Ian Hudson: So I think what we are trying to signal is, we are — the production is still, we’re not expecting a big drop in production, but a lot of that production are going to rental units of our own that go in our own rental fleets. So we’re using production for essentially units that won’t generate that immediate income because they go into our own rental fleet, so it’s almost like an intercompany transaction. So that’s the main reason that we were just calling that out, because while we’re not expecting production to drop off, a lot of that production will be for units that go in our own rental fleet. So that was the primary message we were trying to just indicate there, because with the strong used equipment sales that we’ve seen throughout 2022 and with the continued high demand for rentals in both the U.S. and Canada, we need to replenish our rental fleet.
So that’s typically what happens during Q1, and that’s typically one of the reasons Q1 is a softer quarter for us. But what we’re trying to say is, this quarter it might be more pronounced than it was last year.
Jennifer Sherman: And I would just add is, the historical seasonality of our business, Q1 is our softest quarter.
Walter Liptak: Okay. And what do you expect the operating leverage to look like in the first quarter?
Jennifer Sherman: So in the first quarter — I mean, for the full year, I think we’re looking at leverage in the 20% to 30% range as we talked about. I’d have to get back to you on the first quarter.
Walter Liptak: Okay. All right. And then if I can ask one on inflation and selling prices. Are you still seeing inflationary pressure? And what are the pricing strategies? Are you still finding that you need to increase prices in 2023?
Jennifer Sherman: Yes. We are still seeing inflationary pressure, particularly on the various component parts that we buy, often without a lot of notice, and we have made it clear that both to our dealers and our customers that we will react when needed and pass those costs on as necessary.
Ian Hudson: Yes. We’ve seen steel has come down. We have seen that to the some relief, but some — as Jennifer said, for some of the other components, we haven’t seen much relief to this point and as we typically have an annual price increase that goes into effect. So that’s something that we will be considered as well. For the — for overall in ’22, what we saw was sequential improvement on a year-over-year basis in that kind of price cost dynamics. So for the full year, we were favorable. Most of that came in Q4. So we’re encouraged with the actions that we’ve taken in response. And this is obviously in absolute dollars, not necessarily back to the margins that we were at before, but we were favorable on a year-over-year basis during ’22.
Walter Liptak: Okay. Great. Okay. And then the last one for me is just on the EV products. And it sounds like some of the products are getting commercialized, are you taking orders? Or are those orders somehow tied to some of the government infrastructure programs and other sorts of government funding that may still be in the pipeline?
Jennifer Sherman: We started to take some orders on certain product lines. As I mentioned in my prepared remarks, we have a program that’s available on — for example, in our street sweeping business that identifies public funding that’s available to assist customers in purchasing EV equipment. We’ve launched that. We’re starting to get some traction on that. And then certain products were in the demo phase, as we talked about that. But I’m pleased with the progress that we’ve made, and it’s an important part of our new product development pipeline.
