was about a five-month lag between rollout of engines. So we would expect the 13-liter to begin to pick up pace also. And at the same time, if you look actually our medium-duty Navistar deliveries were down. But I think there was a lot of people anticipating the release of the Cummins engine and now with that has been done, I would expect those to start accelerating too especially next year.

[Operator:]

Thank you. And our next question comes from Jamie Cook from Credit Suisse.

[Lynda Yuan:]

Good morning, guys. This is actually Lynda Yuan in for Jamie Cook. Could you guys little bit more on the vocational side, what are customers - what are you and markets doing there and how are your customers reacting?

[Rusty Rush:]

Right. We are continuing to see as we have for all throughout this year. As I mentioned early in the year, we are starting to see an increase in activity in the construction markets. We are -- especially has affected our medium-duty business, that's one other the reasons for the growth and our medium-duty business. And also, I see more mixture business; Class A mixture business going on. We are working on couple transactions for the first quarter right now. So, I mean, I would tell you from the vocational side, if I was to go look at say oil and gas, it's still soft, okay. You got to remember we are probably 1200 to 1500 units off of what we were in the '11 and '12 in the oil and gas sector. So the results we show this year, I am very pleased with given what we dealt with from a downturn in that market segment, but that is the one good thing about a very diversified approach to the market, is that you are not relying upon just one sector. So we feel pretty good about where would -- as Navistar continues to gain momentum, as we believe oil and gas would be better especially towards the second quarter so as next year, not like it was in '11 and '12 but it is bottom in my mind. It should start coming back, there should be some capital expenditures they've cut off all this year most of your large companies have. Given they are accelerated purchases in '11 and '12, we expect that to start coming back to more normalize I don't want to say '11 or '12 rates, and an increase in construction then, you got to feel good, you got to feel pretty good about that with all those rates --

[Lynda Yuan:]

Yes.

[Rusty Rush:]

Just the growth that I am looking at that right there.

[Lynda Yuan:]

Yes, that is helpful. So for looking at year 2014, I guess the industry forecast, where do you see in market sector a possibility of upside or downside to that forecast? Is that in the energy in market or is that in some other market?

[Rusty Rush:]

Well, I will - oh, I would just think its the overall. I mean, I still believe there's been a lot of our over the road, remember everything is still driven up. The total numbers are still driven by over the road business. So you are going to say that the biggest impact of that -- I think if there is a downside to it, it would be the over the road. (inaudible). I do not think oil and gas can get much a lot lower than it did from CapEx expenditure. Our parts and service business is still very good in the oil and gas business. So as far as there is still a lot of fields that are working and things like that that will support, we had a -- we have it going on there, just the cap side of it, but it is not the big driver of the 215,000 number, it is still the over the road business. So that is where you probably your -- that is where you should -- challenges, if there will be challenges it will come from.

[Operator:]

Thank you. And our next question comes from Brad Delco from Stephens.

[Brad Delco:]

Rusty, lot of moving parts now with --

[Rusty Rush:]

Yes.

[Brad Delco:]

So many acquisitions, I lose track of the names and vocations of all --

[Rusty Rush:]

Tell me about it.

[Brad Delco:]

But what you have done with the network say in the last three and six months to a year, where you think in a normalized truck market your market share is for Class A and medium-duty?

[Rusty Rush:]

Oh, okay. You are going to make me project that here, okay. I would hope that when we complete all these acquisitions, as I said there is still $600 million of revenue based on 2012 Navistar stores that are not even in what you are looking at right now, okay. But I mean, at the same time understand that that gets a little hard to project but I would hope -- I would hope by the end of next year, third quarter of next year 6% Class A, a solid 5% plus in medium where we have been down around 4%, I would think somewhere in that range but a consistent, somewhere in that range, only on an annualized basis. Remember, everybody gets caught up last -- I remember last quarter, everybody was getting on me, oh, you were only 4% in class A. And I said, just wait we will end up at round 5% or better, especially given the issues we dealt with, with Navistar's issues, but is there coming back now. So let us say 6% and 5%, okay, and it may be little better, we will just have to see but that would be what I would think.

