2011 Citigroup Global Industrials Conference

Sep 21, 2011

Slides

United Rentals. Just for what it's worth, we're still working with a logistical issue on the slides. We hope they're going to have those shortly. In the meantime, we have from the company presenting up here today is the CEO, Mike Kneeland. Next to him is the CFO, Bill Plummer. Mike's going to take us out here, and then if there are any questions after the session, Fred Bratman is also with us here from investor relations from United Rentals. With that, I'm going to turn it over to Mike, who's going to give the story on United Rentals. Thank you. Thanks, Tim, and thanks, Citi, for sponsoring us today, and I'm very happy to be here. As Tim pointed out, we're having a technical difficulty with getting our presentation here, but that's not going to stop me from telling you the story about United Rentals. First and foremost, when you go through and you take a look at our industry, there are some macro dynamics that relate to our company. Used prices on fleet. You take a look at the ABI Index, take a look at Dodge Data. I know on everyone's mind in this room is what's happening on the macro environment. Well, I can tell you that used prices continue to march north. The Rouse Report, which just came out in August for July, showed that the prices continue to sequentially go up year-over-year and month-over-month, which is very positive for our industry. Why is that important? Because it shows that demand for our products is growing. The macro environment with the ABI Index, we've had a mixed signal over the last several months. First and foremost, we've had several months of decline, and just recently, we had a very high positive return, well over 50, one of the highest, I think, for over the last four years for the ABI Index. The ABI Index, the Architecture Billings Index, is basically a leading indicator of things to come, and it's usually nine to 12 months out. United Rentals. United Rentals, for those of you who are new to this space, is basically a company that started in 1997. Brad Jacobs and seven other individuals started this company, and very quickly, through acquisitions, grew it to the largest rental company in the world. We have 539 locations today. We are in all 10 Canadian provinces. We operate in 48 of the 50 states. Vermont is one of the states, and we actually go through Vermont through both Massachusetts and New York. The one state that we are not in remotely is Hawaii. Of the MSAs that are out there, we are in 99 of the top 100 MSAs. Over time, the company, for the first six years, had over 250 acquisitions. Brad and the team put together a very large platform from which to build off of. In 2008, when I was appointed as CEO, I brought Bill Plummer and other new members to the management team. We wanted to leverage our size across North America, take this opportunity to go after our CORE business of rental, go after and focus on our customers. In 2008, we embarked on a journey to transform the organization, first and foremost, to focus on the customers. We went out and we interviewed over 1,800 of our customers, both internally and as far as our customers and our competitive customers. It's a very important point that we learned an awful lot about how they view our industry. Collectively, they came back and said, "It makes a lot of sense, but the way you go to market is very difficult for us." Back then, most companies, including United Rentals, was territory-focused. The reason we were doing that is because through the acquisitions, that was the only way to really kind of keep your arms around the acquisition growth. We have since transformed the company from a territory sales aspect to a key account management. That's an important point. Today, roughly about 55% of our revenues come from these key accounts. National accounts. It's there. Then I'll say the presentation is here. If I can catch up here. This is the market dynamics of renting versus buying. I'm going to go back now because I was getting off kilter here. This is an important slide. We'll probably get some Q&A about it. Over the last several years, non-res construction has been declining year-over-year. However, we have seen growth starting back in the second quarter of 2010, and I can stand here today and say it's continuing in the third quarter of 2011 that we're seeing growth. That growth, we believe, is coming from the secular shift of people renting versus owning. In 2009, United Rentals, as well as all of the industry participants, de-fleeted significantly. We sold $650 million of OEC in 2009, a significant amount by any stretch than any year that we've ever been in existence. Coupled with the fact that manufacturing virtually produced very little during that timeframe. On top of that, we are seeing, and we've seen contractors sell off their fleet and shifting that to cash as opposed to having it on their balance sheet as an asset. That being said, with the uncertainty in the marketplace, coupled with the tight credit, we're seeing people shift away from owning towards renting. You can see the reasons on this slide why. Why is it attractive? Because it is a lower cost of ownership. It's flexible because we have a wide variety of assets that you can rent from, and we have the footprint