Ryan McMonagle: Yes it’s a great question Tami, and happy to talk about it. But I think there’s so much pent-up demand kind of in the space overall for the work to be done. So it’s really more of what caused the short term. Yes from a CapEx spending perspective when you think about data centers, when we think about AI as kind of a new short-term demand driver we think about electrification. When you think about grid upgrades to me those are all clear long term macro demand drivers, that are all really compelling for YT and D makes sense. We are managing through the short-term blip. We really do think it is a combination of some of our customers’ supply chain challenges. What I mean by that is making sure they have all the supplies needed to build the power lines in the case of transmission work that might be generators that might be superstructure might be all sorts of things, right that are needed but they want to make sure those are all in place before they sent crews to work.
A lot of those are supplied by the power producer or the IOU in many cases. And so we’ve got that dynamic and then we’ve got regulatory that seems to be holding up. And obviously, there’s a lot of press out there right now with what the Department of Energy is doing and what FERC is trying to do as I tried to accelerate approvals of some of these lines. I think that will be an unlock as those improve. Those obviously take time. That regulatory process takes time but I think those are the biggest two. And then the third would be as IOUs finalize CapEx plans and as they make their decisions on rate base increases and then as they make their decisions on how that CapEx will be spent between transmission and distribution, that’s also kind of the funnel unlock for us as those plans are finalized.
And as that CapEx dollars spent that’s the work that our customers utility contractors are primarily doing. And so I think it’s unlock of all three of those.
Tami Zakaria: Got it. Okay. Thank you.
Ryan McMonagle: Thanks, Tami.
Operator: [Operator Instructions] The next question comes from the line of Michael Shlisky DA Davidson and Company. Please go ahead.
Michael Shlisky: Yes, hi. Good afternoon and thanks for taking my question. I wanted to ask on ERS first, did the sales of used units in ERS surprised you at all. And can you maybe share if pricing was a driver in this quarter’s result at all?
Ryan McMonagle: Yes. It did come in lower than we expected and some of that is just a function of as our customers are deploying their CapEx and when they expect to buy. So it did come in lower than expected for the assets that we sold. We still saw some very good residual values but in the used equipment market right now, yes we are seeing some pricing pressure on there, but we are still able to sell and generate kind of compelling gross profit. But Mike yes, it absolutely came in lower than we expected in the year. And as we’ve talked about in the past that’s always the hardest part of our business to forecast. And so we’re going to continue to refine how we do that and get better at it. But yes, it did come in lower than expected to answer your question.
Chris Eperjesy: And Mike, this is Chris. Maybe just a little more color there. The comp year-over-year was going to be a tough one. If you look back at Q1 of last year, which tends to be more of a softer quarter. It actually is our highest quarter by I think 40% in terms of magnitude. And so it was a very unusual Q1 of last year. Some demand moved from Q4 of 2022 into Q1 of 2023. And so we were going to have a tough comp and we knew that that was clearly wasn’t in the cards to be at that level. So it was a really tough comp. We don’t have the same kind of comp situation in Q2.
Michael Shlisky: Okay. Got it. And also wanted to touch on some of our projects that you’re tracking are they being pushed out on the calendar or is it centers on there being canceled? And I guess just I’m just trying to kind of figure out what do we need to be increasing our end of 2024 or probably 2025 numbers. What may not have hit the P&L this quarter or last couple of quarters or if we just have to adjust even for end of end of this year because they’re being pushed out or just 2024 get pushed to 2025 and then 2025 get pushed to 2026 and so on. Just sort of a sense as to what’s not being put in the ground today, kind of what period should that revenue eventually hit?
Ryan McMonagle: Yes. No, it’s a great question. And we are not hearing of cancellations. We’re hearing of delays. And so I think it’s an important question, right? So that will push — the work still has to be done. The macro factors are still what they are. In fact, I would argue the macro forecasts have even gotten more compelling, but the work in the short term is just getting pushed. And when I listen to what our customers are saying, and you listen to some of the other public companies in the space, it seems consistent that the expectation is later this year, those will begin and they should carry well into some into 2025 and even in 2026.
Michael Shlisky: Okay. Maybe one last one for me. Can you maybe update us on the cadence of fleet utilization as we go through the rest of the year? And maybe, can you update us on at this point, what do you think is the kind of sweet spot utilization? Has it changed at all, given recent developments? Are you still feel free content maybe it’s in the 70s or high 70s where you can get you best result?
Ryan McMonagle: Yes, I’ll start and Chris, can give some more color on cadence Mike. But yes, look I think it’s an important question because we talked about last year, we were running kind of at a very high utilization numbers, when we were running in the mid 80s or even in the upper 80s. So even in a quarter like this quarter, we’re running in the low 70s from a utilization standpoint, which is very good in the grand scheme of rental businesses. If you look across a broader portfolio of rental, it is meaningfully down from where we ran in Q1 of 2023. But Mike, I think you’re right that still running in the mid 70s, is certainly where we should shoot for and can achieve as you think about steady state. And so, there’s a little bit of this is we’re just comping off very hard utilization numbers that we talked about, a year ago.