[Brad Delco:]

Now that is helpful. And then, going back to parts and service piece as well, because I would imagine a lot of these acquisitions do have some component of parts and service but you've been putting pretty high teens, low 20s type growth on that segment of the business. What do you think the acquisitions by themselves would do to numbers next year?

[Rusty Rush:]

Well, let me slow you down little bit there, Brad. Same store, I wish I was growing at that type of level, I did in '10 and '11 and the hill has got a little up taller here in '12 and '13, so it is in mid to high single digits, okay on same store growth, okay, in parts and service, okay. Let us -- do not put me that far out there, I'd hate that commitment out there continuing right now. But we do see the levels of growth at new stores to be at a higher level, okay. For example, if I was to look and say the Ohio acquisition, I do not think every acquisition is the same but the growth there from a parts and service prospective has been in the low double digits, okay, low to mid double digits and accelerating because you find this, you implement your strategies with all -- with already proven strategies there that you are able to accelerate some of that. In the revenue mix of acquisitions, as we can get that more similar to our revenue mix, it was just to push more parts and service. So I just do not want to carry away with another -- that your first comment that the same store growth is in the teens because its not, not when we are already -- when it is, when you come out of a trough but not at this part of a cycle.

[Brad Delco:]

I understood and I get that same store sales are lower but I'm trying to breakdown the $600 million of revenue you said. What -

[Rusty Rush:]

Yes, okay. Let's (inaudible) --

[Brad Delco:]

Portion of that is --

[Rusty Rush:]

Let me try to break that down. Let us say it's similar to ours, okay. It's not going to be that far off, I can give offline and probably get you a little better numbers on that but its going to be very similar, okay. The problem is it's just not enough, right. Our deal is to get it larger, right. Our deal is to grow -- especially, we believe that given that some of the Navistar store have been under lot of stress from last year or two, their truck sales may not have been what they should have been or historically were probably two or three years ago, okay.

[Operator:]

Thank you. And our next question comes from Rhem Wood from BB&T Capital Market.

[Rhem Wood:]

So my first question, I mean, you guys have made these recent acquisitions. Do you feel you are at a point where you try need to stop and digest what you have and implement the new systems or can you continue at this kind of same pace?

[Rusty Rush:]

No, no we are reaching a pause point at this moment, I mean I'm not going to say stop, stop is very much too -- its too definitive for me. But at the same time, the organization I have, it has been very stressful year for the organization, so I am very proud of the performance we've had. But at the same time, we have set the stage for the rest of this decade or started to set the stage for the rest of this decade as to what we are as a overall solution provider who differentiate themselves from this competition in the marketplace. At the same time you never know when an opportunity would come along that makes sense inside of it. But at the accelerated pace we're not going to continue at this pace from an acquisition perspective in 2014. But that's not to say there won't be acquisitions in 2014. So I don't want you to read in to be it just a stop. But as I've talked about before, I want to reiterate. I have, we have -- the organization has changed. We have had to add some G&A. We are going to accelerate the role out of our SAP business system because we're very confident in it. Prior I think I want to speak to that a minute. Prior to a month or two ago we were on a pace -- we were not going to get it completed till 2016 second, third quarter. We have decided to accelerate the role out of our SAP business system because we believe it gives us a definitive advantage at the point of sale, at the point of business. So we have now decided to have it all done before the end of the first quarter 2015. So we have a lot going on next year besides just acquisitions as we continue to accelerate that. And we continue to build out our corporate infrastructure to support these stores the way they need to be supported going forward. So acquisitions, while there maybe some more, it will not be at the current pace next year.

