Ted Jackson: But it’s not a unit volume situation. This is — you’re concerned with regard to that.
Ryan Greenawalt: It’s [indiscernible] the delivery, yes, the supply chain broke free and now you’ve got all the inventories are normalizing at the same time.
Ted Jackson: Okay. Jumping over to Material Handling. I mean you kind of got that answer for me anyway. But one of the nuances within Hyster-Yale is that a lot of the backlog that they’ve been kind of pushing through and starting to deliver has been on the larger end, kind of a higher margin product. Is that the case in terms of the stuff that’s starting to flow through your P&L? And then when you get into kind of bigger systems versus our units versus smaller units, is there a better margin profile for them for you as a distributor? Or is that not the case?
Ryan Greenawalt: Ted, this is Ryan again. The margin profile by product category is going to be more related to how specialized and how the competitive environment for it. So the largest by volume type of machine in our construction equipment business is excavators. And it’s also the most competitive excavators by unit volume.
Tony Colucci: Yes. He was mentioning Hyster-Yale, but…
Ted Jackson: I’m talking about Hyster-Yale Materials Handling Material Handling.
Ryan Greenawalt: Yes, Material Handling. Ted, what I can say about our mix relative to Hyster-Yale came out with the new narrow aisle product a couple of years ago, supply chain issues sort of delayed, let’s say, the market’s ability to kind of — well, there was delayed deliveries frankly on that class of product. What I will say is we’re getting — we’re making headway into that Class II narrow-aisle product line that’s becoming a bigger mix of our business. I think in terms of big trucks, Alta has always been a dominant force in our — specifically in our Midwest geographies with larger high-capacity trucks. The margin profile between the two is relatively the same overall. But I would say our mix is definitely starting to shift toward the Class II, because of some of the innovations and broadening of the product portfolio in Hyster-Yale.
Yes. Ted, now that I understand your question, what I was saying holds true for large trucks within the Hyster-Yale world. So it’s less — there’s less competition. We hold higher margin generally speaking than the hard-align-product.
Ted Jackson: Okay. Okay. And then my final comment, which is in the question, is I’m just going to defend you from yourself. You guys have — came in here, well, little contrite with really kind of a downbeat tone. And I mean maybe I talked to you too much, Tony. But when I look at the guidance and I look at least my model against consensus, I mean, I was kind of below the low end of your range anyway. And the consensus when I look at it is at the low end of your range. So I give yourself a little — don’t beat yourself up so much. I guess that’s all I’m saying. Your quarter was great and your outlook doesn’t throw me off. Okay?
Tony Colucci: Thank you, Ted. Yes. Certainly, it — that’s not what we want to message. We feel good about the remainder of the year. Thanks, Ted.
Operator: Thank you. Our next question comes from the line of Steve Hansen with Raymond James. Please go ahead.
Steve Hansen: Yes. Thanks guys. Most of the questions have been answered. But I did want to circle back on the competitive commentary and just the broader channel inventories being relatively full here. I mean, how do you feel about your own inventory and the ability to work that down through the next couple of quarters in order to free up some cash? And how do you think about that in the broader context of the balance sheet? There hasn’t been much discussion on the balance sheet today. But just trying to get a broader sense for how you want to manage through this environment.
Tony Colucci: Yes. Thanks, Steve. The balance sheet was relatively stable, which is quarter-over-quarter some, I think, immaterial moves to the rental fleet and inventory and AR in general, which is why we didn’t focus on it. Liquidity is still in a good position, leverage holding at the midpoint of our guidance. So — but on your question relative to inventory, we think we’re trying to — we try to target two turns of inventory, maybe a little bit less than that in our Construction business and maybe a turn higher than that in our Material Handling business on new equipment. And remember, the Material Handling, it’s a little bit of — you’re not buying for stock. These are large fleets that are going to Fortune 500 companies that are purchased well in advance.
So there’s a little bit of prep and delivery time in our shops on the Material Handling side. But then the fleets are gone and delivered and invoiced. So the bigger impact to your question is on the Construction side. We think we’re at a good level inventory-wise. I could see it spiking up maybe a little bit more from where we’re at from here as we work through with manufacturers to take delivery. But we think we’ve got enough equipment on the balance sheet right now to kind of hold steady. So I guess what I’m saying is, I don’t see any large reduction. I don’t see any large kind of increase. We feel like we’re in a good spot to keep turning at the levels that I mentioned and just go from here.
Steve Hansen: Okay. That’s helpful. Thanks. And then just wanted to go back. I think it might have been Ryan’s comment earlier about the most competitive aspects of the market being in excavator. But I mean, just as a broader sweep, it sounds like the construction side has been more competitive. Are there specific lanes or verticals where you’re seeing the most competition? And just curious if that’s filtering into that rental side on the same vertical or not?
Ryan Greenawalt: The competition that we’re seeing is in the heavy construction. So the heart of the line Volvo products, large wheel loaders, large excavators, articulated, 40-ton articulated dump trucks. I think maybe less so on the compact end of the market.
Steve Hansen: Very helpful. Thank you.
Operator: There are no additional questions waiting at this time. I would like to pass the conference back to Ryan Greenawalt, CEO with Alta Equipment Group for any closing remarks.
Ryan Greenawalt: Thank you for joining us today. That concludes the call.
Operator: That concludes today’s conference call. I hope you all enjoy the rest of your day. You may now disconnect your lines.
