Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Karru Martinson – Duetsche Bank.
Karru Martinson – Duetsche Bank
On the EBITDA guidance that you gave, it seems like on an LTM basis you're at the mid point already and with the gross margin improvement that you're looking at the second half here, what's your thinking behind the range, and is the supply kind of a flat year for second half.
Keith Plowman
When you look at the guidance that we gave and the underlying assumptions, if you run from the 7% to 9%, you take the 36% gross margin rate that we provided and you take the SG&A improvement that we've noted out there, you'll get right to our guidance range.
At this point we're very pleased with what we've done in gross margin. I will tell you that management feels good about the second half as they've noted in their comments earlier, and what we think the opportunities are in the second half. But right now, we are looking to an economy that's not sure, so we are really looking at a gross margin rate of 36% based upon those comp numbers. When you just do the math, that's essentially where it takes you to.
Karru Martinson – Duetsche Bank
In terms of the borrowing capacity, we're past the low point now, correct?
Keith Plowman
We had two low points last year, July and then October. And October actually was lower than July in 2008. Some of that reflected the changes going on in the macro environment. We still expect that those will be our two low months and when you look at where we were with excess capacity in the month of July, and we feel pretty good about what we had given before saying that we expected to be in that 150 range to the October month.
Karru Martinson – Duetsche Bank
I have to ask about the auto market exposure and if you're seeing anything different in those markets versus the other ones.
Bud Bergren
Actually as I said earlier, Detroit was one of our better markets in the second quarter. We actually have seen things stabilize there. The auto related markets are about 14% of our sales actually in the second quarter, had a little better sales trend than the whole company, so we are actually seeing some improvement in that market.
Operator
Your next question comes from Emily Shanks – Barclays Capital.
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