Chris Woronka: Yeah, no, that’s great. Thanks, Izzy. And then, the second question is, if I’ve done the math correctly, I think you reduced your DOE on a reported basis globally by about 1.8% per transaction in the quarter. That’s to me, a pretty impressive number. What’s your outlook for that? And if it’s not a number, it’s just directionally, can that continue to decline as you build volume and work on some of these initiatives that Joe was talking about?
Izzy Martins: You’re spot on. It’s exactly what Joe just went through. And as you know, we just made that transition. As I’m new to this and Brian’s leading that team, and in the initial stages, we’re already seeing benefits. I don’t have an exact number for you. But as you stated, as you multiply it, as you take it to more locations, whatever it may be, it should continue to give us that advantage. And as you saw this particular quarter, right, even though we had a tremendous amount of vehicles going out in the quarter, all-time record, you would expect the DOE to go up because that’s where we incur the costs to prepare the carts for disposition. But instead, you saw volume going up by five, record dispositions, and our DOE only went up by two. And we’re just getting started in scaling up all these improvements enabled by technology that Joe took you through.
Chris Woronka: Okay. Very good. Thanks.
Operator: Thank you. Our next question comes from the line of Harold Antor with Jefferies. Please receive your questions.
Harold Antor: Hello. This is Harold Antor for Stephanie Moore. Joe, so I guess on the fleet, with high demand levels right now, is there any expectation for fleet additions this year? And just how does the company plan to manage that?
Izzy Martins: Hi. Thank you for the question. I think you think of it this way. Although we accelerated plenty of the dispositions into the first half or, say, the first four months, every single month will be continually to add new fleet and dispose of fleet. So it’s just always a continuous cycle. So I wouldn’t say that anything has significantly changed. I would just simply say that maybe what it may create is actually even more efficiencies in the peak season, given that we accelerated the deletes a little bit earlier this year.
Joe Ferraro: Yeah, I think I’ll jump in here. Look, utilization was important for us, and we got our utilization back to historic norms, and I think that’s a tremendous opportunity. Some of the things that I mentioned early on about some of the cost initiatives and things and productivity improvements and how we manage, I think is going to benefit us this year. Price of vehicles are high, and you’re going to see us manage our fleet to a more efficient level. I believe that we can get utilizations up over prior levels in the third quarter and not deter volume.
Harold Antor: Got it. Got it. And I guess — and I’m sorry if I missed this, but just on managing capital costs, given I guess, what appears to be a higher interest rate environment than we expected a few months ago. I guess, interest rate expectations throughout the year, if you could comment on that, that would be great.
Izzy Martins: Yeah. That’s exactly why we had to adjust our depreciation to be a little bit higher than what we guided last time. So I think if you use this revised, call it, number that we gave today, I think that addresses that issue.
Operator: Thank you. Our next question is from the line of John Healy with Northcoast Research. Please proceed with your questions.
John Healy: Thank you for taking my question. First, I wanted to just talk a little bit about the summer expectations. Joe, I don’t know if you’d be willing to do this, but could you talk to maybe what you think your fleet might grow in Q2 and Q3? And I think in the last statement, you just said potentially we could get utilization in Q3 above previous levels. Is there a reason to think and have some hope that if that’s the case, we could have potentially positive pricing for you guys on an RPD basis in Q3?
Joe Ferraro: Yeah. Look, I mean, it gives us our best chance there, John. That’s the way I would say. We took a concerted effort to get our fleet sizes in line, right? We did it quickly. We wanted to get it behind us. That’s taking into consideration new cars that may be coming in and cars that we exited. And the fact that we removed 50% of our annual sales in the first four months, I think, is pretty remarkable to get us to that level. I’m a little more optimistic on the pricing trends, quite frankly. And I know everybody does scrapes, and that’s the initial price that you see in the marketplace. But I think when you think about price, you have to think about it in a couple of ways. For us, what is the segmentation of price, and what’s the strategy behind what price you actually achieve?
There’s many different factors, whether it’s commercial or leisure, whether it’s exclusive partners or not, or whether it’s car size based on mix. I think all those affect how we see it. And if you think about the trends, just in general, we started — last year, we were down, in the Americas at least, down seven exiting the fourth quarter. We came in down six with March better than that. The year before, that didn’t happen. The fourth quarter to the first quarter was the other way. And I like the way that we exit. And you say, well, maybe it was because Easter was in March, and there was probably a little bit more demand, possibly. But I think in order to understand pricing trends, it would be helpful to go back to the COVID years. Like in 2022, which is when you compare everything that happened in 2023, there was just an acceleration of demand, and there was a short supply of vehicles.
So you got two, the demand increase and then the short supply. That really didn’t end until February. We didn’t actually go over it until this past February, because you had Omicron kind of like in 2022. So I think all of that accelerated behind us. And I think we took a lot of that price decline last year and in the early months of the fourth quarter. If you think about in 2023 and 2024, the biggest decline comparisons that we had compared to prior year were in the second and third quarter. That’s why I’m kind of saying that, we have a shot to get to flatten potentially up. And I don’t believe the fleet was going to be an inhibiting factor for us. We have systems in place that enable us to put cars in the places that matter the most. And our DFP system allows us to price cars the way we think it needs to be priced before we get to that event.
