And so I do think that — I do think prospectively, when we think about CapEx to the different fleet strategies we have, whether they be regionally — can region — CapEx be regionally allocated or end market allocated, it will inform certainly some tweaking. So I do think you will see some of that as we move forward and get a little bit better at this approach to kind of portfolio optimization.
Ryan Sigdahl: Good. Yeah. Rumors are Taylor Swift drivers received some very nice bonuses. So maybe an opportunity there for the Flatbed. Last question for me, just on the CapEx guidance, $140 million at midpoint, does that include leased equipment and then is the strategy still the same to have a small amount of leased equipment or can you finance that at a cheaper cost of capital internally at this point?
Aaron Coley: Great question. And yes, we would expect to reduce our overall operating leases going forward in favor of equipment financing just because it’s better in this market and so we would expect to reduce that. The gross CapEx number does include operating leases, any that we would have net of any proceeds from the sale of revenue generating equipment.
Ryan Sigdahl: Great. Thank you. Good luck guys.
Jonathan Shepko: Thanks, Ryan.
Aaron Coley: Thanks, Ryan.
Operator: Thank you. One moment for our next question. Our next question comes from Elliot Alper of TD Cowen.
Elliot Alper: Great. Thank you for the question. Maybe on Flatbed, can you expand on some of the challenges you are seeing in the macro environment and maybe how impactful the Northwest Flatbed operation was in the quarter, seeing some of the encouraging homebuilding data and CAT was positive on new construction side. I mean, curious to hear your thoughts, maybe the puts and takes in the back half of the year there?
Jonathan Shepko: Yeah. Sure. Sure. So I am going to — we are going to continue to differentiate between Southeast Flatbed and the Pacific Northwest Flatbed. So, as we said on the call, our Southeast Flatbed segment, which is probably 75% to — probably closer to 80% of our total Southeast composition did very well. They executed, they drove improved productivity, they have looked to diversify their end markets, get out of more kind of volatile end markets, they have picked up additional dedicated business, they are really shifting their sales teams to find more dedicated business to provide really that kind of the baseload and that resiliency. And look, the Northwest, when we talked about maybe last quarter, the quarter before, we said about 30% or so of our overall portfolio is made up of construction, and probably, 20% of that is residential facing.
So maybe 6% overall is residential kind of in a normalized cycle, a lot of that sits in the Pacific Northwest. So, they do a lot of buildings materials. I mean when you think about Owens Corning and Roofing Shingles, you think about lumber and things like that. And you just haven’t seen inventory drawdowns up there at the kind of retail or supplier level or at the kind of manufacturing level, wholesaler level. So things are absolutely sitting there. So nothing is moving up there. Had you remove — directionally had you removed that part of the business from this and just focused on Southeast Flatbed, this would have probably been, as I said, something in the low 90s OR and it probably would have moved our consolidated OR for this quarter down 1.5 basis points to 200 basis points.
So, we are absolutely kind of going back to what Ryan asked. I mean we are evaluating how we think about exposure in these different end markets, these different regions and we will move assets around. But we are absolutely focused on that and that team up there in the Northwest is doing what they can, and they are repositioning assets and trying to approach the market a little bit differently, but you can’t do that overnight. So, again, we are in the midst of probably one of the worst freight recessions this organization has seen and I think we have been remarkably as a whole, right? I mean, relying on diversification, relying on that ability to shift between asset-light back and higher margin company starts in environments like this. We think that we have been notwithstanding Wind and Northwest issues, we have been pretty resilient this quarter.