across North America in order for you to facilitate those rentals. This here is put together in conjunction with the American Rental Association through a Global Insight. The important point of this slide is you can see where it has a CAGR growth going from 2010 and beyond. Now we could all debate what that rate will be, but nonetheless, it is a positive trend. Let me go back one slide here. This is the slide I was trying to talk to you about earlier, was transforming the company, we did three things. Market strategy, building our relationships with our customers, optimizing, taking our branch footprint that was well over 700 and optimizing it to today, we have 539 branches. Bill will talk about our capital structure. Because we are a highly leveraged business, it's very important that we have flexibility in our capital structure for any environment. When you look at the market segmentation, you can see what I was talking to you before about the single point of contact and to improve our customer service quality inside the organization. I'm going to go through several of these in the presentation. But it's very important to remind everybody here how important it was for the customers to focus on basically relying on one person to rely on their needs for their rentals. You can't underestimate the power that we've seen from that result. We have made significant strides with our key account program. We've seen our national account penetration on a year-over-year basis on their share of wallet go from 39% to 53% as a result of the way in which we're going to market. Single point of contact, measuring ourselves in the eyes of our customer on the services that we provide. We're also using our specialty rentals as a way to penetrate new markets. Operation United, I talked about this. These are our priorities and rates and operational efficiencies. We'll talk in detail about these, and Bill will go over some of these in a lot of detail. I was talking to you about our segments and how we go about our key account focus. As you can see, we've got national, strategic, and assigned accounts, and they're broken down in three buckets. These three buckets are based on geography. They're also based on revenue. I'll give you an example. We have a customer like a Peter Kiewit, which Peter Kiewit is very well known, will penetrate all across North America. That would fit into the national account bucket. Then you may have a smaller company located here in the Massachusetts area, Perini, where he may be considered more of a strategic account, where they may hit certain markets, but by and large, they are not going to be overall all of North America. An assigned account would be someone who would have enough work in the central portion of Boston alone. They will never go beyond the Boston area. But we have a key account. We have people who are assigned for each level of these types of customers. It brings a better stable relationship. It has a better understanding. We know their means and by which they order, how they want their invoicing. We have contacts. We build those relationships over time. As I mentioned earlier, 55% of our rental revenue to date is coming from that single point of contact. Again, you can see the trends that we are seeing from the second quarter, and our key account revenues rose 18.6% on a year-over-year basis. Again, going back to that earlier slide when I was talking about our primary end market being down, we are seeing significant growth. Why do we target these large accounts? This slide really shows the reason behind it. As the average term, much larger. This contract size, again, almost 2 and a half times larger. And the amount of equipment that they keep on rent, more than 2 times. Less touch points, and that we can keep these things out for longer periods of time, drives our time utilization, also helps us drive our efficiencies at the same time. Again, this is the slide I told you about that shows our broad footprint across North America. Again, we have the capacity to meet our customer demands almost anywhere in North America. Now, this slide here, as I mentioned before, when we first we went out and we talked to the customers, what are some of the drivers? The single point of contact being a very strong point. But this one here talks about how we measure ourselves in the eyes of our customers. On-time delivery, pickup, invoice accuracy. Our customers want to build something. They want to get something accomplished. The last thing they want to do is do administrative work, and they want to focus on making sure that they have an accurate invoice. And then service call response time. And we measure response from the time they place that call to the time that machine is back up and running. That is the most important point for that customer. It is not when we get that call, and we send somebody out there. That is great response. But the reality of it is uptime. Safety and productivity are one of the key drivers to our industry. Our industrial revenue continues to increase. It is a focus of the company. We focus on driving the industrial penetration. We measure this by SIC code. And you can see since 2008, we have made continuous improvements. It is a longer-term sell, with longer benefits and less turnover. And