Stanley Elliott: Perfect. Thanks so much and best of luck.
Operator: Thank you. And the next question comes from Steven Fisher with UBS.
Steven Fisher: Thanks. Good morning. I just want to try and calibrate the profit from used equipment sales going forward. And as we think about maybe that normalizing, is there any kind of like historical periods you’d look back to kind of going back to maybe pre-pandemic levels, but then you have to adjust for your — kind of your fleet size and the normalized margin? Just how do we think about that kind of normalizing of used equipment profit generation?
John Engquist: Steven, I think as we’ve said before, we’ve had this question before. And our expectation is to maintain that 50-plus percent gross margin on used sales. As far as any historical period to compare to, that’s a little bit more challenging considering that we were heavy in the distribution business years ago. With the exit from distribution and really more predictable fleet sales as we move forward, we’re going to focus on selling off the back end of our fleet. As Leslie and Brad discussed in their prepared comments, the age of the fleet assets that we sold in the third quarter was 72 months — 75 months, excuse me. When you go back and compare that to prior periods, you would — there’s really nothing great to compare that to. So I think as we look forward, 50-plus percent is going to be our bogey, and that’s what our expectation is going to be moving forward.
Bradley Barber: Yes. Look, if we see a softening in the used equipment markets, with our balance sheet, with the age of our fleet, we can just slow our fleet sale. We do not have — we are not going to give inventory way and as John outlined, we’re just a different business today being a pure rental model as opposed to also chasing market share for that downstream parts and service business, which was part of the distribution. So we’re going to go with 50% right now. And if we see a need to change that, then we certainly will make sure we advise everyone.
Steven Fisher: Got it. And then on the — just a follow-up on the competitive environment question. To what extent do you see OEM dealer rental fleets ramping up? And what impact are they having on the market?
Bradley Barber: I’m not seeing or hearing anything measurable about any OEM dealer rental fleet. The dealer rental fleets are no more significant today than they have been in any prior period. So I don’t see any change there whatsoever actually.
Steven Fisher: Okay. And then just last, related to the mega projects, how should we think about the mix of fleet that they require? Do you see them as being balanced between aerials and earthmoving or is there any particular weighting shift that you see in your fleet purchasing?
Bradley Barber: Yes. Nothing is going to change our purchasing. Actually, we don’t disclose this, but as we look at it internally, the mix of products, when you collect — when you aggregate a variety of mega projects is very similar to what we offer in the traditional construction process for smaller jobs. So we see no shift there whatsoever. We like our mix. It serves us well. We’ll continue to work on it and refine it through our fleet management practices, but the mega projects will not change how we’re investing in product tax.
Steven Fisher: Got it. Thank you very much.
Bradley Barber: Thank you, Steve.
Operator: Thank you. [Operator Instructions] And the next question comes from Alex Rygiel with B. Riley.
Alex Rygiel: Thank you very much. Nice quarter, gentlemen. Is there any specific end market or — as it relates to mega projects that is more advantageous to you all?
Bradley Barber: Not particularly. I mean obviously, when we look through our footprint, there are some areas that inherently have incrementally more — incremental more opportunity with the number of these mega projects that we’re defining as $500 million or greater. But maybe state it better. There aren’t any areas that are broadly excluded from those types of opportunities. We’re seeing it broad-based.
Alex Rygiel: And then can you talk a little bit about capital allocation towards purchasing new rental equipment versus maybe a buyback or a dividend?
Bradley Barber: Well, we have shown and let me reaffirm, we’re committed to the dividend as we stated in our remarks, it requires Board approval on a quarterly basis, but we’re dedicated to that dividend with our leverage and available in our liquidity position with our ABL, as Leslie pointed out. We challenge ourselves just on improving returns and improving mix as to improve the overall value and EBITDA generation for our shareholders. As it pertains to the potential stock buyback, I mean, we consider everything on behalf of capital allocation periodically and work with our Board closely on that. But for now I can report to you that everyone should expect more of the same. We’re going to pay our dividend. We’re going to invest where we can continue to improve returns on rental assets and grow these 12 to 15 locations a year while we have same-store growth. And we will always take into consideration other aspects that could become available to us.
Alex Rygiel: Very helpful. Thank you.
Bradley Barber: Thank you.
Operator: Thank you. And the next question is a follow-up from Seth Weber with Wells Fargo Securities.
Seth Weber: Hi. Thanks for taking the follow-up. I just wanted to go back to the mega project pricing competition discussion. In a more challenging rate environment, can you just talk to like would margins be affected by that or do you — or are the margins — or does it kind of wash out on the margin line because there’s less — because you have more surety of demand, the equipment is sitting on site, there’s less pickup, drop-offs, that kind of thing. I’m just trying to think through how — I understand the rate — potential rate impact, but is there a potential margin impact as well or does that kind of get washed out?
Bradley Barber: No, it gets washed out. We are not planning on participating in any type of work that we think is going to deteriorate our margins. In fact, I will say that we think we have some incremental opportunities to improve rental margins and improve dollar utilization. While we include this, it’s very much a yield conversation is that the amount of products, the mix of products, the discount that’s required in the lesser term. So no, we do not anticipate degradation to our margins due to participation on larger projects. That yield is going to be positive.