[Rhem Wood:]

Thanks, that's helpful. So, second question, you guys have obviously seen order rates for Navistar trucks improve and they're staying the same thing. But simply what are kind of hearing from your customers who have been testing these trucks that gives you confidence that they will come back and buy at a bigger level and that Navistar will continue to gain back share? And then along with that, have you guys had to discount pricing at all to get these trucks moving or maybe can you explain why the average pricing, I know mix has a lot to do with this, but why the average heavy duty pricing was down in the quarter?

[Rusty Rush:]

Sure, I can explain that. Well obviously with Navistar accelerating, remember Navistar is more of a fleet truck on the Class A side. Most of what we sell, in the Navistar business goes to the over the road business. Over half of what we sell on the Peterbilt side is the refuse, is in construction, is in all those other niches which tend to have bodies and things sometimes and other additional components added to them. So that's really, it's more of a mix issue than anything else. I don't want to get into pricing by brand. It has to do more with the market mix and the market segment mix as to where they go into.

[Rhem Wood:]

And then just a couple of numbers that you typically give. Can you give us the margins by heavy-duty, medium-duty, light-duty used and then Navistar units sales heavy-duty, medium-duty and bus sales?

[Rusty Rush:]

Sure, go ahead. Steve's got it right here.

[Steven Keller:]

The margins for heavy duty were 6.7, medium duty 5.3, light duty 3.7 and used were 9%. The Class A sales for the Navistar region were about 520 units this quarter.

[Rusty Rush:]

Yes, I think if I am not mistaken of our increase sequentially in Class A Navistar was about two-thirds of it sequentially.

[Steven Keller:]

And the medium-duty sales in the quarter for Navistar were about 154 units and we sold about 610 buses or so during the quarter.

[Rhem Wood:]

Okay. And then last and I'll turn it. What was the same store grow percentage parts and service and the AR for same-store as well?

[Rusty Rush:]

6.2.

[Operator:]

Thank you. And our next question comes from Art Hatfield from Raymond James.

[Art Hatfield:]

Rusty, on the Class A sales to jump from Q2 to Q3 how many units were from the acquisitions that you closed in the quarter?

[Rusty Rush:]

Oh, they were closed in the quarter, very not, no, I mean, done really, I mean I think it was one, how about that? Okay.

[Steven Keller:]

Yes, just a handful.

[Rusty Rush:]

Just a handful because of the acquisitions were just coming online. I think who would -- when we bought out I want to deliver before we got the stores, so.

[Art Hatfield:]

Okay.

[Rusty Rush:]

The big Navistar acquisitions, the big one is of course Chicago and Indy area of acquisition will come in January and then we're closing one this weekend with the central stores. We're excited about it in central Illinois, which will give us full broad coverage across Illinois.

[Art Hatfield:]

Okay.

[Rusty Rush:]

I just want to take one second. We're very excited about where we're going to be. If you look at the map, you go across from Kansas City to Missouri across Illinois, Indiana, Ohio, right across Virginia, North Carolina down to Atlanta. That is we're very excited about where Navistar network, what's it going to like when you look out and get to (inaudible) in January.

[Art Hatfield:]

In the parts and service business, the same-store growth that you've seen what drives that? Is it the age of the fleet that you see in the marketplace? Is it you doing a better job of -- not to say you've ever done a bad job but just being more focused job on marketing what you can do? Ryder talks about this opportunity. They see given their network of maintenance facilities and I think you're in the same boat --

[Rusty Rush:]

Yes.

[Art Hatfield:]

Getting large fleet operators to outsource their kind of out of network maintenance needs. Are you seeing any of the -- I know you've talked about that so --

[Rusty Rush:]

Let me speak to that, Arty, real quick and I did not mean to interrupt obviously, let you finish.

[Art Hatfield:]

No.