we see this as an opportunity for United Rentals. We have done some acquisitions, and one of the most recent ones we did was Venetor in Canada. Puts us in a very strong position on Eastern Canada. As I mentioned before, we are in all 10 Canadian provinces. We have a strong footprint and penetration. But we had the opportunity with this acquisition to really strengthen our position in Ontario. We've seen significant growth in Eastern Canada. Historically, Western Canada has always been a strong point as it relates to the oil and related commodities. We've seen that shift go from the west towards the east, and it's positioning us very well. It's a long-term established company. Again, it's a strategic portion of our business. It's a strength of ours. We look at the positive return on internal rate of return, and also from a cultural aspect, it fits very well in our portfolio. Trench safety, again, I've mentioned our specialty business. Trench safety business, and we are the largest in the trench business in North America, is usually typically the first one on the job. When I say the first one on the job, they are talking to customers 6, 8, 9, 10 months in advance as they think about going into a project. How do they get the utilities? How do they make sure that they can do it in a safe, efficient manner? We do this through the technology that we have. When you look at this business, you say, "It doesn't look very sophisticated." The reality of it is, it is extremely difficult because you have to measure the type of soil, the depth of soil, the length that you want to do it, and how you plan to attack the job and plan that job for productivity. We also do this in the construct of safety. OSHA requires that anyone that works below 5 feet, it's mandatory to have a certified person on below-grade construction. As a result of that, we are the biggest providers of training in North America. Over 50,000 contractors since 2005, and it continues to grow. It also gives us the ability for cross-selling. Our general rental customers and our industrial customers, our large accounts, we are now focused on selling cross-segments, and we're growing our business as a result of that. HVAC, so what is it? It may sound like just air conditioning. It's much more sophisticated than that. You can also reverse it and use it for dehumidification, like we have in the flooding that we've seen over the last several months. It also provides cooling capabilities for hospitals and large buildings. It also provides cooling for some of the products for the industrial services as well, and it's a very high-margin business. Again, leveraging our current customer contacts are building this business. Our Gold Star operation has three branches. Again, strategically it fits as we look at our portfolio of customers, with about 80% of its revenue coming from the industrial sector, and it helps us accelerate our industrial growth. It enabled us to go into certain markets that we would be otherwise have to wait for an MSA to come up in order for us to bid. They already had existing customers. This allows us to go in, and now we can cross-sell across all segments of our business. I think that I'm going to shift over and let you- Sure take over from the optimization. Sure. In the spirit of time, I'll move through these fairly quickly, but I do think it's important to hit the key points because the optimization story is a vital part of what we've been doing as a company. We've been focused on managing our fleet more effectively to maximize the return out of the investment that we have. Mike mentioned the optimization around our branch footprint. We've looked very hard at our branch footprint over the last few years, and we think that's been an important lever for us to become more efficient in how we do our business. Then we've been looking at ways to dive into all of our processes and leverage technology to get a better, more efficient, and more effective result for our customers. One of the areas that we've done this in particular is around how we manage our pricing. Our industry is an industry that has an old-school approach to pricing in many, many ways. The salesperson's out there talking to the customer, and they have a general sense of where the market is, and they have a fair amount of authority to offer a price to the customer with basically their intuition being the main guide. We said we want to put more science and more support for the salesperson in thinking about how we offer price. We've worked with a company called Zilliant in developing a pricing algorithm that we've programmed and developed systems around to help put a more scientific approach to how we calculate the price. We look at actual prices realized in the market across a broad pricing zone. We do some statistical analysis to determine what we think is the optimum price to offer to the customer that gives us the greatest likelihood of closing the deal. Then we put some workflow management process around how the salesperson actually agrees to the price, where they have to go back and to get approvals before actually offering the price, and supported all of that with integration into our transaction management system we call Rental Man. This was a major initiative. We rolled it out over the course of