James Rollyson: Makes perfect sense. And then just one last question. with leverage kind of already getting to your original. In the range of your original year-end goal. And obviously, next year, you’re moving envelope down to 3 to 3.5x. Once you get to that leverage level that you’re looking for, what then — because that’s obviously consuming some of your cash flow to get your leverage where you want it to be and your dividend coverage is 2.6x, and seemingly growing. Just kind of curious how you think about allocating capital beyond 2024 when you get your leverage where you want it to be.
Bradley Childers: We are a returns-focused investor. We’re going to look to return and invest our cash where we’re going to yield the best return. That includes the increase in the dividend for the benefit of our investors. That includes looking at share repurchases for the benefit of our investors. And with the managed liquidity and the objective of maintaining a free cash flow objective through the cycle and year-over-year. We — as we grow that cash flow, we’ll have more to invest in the market if the returns on the equipment are there also.
Operator: Our next question goes to Steve Ferazani of Sidoti.
Stephen Ferazani: Brad, appreciate all the color on the call. I feel like I probably asked this last quarter, but worth asking again. utilization rates now a new record didn’t seem like it could go higher. Just a question as we get into a seasonally higher demand area, and I’m sure your asset turnover has to be at near record lows. Is it safe to say that utilization is sustainable because you’re not going to be returning compression into the winter months. Is that a fair way to look at it?
Bradley Childers: Yes, it is. What we said in the past, I can say again, and that is that there is not enough compression market, a compression equipment in the market today to meet current production needs. Not to mention the growing production that we see coming from the expansion of LNG exports. So we see high utilization rates continuing, we see incremental growth ahead to support that level of production. And so we think utilization can maintain and candidly can even continue to tighten from here based on the demand we see in the market today.
Stephen Ferazani: I think I know the answer to this, but I’ll ask it anyway. Obviously, in more drilling-related sectors, we’ve seen smaller operators getting more aggressive pricing and pushing down margins. Clearly, the numbers show it’s not happening here. Any pressure from smaller operators or is everybody to your previous answer, operating at such full capacity that there’s — that’s just not any kind of a near-term risk?
Bradley Childers: There’s definitely pricing competitiveness in the marketplace that we experienced. But with a high-quality group of customers, we have that are looking at growth and the need to expand their compression operations. They understand — and with the inflation that we’ve experienced in the past, the market has been digesting and understanding of the rate increases that we’ve put in place to date. We’ve had a good level of accomplishment in our overall rate book. So it’s not that there’s not competition there is, but it’s that with the growth in the market and recovery from inflation and the need to improve returns. The pricing that we’ve accomplished and the pricing that we expect to continue to drive in 2024, we believe will be accepted by the market to boost those returns.
Douglas Aron: Can I — Steve, if I could just emphasize a portion of Brad’s answer there, right? If we go back to end of 2019, end of 2020, I think we said this on our last call, we’ve seen nearly a 40% increase in the cost of new build large horsepower equipment from something in the $900 a horsepower to approaching $1,200 a horsepower. That increment means that — be it customers that are ordering their own equipment with the foresight of doing so, again, with long lead times for that equipment. A potential new entrant, which we haven’t yet seen or anyone else in order to get any kind of a recovery is going to have to be pricing it at what we see as current rates. And so again, I think one of the really attractive parts of the Archrock story is 3.6 million, 3.7 million horsepower installed base that in a large — in a lot of cases was acquired at a much different time frame.