[Rusty Rush:]

When I look at it -- as I've talked before over 20% of our technicians do not work in our shops, okay. We've probably got up to 250 mobile trucks, 150 technicians and growing in customer shops. Our -- the way we go to a market, the way we will continue to go to market there's a good growth this decade, will grow into rest of this decade is where are your pressure points, where are your pain points, what can I help you with, how can I keep you up and running. Our goal given, our geographic footprint, is to continue to expand just as you spoke about Ryder talking about those that take advantage of those abilities that we have to leverage off of that network but not just in store but in territory, to have the base, to go out and do what we need to do, to take care of a customer. And we continue with technology, continuing to grow, which always increases complexity of product. We believe those opportunities will only grow as we get into the next -- as we grow throughout the rest of this decade. So yes, there is no question about that in new territories we go into. I mean, we went into Ohio, they didn't have mobile techs. They didn't have people -- people in other people shops. We've already got that. We're not to the levels we want to be but we because -- and we're actually making huge real estate investments. We're building a new store in Cincinnati going -- we're getting things break ground now, closing dirt, closing 23 acres in Columbus to build a new store there, looking for real estate in Cleveland. I mean, but right now we had to attack it by going to them. But to your point, yes, we believe the outsourcing of other maintenance along with other mechanical work in the future will be away with the future, not everything. We know what all fleets are going to do that but at the same time the complexity of product, the investment in training, the investment in diagnostic equipment it takes and staying up-to-date with everything, that's what we do. That's what we do and the larger our network is the better off the more sense we can make it to our customer go out and take it on an overall perspective, take that over for them, take care of their breakdown systems. Can we take over your breakdown department? We'll supply with people and then we'll manage your -- help you manage your fleet across, our broad network in and outside of our network. So, anyway, I know I get a little longwinded there but I get pretty excited.

[Art Hatfield:]

No, no, but and that's no, that's good stuff. And as I think about that though and as you grow that side of the business isn't that a real positive tailwind to margins going forward because I think the most part these opportunities are -- you would have limited investment tied up and mostly the opportunities?

[Rusty Rush:]

Yeah. We'll have some investments and one thing about -- the one thing you got to remember about mobile is and sometimes the costs are a little more. But if it's incremental that's we're after. You're not cashing percentage; you're cashing dollars at the end of the day. So how long this business is business we're not getting, we're going out and trying to capture.

[Art Hatfield:]

But to your point, it doesn't take the CapEx investment. There might be a truck here or there but not, you are not building a $15 million facility, okay.

[Art Hatfield:]

Right. So if I think about that and I can kind of ponder that with regards to margins, but as we go forward your comment to Chaz about maybe middle of next year we start to see margins normalize, help me understand the situation with regards to your big opportunity being just growth in Navistar as that comes back and the investments you have made to acquisitions to get position for that how to think about margins because as you point out because of the mix or where those trucks typically get sold in the fleet? It's a little bit lower margin than you are historically used to. So how should we think about operating margins for Rush Enterprises going forward in that regard?

[Rusty Rush:]

I mean, I would -- good question. It is -- a lot has to do -- operating margins, a lot has to do with the size of the truck market, okay.

[Art Hatfield:]

Right.

[Rusty Rush:]

We are (inaudible) for a party -- I like to break it into segments, okay, and I like to break it into gross margins okay to begin with. Our gross profit operating margin on truck sales will probably be a little more difficult to maintain because there is a lot more - it is a lot more fleet business, not owner-operator type small stuff, okay. But as Navistar continues to grow as a piece, that is going to go the truck sales probably to more accelerated price than the parts and service as their market share continues to gain, you follow me, and that is the big cap cost, the big revenue piece is the truck right itself. So the operating, as far as return on sales, if you can look at it from that prospective it is going to be little more difficult, if they accelerate from say 14% to 20%, because we are going to be selling a whole lot more trucks, growing the parts and service business that quickly to keep up with that pace would be very difficult. So I know I am not giving you exactly a straight answer, I am looking forward. I do know that the leveragability of what we put in place and continue to spend should take hold in the back half of next year as we may take these new stores in that 600 online (inaudible) --

[Art Hatfield:]

But let me ask just then maybe --

[Rusty Rush:]

We are in the low 3%, so let us say we did get it up to somewhere around in upper 3% number would be my thought.