the last 2 and a half years or so. It's fully implemented across all the business, with the exception of our trench business, which is managed a little differently just because of the particulars of that business. But it is a vital part of how we offer pricing to the market right now. We have greater visibility to our pricing. We have more hard stops in the process, where a salesperson has to reach back to a district manager in order to get a certain level of discounting on pricing, and we think we're getting a better realization on price. We think we see it in the numbers. Our price realization this year, we've committed to delivering 5% or more year-over-year improvement in price for the full year. Year to date through July, we're well in excess of 5%, somewhere in that 5.6, 5.7 area. I think it's safe to say that we're continuing to see pricing improvement through August and September so far. We feel very good about the price result, and CORE is an important tool that we've used to help us optimize that offering. As we look at our fleet, looking across our fleet at ways of optimizing the use of our fleet, we've thought actively about the fleet mix. What's the right fleet mix to have in the current environment and in the environment that we expect? You see here just a side-by-side comparison of where our fleet mix is today and where we want to take it over time to optimize against the demand and the customer base that we've developed recently. Of that $4.2 billion or so of fleet, currently we're roughly 49% aerial. We think that should go down a few percentage points. Where should the mix go? It should go into earth-moving equipment, taking that from about 14% to 20%. Then in certain other areas for example, industrial-related Cat classes like power, like some trucks and generators and other Cat classes. That's our thought about how to skew the fleet mix to match up better with the demand that we generate today and expect to generate over time. This slide is just a snapshot of what we have in those very broad categories and gives you a sense of the kind of utilization and dollar utilization, time utilization, and dollar utilization that we get off of the major categories of equipment. It's, I think, a good snapshot to give you a sense of what we get out of the fleet. This next slide just talks about one of the ways that we've been focused on optimizing the use of our fleet, moving it around. We've got the biggest, densest branch network of any rental company in the world. In the past, we would manage those branches as single isolated entities. Well, we can get a much better result if we manage it as a network of branches, and that's what we're trying to talk about with this slide. We transfer fleet among our branches. A level of demand comes up from a customer in branch A. If they don't have the fleet, they will reach out to branch B and transfer the fleet in to satisfy that customer demand, subject to certain constraints. We've been doing more and more of that over the last several years, and we think that's an important part of how we've driven greater utilization of our fleet overall, and the slide is just meant to talk about how we've approached that. We manage the fleet. It's obviously the vital part of our business, and so we spend a lot of time thinking about what's the right way to manage the fleet over the life cycle of the equipment that we have. This slide is really meant to talk about some of the key elements of that. Starting in the upper right corner, what's the right level of capital to spend on your fleet every year? What's the right amount of used equipment to sell out of that fleet every year? Well, that's driven by the equipment and its life cycle. We know in great detail, based on age and utilization of equipment, when we need to sell things. That'll set our replacement need in a given year, and that will inform our decision about how much gross new equipment we need to buy, both to replace it, but also to grow our fleet. The upper right gives you a sense of where we've been over the last number of years in terms of our used sales and our new purchases. That's a vital part as we think going forward. Lower right tells you about utilizing the fleet, and I talked about that already. Drive higher utilization. We've been doing that nicely over the last few years, even though demand came down significantly in 2009. Lower left tells you about the age composition of our fleet. It's important to us to look across the fleet and to avoid piling up major buckets of age in any given year. Why? You don't want to have to go out and be forced to buy a lot of equipment to replace an age bucket that's gotten too old in any given year. That takes away flexibility. None of us wants to be in a corner where we have to go out and spend $700 million a year to replace fleet that's becoming too old. So we manage that age composition curve pretty actively. We do it primarily by selling the oldest fleet first, and so the upper left corner is just showing you what we've been able to do over the last several years. You can see that we typically will sell equipment with an average age of somewhere in that 70 to 80 month range, with the second quarter being particularly high at 85 months. That's another aspect of how we've optimized the