It doesn’t dramatically increase gross margin. I don’t think there was a big move in gross margin in the ERS – in the rental line of the ERS segment, which would be where you want to look to see that. So not a meaningful impact there. And then as you’re thinking about seasonality for next year, I’d say it’s probably too early to call. Transmission projects are generally much longer-duration projects. So as those go, they typically are a multiyear project duration, so that typically is good for a longer duration of utilization. But I would say too early to call in terms of making any broader comments about significant increases in utilization heading into next year.
Tim Thein: Okay. Okay. And then just a quick one on TES. You had highlighted that across the customer base, there was some impact that’s maybe of incremental strength and weakness. And anything stand out there in terms of – or any areas you’d highlight in either of those camps in terms of where you saw activity decelerate or accelerate? Thank you.
Ryan McMonagle: Sure. Yes, good question. I’d say on the accelerate – on the increase side, we certainly were seeing more activity on the infrastructure side of things. So certainly, which for us means a pickup in some categories like dump trucks, water trucks, service trucks, refuse, that type of product. We certainly did see a pickup there. How much of that is related to the IIJA and some infrastructure spend there, I think kind of TBD, we are hearing that those dollars are becoming available more quickly. So I’d say that’s been the big pickup that we saw. And I think utility is where we saw some of the slowdown in terms of adding – the net impact of adding incremental backlog. And I think that’s just waiting for as these projects go, we’ll see that continue to pick back up. So hopefully, that helps a little bit, Tim.
Tim Thein: All right, thanks a lot.
Ryan McMonagle: Thanks Tim.
Operator: The next question comes from Tami Zakaria with JPMorgan. Please go ahead.
Tami Zakaria: Hi, thank you so much for taking my questions. So my first question is on inventory. You mentioned – I mean, we’ve seen it go up quite a bit sequentially, more than typical seasonality it seems. Is this inventory work-in-progress or finished goods? If finished goods, what categories? And do you expect this to normalize by year-end? Or it could take longer than just one quarter to come back to normal?
Chris Eperjesy: Yes, hi Tami, this is Chris. I think one thing I would point out is the inventory build recently is coming off of a historic low. And so with that, with a little bit of context, as Ryan indicated, we did take a position that we thought having the inventories, we went into a period of significant growth is going to benefit us and that applies to both to Q4 into next year. The answer to your question is there is a little bit of both. So certainly, the increase in inventory, you will see some in it as we’re ramping up production. But there’s always some churn as we’re putting new vehicles into the rental fleet as well as new vehicles as they get titled and we get them to a customer. And so I would say it’s not just one bucket, but it’s in finished product as well as within – as well as some of our parts and raw materials as well.
Ryan McMonagle: Tami, just for context too, as you think about it, that’s the traditional Custom Truck model is to carry some completed whole goods, so we can quickly react to the market to be able to sell the truck or to add it into the rental fleet. So it is getting back to what we would call a more normal level of having some complete available inventory to be put in the rental fleet or to sell as the customers need.
Tami Zakaria: Got it. That’s helpful. And then my second question, it could be a little too simplistic, but why do you think selling used equipment makes sense when there’s demand and utilization is high? It seems like the sale of used equipment is lowering your net fleet expansion number this year. So any thoughts on that? And how should we think about net fleet expansion growth over the next couple of years? If you could refresh us on your target there.
Ryan McMonagle: Why don’t I take the first one, and I’ll let Chris take the net growth rates. We sell used equipment coming out of the rental fleet because as it ends – as it approaches the end of its useful life, right, it’s time to sell, right? And so we will sell assets out of the rental fleet when our repair and maintenance expense increase as assets age. So we have kind of our own model, when is the optimal time to begin the dispose of an asset. So I think that’s certainly one piece of it. The second is residual value stay strong in the used market. We think it is a good time to be able to sell used assets. And then the other thing that I think Chris mentioned in his comments was when customers come to us and say, hey, I want to buy this truck that I have or this piece of equipment that I have on rent, we will engage in that discussion when it makes sense as well.
So those are the reasons that we sell. As we’ve talked about in the past, we manage through a ROIC, to a lifetime value ROIC on assets, and that’s what we’ve talked about. The incremental asset is generally generating kind of high teens, low 20s annualized ROIC, which we think is a great way to deploy capital. So that’s where we’re really comfortable with that overall ROIC on each asset. And then I’ll let Chris take the comment about fleet growth and how it’s changed a little bit because of the asset base.
Chris Eperjesy: Yes. And one other thing I would point out, Tami, in Ryan’s comments earlier, he did talk that we continue to see a reduction in the age of our fleet. And so I think that’s an important part of selling some of the aged equipment. And so our – as Ryan indicated, our fleet age is at 3.5 years now, and we believe that is the youngest in the industry. In terms of kind of looking forward, we had given guidance this year that we thought we’d be able to grow the net – what we see by mid to high single digits. I think that continues to be a good way to model it as you look out over the next couple of years.