[Art Hatfield:]

Okay. But --

[Rusty Rush:]

Let us take about the back half of next year because this acquisition we are taking on in January is a very -- well, we are very excited about the one we are doing here this weekend, it is not as large. The one we are taking on in January is 650 employees and over $400 million revenue and that is based upon 2012 numbers, which was depressed market share number. So the size of it, once we get it integrated into our business that -- that always takes about six months.

[Art Hatfield:]

So let me ask you this, I mean, also I would assume next year that you have been very helpful but you also got a little bit of a headwind because of the SAP rollout?

[Rusty Rush:]

That is no question. If you want me to qualify that I will go and get, here is what is going on and I want to get this -- I think so I can get it out on table. As I said in the press release, as I said in my early comments, we have decided to go and accelerate the rollout of our SAP business system. While it has taken us longer to get it done than we wanted and probably cost us more money, we are very, very excited about the benefits we see at the operating level. So we have decided to, I did not to wait to the middle of 2016 to get it finished. I think the benefits are much -- we need to get it out there.

[Art Hatfield:]

All right.

[Rusty Rush:]

And get that to all our stores, where it is probably running it over half to two-thirds of our Peterbilt stores now, we want to accelerate that pace to finish by the end of first quarter 2015. So to quantify that, this year the rollout fees, the cost of rolling it out, it was about 5 -- I'm going to put it an EPS numbers, was about $0.05 of the EPS this year. Our original plan was to continue it at about $0.05 the next two years for each year.

[Art Hatfield:]

Right.

[Rusty Rush:]

By accelerating it it's going to cost me another $0.04 or $0.05 okay, but I am going -- it is probably going to cost us $0.14 next year to roll it out next year if that is the decision I made.

[Art Hatfield:]

All right. Okay. But that goes away in '15? No?

[Rusty Rush:]

What is that?

[Art Hatfield:]

That goes away at 15 and that goes away the rollout piece?

[Rusty Rush:]

Yes, sir. Yes sir, that goes away in 15, but we believe the benefits far outweigh the incremental -- as you were to look at it was going to $0.05, it will be $0.14 in one year, so the $0.09 of EPS we believe -- and those are rough numbers Arty, it may be could be $0.08, may be could be $0.10, but they're right, its right in that range, okay. That is what we project, it will take to accelerate, because of the increased -- we have to hire some additional people, additional trainers to do what we need to do to get it out there, to backfill to get it out there that fast, but I did not want to wait.

[Art Hatfield:]

Do you mind sharing with us what you think the annual benefit is?

[Rusty Rush:]

Oh, I do.

[Art Hatfield:]

Okay.

[Rusty Rush:]

I think you will see it in the numbers how is that, okay.

[Art Hatfield:]

But then, I may not be around in '16, so.

[Rusty Rush:]

And why do you think I accelerated in '15, I thought I might not be around either, Arty. You and I are thinking almost same lines.

[Operator:]

Thank you. (Operator Instructions). Our next question comes from Bill Armstrong from CL King & Associates.

[Bill Armstrong:]

My question had to do with the SAP rollout but you just answered it, so thanks.

[Rusty Rush:]

You are welcome, Bill. I just -- I want to know that -- I hope that you understand we are very excited about the system. It's been a long, long arduous six or seven years to get it done, but I'm telling you it will be, from our perspective, it will give us an advantage in real time management of our business that is far superior to any other business system that's out there and available inside, not just the truck business but the automotive business in total.

[Operator:]

Thank you. I'm showing no one else in the queue at this time, sir.

[Rusty Rush:]

Okay, with that we appreciate everyone's call in this morning and look forward to speaking to you. I guess it'd probably February when we release first quarter numbers, so -- our fourth quarter numbers, excuse me. Thank you all very much.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program for today. You may all disconnect and have a wonderful day.