business over time. This next slide just talks about the branch footprint optimization strategy in a little bit more detail. Again, I won't go into a lot of detail on it, but it just shows that in a particular area, in this case around L.A., we've been able to take out branches and still drive greater utilization of our equipment and more efficiency across that network. FAST is another technology-led initiative that we've been using to help drive logistics efficiency. Our pickup and delivery cycle, in the past, has been managed primarily by human beings. We have dispatchers across our branches, not at every branch, but across every other branch, perhaps. There will be one human dispatcher in the past. They've done, based on their experience and their knowledge of the market and just gut feel, they've laid out which drivers and which trucks should pick up what piece and deliver it to what customer. There are a lot better techniques for doing that these days, so we've been on an initiative to put in optimization routines, link it with handheld computers, link all of that back into our Rental Man transaction processing system, monitor the trucks, use GPS, use data from the trucks J-Bus to tie all of our logistics activities together so that we can be more effective and more efficient in how we manage pickup, delivery, and flow through our rental cycle. This is a major initiative. We're about 300 branches out of our network rolled out in this program today, and we expect there to be a nice cost benefit and effectiveness benefit from automating these processes, again, part of our optimization. So that's another major leg of the transformation that Mike talked about, and we continue to look for ways to optimize our business in every way that we can. Mike mentioned capital structure. I'll be very brief here. It's the lifeblood of a company like this. We're capital intensive, we know it, and we've got to manage access to that capital in a very prudent way. So we've been focused on that for the last few years. In particular, we've been managing the maturities of our debt profile so that we don't have major debt maturities. Don't want to be painted into a corner where you got a $1 billion maturity coming up in an environment like, say, today, where the high-yield market is not readily accessible. So let's reduce the size of our maturities, let's push them out in time, and let's manage them actively as they march through time so that you keep the refinancing risk at a manageable level. You see that in the debt profile here today. The next major event that we have coming up is our asset-based loan facility. It matures in June of 2013, and we're actively discussing what and when we should renew that facility even today. That ABL market is a very robust market. It's very readily available to us even now in a very turbulent market. So we're looking at perhaps doing something on that ABL. Not perhaps, we'll probably do something very shortly. The rest of our debt maturities we think are well managed, well placed, and we'll keep looking at those as they march over time to make sure that we can continue to say that. So the next slide is the components of our capital structure. The only point to make here is that we've got capitalization in a variety of different markets, whether they're secured loans, unsecured loans, subordinated notes, or holding company notes. We've got convertibles in the cap structure, so a wide pool of different markets to access. That, again, helps us manage that capital structure. Coupled with the fact that we've got a lot of liquidity, roughly $600 million of available liquidity through our bank facilities and cash on hand. Plenty to do any of the purchases that we think we need to do. The next slide just shows you our cash flow over history. The only point here is to say that we've been nicely free cash flow positive over the last number of years, and we've committed to being free cash flow positive again this year, albeit a much smaller number. I won't drag you through the second quarter financial results. You've all seen or can see that easily other than to say, second quarter was a strong quarter for us. We grew rental revenue 16%. We raised rates 6.1% year-over-year. Our volume, as measured by the amount of fleet that we have on rent, was up nicely, almost 14%. We drove time utilization to that optimization theme. We increased it 3.6 percentage points over the same quarter last year. It was a new record for us. By the way, we've been able to say new records for the last six quarters. You saw it in our margins. EBITDA margin was 35.1%. That's 300 basis points better than the same quarter the prior year. So on a good path in the second quarter. That followed a solid first quarter, and I'll touch on the remainder of 2011 here in a second. For the full year for 2011, we said we're going to raise rental rates 5% year-over-year at a minimum. At least 5%. We were there through the second quarter, and we continue to be very comfortable that we're going to be north of 5% for the full year. Time utilization will be up 2.5 percentage points, and we'll still be free cash flow positive, as I said, for the full year. We did a call where we talked about the month of July results only. July was a good month for us following on the second quarter. Rental revenue was up for the month of July. I'm forgetting the exact number now, but it was better than the 16% we saw in the second quarter. Our rental rates for the month of July, for that month alone, year-over-year, were up almost 7.8%. So good momentum on rental rate performance. Our margin expansion was nicely positive in July. We didn't give the number, but for the month of July, it was a very strong result as well. We haven't talked about August publicly, but I will say here that August was another good month, with results on rental rate realization, revenue growth, margin expansion, all being comparable or better to July. As we stand here on September 22nd, so far, September's a good month as well relative to July and August as well. So we're optimistic about what we'll deliver for the third quarter. Our business is still robust. The demand that we're seeing is pretty solid as we sit today. The $64 million question is: Does that maintain throughout next year? That's what we can talk about in Q&A. I'll get to Q&A right after one more slide. We put this slide in to talk about the next two to three years and what we can do in generating profitability over that period. So this is what would need to be true in order to get back to something like $1 billion, $1.1 billion of EBITDA. That's the peak EBITDA that this company has delivered. Compared to 2010, if we got 11% of rental rates, remember I said we're going to get at least 5% this year, if we got 67% of time utilization, we're going to do that this year, and if we got a 10% increase in fleet size, then we think that we can get back to something like $1.075 billion of EBITDA dollars, broken out between the contributions that you see here over fleet, rental rates, time utilization, cost control, and other components. That would be around a 40% margin, and we think that can happen reasonably in the 2- to 3-year time frame. We're optimistic about where the business can go. What we're doing just inside of the business, regardless of what the external environment is doing, will contribute to getting here. As long as we don't have a major dislocation in the external market, we feel very comfortable that we're going to deliver very solid results for some time to come. I'm going to stop there, and I guess we can open it up for Q&A. Questions? Yes, sir. You mentioned something about 2012. How far do you see? Sorry, I'm sorry. Ask the question again. How far? Yeah, you mentioned something about 2012. Mm-hmm. How much visibility do you have? I can take a stab at it if you want. So obviously, a key question. We have been surveying our customers to ask them: Where the projects are you on? How long are they going to last? And what does that mean for your demand in 2012? We just finished up our quarterly business reviews where we asked that question explicitly. We surveyed roughly 3,000 different customers across our entire network. And of those customers, we said, "On a scale of 1 to 5, what's next year going to be like?" With 5 being strong growth, 3 being flat, and 1 being severe decline or significant decline. More than 80% of the customers said they were going to be flat or up next year. Only about 14% said that they were going to be either slightly or strongly down next year, and another 5% said they're uncertain. So if you want to count uncertain in the negative bucket, that's about an 80/20 split between folks who are flat to up next year and 20% below flat. So based on that feedback, we feel like there's pretty good momentum going into the year. As Mike said, we're a lagging industry, and so what we've got to do is to figure out how to preserve enough flexibility so that if that scenario deteriorates as the year goes on next year, that we've got levers to pull to respond to it, and we feel that we do. Anything to add? No, I think that answers it very well. Okay. Maybe we go over here. What determines the penetration that you have with some of these key accounts, and what is the spend in that? Do they use you as a marginal supplier to augment a base fleet of their own, and how is that? Yeah. The way in which we do that is every year, those key accounts, we quantify those, and we go out and we ask them: What is your spend in rental total dollars? Then we track against how much they are spending with us. Then that is how we measure the penetration with them on a year-over-year basis. We are penetrating them, our current customer base. We are earning more share of their wallet based on those numbers right there. Every year, we go through a process where we go through and ask them specifically about their business. Similar to what Bill just mentioned, a quarterly review, giving them a survey. Our reps, our account reps, actually go in with each client and say, "What is your spend? What has your store spend been for this past year?" Then we measure our share against that wallet spend. It's not a perfect number, but it's the only number that we can measure ourselves against. Can you be more specific in terms of the other piece of the number? Well, as I mentioned earlier, I said a year ago, it was around 39%, and as of the second quarter, it's up to 53% of what their spend is, that we're earning more of their business. A question in the back. Yes, ma'am. Yes, you. Okay. Go ahead. I was waiting for the mic. Okay. Can you perhaps give a sense of how far we are in this. Sorry. Can you perhaps give a sense of how far we are in the secular trend that you mentioned? Not exactly like this last question. I mean, like, the customers that have completely no, are not using rental at all, so complete ownership. Do you measure penetration rate in the complete market? Can you give a sense of how far we are in a secular trend and how far we have to go? Well, it's very hard to measure, and there's some industry analysts who've put numbers out there. Because it's an industry that doesn't report all their numbers. The best way we get it is we ask a lot of our vendors how much is going to ownership versus how much is going into the rental market. The one thing I will tell you is I see as a telltale sign is that there's other manufacturers, I think have been entering into the rental sector. Caterpillar certainly has Cat rental stores. We're also seeing the entry of Volvo come in into buying up some of their own distribution points. So my sense would be is that's a trend that they're beginning to see. You'd have to ask them specifically. We do know that we've asked one specific large earthmoving vendor, that you would all recognize, and they have said to us that they're seeing more of their products go to the rental sector as opposed to, they're seeing a shift away from ownership towards rental. They see that trend continuing to grow. Again, it's very hard to put your thumbs on it after the fact. Given the difficult economic environment that we seem to be entering, could you talk to us a little bit about the flexibility that you have in your CapEx plans and what you might be doing next year as well on CapEx? Sure. 2009, I think, is a real good example of the kind of approach that we would use. Just as a general statement, we would reduce the amount of capital spend significantly. This year, the amount of gross capital spend significantly, and we would increase the amount of used equipment that we sold significantly. To give you some general numbers, this year, we've said that we're going to spend about $650 million gross, and we would spend between $450 million and $500 million net in capital this year. That's net of the proceeds of used equipment sales. $650 million is a really high starting point. If we thought next year was going to be significantly softer than this year, we could dial that back. We wouldn't take it to zero. Even in 2009, you saw us spend $250 million of gross capital in that environment or so. But again, going from $650 million down to something like $300 million or $350 million in a severe scenario, gives you a lot of cushion in terms of your cash flow. Similarly, we could raise the amount of used equipment that we sell into the used equipment market. On original equipment cost basis in 2009, we sold $650 million, $653 million of used equipment. That's a huge amount. That was a record for the company's history. We could do that again and then some. The used equipment market held up very nicely in 2009 in terms of volume demand. Pricing came down, and that's what you expect in a recession. But we were able to sell every unit that we wanted to sell in 2009. We would do that again, and again, then some in 2012 if it was a severe downturn to generate cash flow from the fleet. That's sort of the broad thinking about how we would manage cash flow. On the operating side, we would do again what we've been doing. If it were a severe downturn, we've closed a lot of branches, but we'd look at closing more branches. That's one lever that you could turn. We've taken a lot of headcount out, but there is always another opportunity if transaction volume is coming down. We'd look to headcount again. Then we'd look everywhere in our expenses to carve out expense to deal with a severe downturn. Those are some of the levers that we'd be looking at, and we'd pull them hard. Do you expect that, given what you're seeing now in the economy, that you will moderate your CapEx plans? It's hard to say. Based on the survey data that I just gave you, our customers are saying, it's going to be a good year next year. What if they're wrong? We're approaching our planning for 2012 really in two ways. We're going to say, let's assume first that the economy continues the way our customers say it will, but then what's the capital plan look like and what's the overall management plan look like if we have a double dip? We're not ignorant of the fact that the economy has got some real question marks in next year. We're taking a dual approach to it. We'll set up a capital plan that covers the first half of the year. We'll start executing that, and then as we see how the year unfolds in the first and second quarter, we'll make changes based on that. We can spend in the first half, and the nice thing is that most of our vendor relationships allow us to cancel orders up until 30 days before shipping. We've got flexibility there as well. I think we've run over in time. Yeah, we've run over on time. I just would say if you have any questions or comments, please funnel them through Fred Bratman. For those of you who would like, we'd be more than happy to entertain any one of you to one of our branch visits. Thank you all. Thank you.