Mark Humphrey: Yes. I mean, I think you start with from seven to 10 our rental revenue guide rate and sort of that, that takes you into your fleet needs for the year, knowing full well that we’ve got some fleet efficiency gains that we’re looking for, both from the end fleet as well as from a time utilization perspective. So I think the guide implies that seven 50 to $1 billion of gross CapEx spend. That’s not and we’re not saying that that’s the end-all, be-all. We will update you as things change. And so the last part of your question, Neil, was around what we’re just really, I suppose. Yes, it has the cut to that space as the end market and panned out broadly as hadn’t anticipated it would. And with the sort of what looks like sort of lower CapEx expectations reflect more and opportunities for efficiency then and you have less optimism around the end?
Yes, I don’t think it’s I don’t think it’s a statement on the end markets. I think it’s more a statement on us wanting to get obtain fleet efficiency. And I would say demand is normalizing. End markets are strong and so I don’t think it’s anything more than us being prudent and diligent from a fleet efficiency perspective.
Larry Silber: Yes. And I would add to that, Neil, with the OEMs becoming more normalized themselves and having shorter lead times. If there are spikes in demand, we can always get gear on a shorter story overall or shorter basis. From a lead time perspective, sometimes we can get it within a matter of days or weeks as opposed to months or years in the past. So our ability with a normalized OEM supply chain really helps any sort of moderations in the end-user market.
Neil Tyler: Got it. Thank you. And then, just to come back to the pricing outlook that you gave — I and thanks for the sort of help on the initiatives that you’re able to apply to your acquired businesses. But in your experience you are and I think you talked about sort of sticker shock with some of those and businesses had faced. Do you think that, you know, outside of your sense that sort of outside of those businesses you’ve acquired and also the smaller end of the market that and you know that the broader industry is sort of responding more constructively to add to upward cost pressure? Or is that only really when you come on board that you see the changes take place?
Aaron Birnbaum: No, I think it’s odd to every is trying to act in a disciplined manner, thereby understands the cost of capital. And as Mark said, some markets are normalizing but they’re healthy and solid. But as far as getting the returns on capital, I think the entire industry is operating in a disciplined way.
Neil Tyler: Fantastic. Thank you very much. That’s really helpful.
Larry Silber: Thanks, Neil.
Operator: Your next question comes from Ken Newman with KeyBanc Capital Markets. Please go ahead.
Ken Newman: You want to learn more and I just wanted to go back on marketing. You mentioned core CAD, you’d is probably the right way to think about modeling the business going forward, given all the moving pieces, the synergies I’m sorry if I missed this, but is there a way to think about how you think about the cadence for that metric as we move through the year, you put up a 42 percentage change this last quarter, is that approach a mid-40 [ph] number by the end of the year or a little too difficult?
Mark Humphrey: No. I mean, I think, you know, obviously the seasonality or cyclicality of the business within the year, right? Your 4Q, 3Q and 4Q dollar yields will be the high watermark for the year. We finished this year at 42.5% sort of dollar You, of course. And I think as we said and sort of anticipated in the guide is an improvement of that average, 42.5 will be improved in 2023 just from the fleet efficiency, some metrics that we’re putting in internally.
Ken Newman: Okay. That’s helpful. And then for my follow-up, this is more of, I guess, more of an accounting question, just to clarify that we’re often a level set on the expectations. Obviously, generally, I know it’s kind of hard to pin down on the timing of when you expect to sell that asset. But I’m curious just to clarify, we’re not expecting to put that into discontinued ops here in the income statement for 2024, correct?
Mark Humphrey: No, that’s and that’s right. I mean, it’ll sit out there as available for sale. I think on a while. GAAP is GAAP on and we’ll report that way until we and move it off our books. We’ll have a on a more port pro forma view of the core business as we as we walk into Q1 reporting app as we’re not providing center lease inside of our guide for 2024. So we should expect that if there was a recovery instantly, you would exclude any kind of impact just to make it apples to apples with your guide? That’s exactly right. We’ll report on apples-to-apples.
Ken Newman: Got it. Okay, that’s very helpful. Thank you.
Mark Humphrey: Thank you.
Operator: Your next question comes from Mig Dobre with Baird. Please go ahead.
Mig Dobre: Good morning. Thank you for taking the question. I want to go back to a question that Neil asked a moment ago on cash. I’m kind of trying to wrap my mind around what some of what what’s baked into 2024 because it I remember your target that you set out for 2026, implying a little north of $1 billion per annum of net cabinet. Obviously, you’re guiding for something that’s substantially lower. So I guess two questions here. Why is that happening first? And then second, what are the areas where you’re investing less than you did it 2023?
Mark Humphrey: Yes. I mean, I think that the guide, the three year guide rate was sort of set on a 10% to 14% on average growth rate for that three-year period. Right? Our guide here is on in that 7% to 10% range based on our current visibility into 2024. And so I think correspondingly, if you think back to ARM, the overall guide from November at Investor Day, that was like a 3-ish [ph] sort of number over the three year period. And this is implying something more along the lines of $600 million to $700 million at the midpoint of the of the fleet guide. So that’s really the difference there, Mig, is the 10% to 14% versus 7% to 10% [ph], Tom; and it is year one.
Aaron Birnbaum: Okay. I think I think the second part of your slides you had a second part of that question about where the areas we’re investing less than and we’ve mentioned previously in the last hour that the access aerial and material handling areas we really can’t get enough of the fleet that we want those up. Manufacturers can provide us as much as we want, as Larry mentioned. So we would take more if we could. But those are some of the areas with where we are. It can’t get as much as we want. And so that would imply that maybe earthmoving or some other specialty areas is maybe where the lower investment is. No, no, it’s just that if we could obtain more aerial access material handling, we would invest more there.
Mig Dobre: Okay. And then, then sort of the final question for me is on the business mix itself. There’s been obviously a lot of growth past couple of years, and we’re talking about infrastructure and we’re talking about mega projects. But if I sort of look at your mix national versus local or even within contractors versus industrials versus your other verticals, there hasn’t been much, much change that I see and that I can see. So I’m sort of curious, and do you expect the business mix to continue to remain constant or would that change over the next couple of years?
Larry Silber: Well, look, we are trying to remain diversified and grow all of our verticals at a similar pace so that we’re not dependent on any one segment of our business relative to if there’s ever a downturn or ever some type of an event that causes one to go down, we’re going to be well balanced across the board in all of our verticals. So I don’t think that implies anything other than a very balanced growth business that is able to be very nimble and adjust to marketplace dynamics and changes and take advantage of opportunities on hot markets it.
Operator: Your final question comes from David Raso with Evercore ISI. Please go ahead.
David Raso: Hi, thank you for the time on the net rental CapEx, right? As percent of your EBITDA I’m sorry, of your rental revenue guide. It is the lowest we’ve seen in 10 years except for the pandemic initial year. But when I look at the average of the last four years, right, including the guide in the prior three, you sort of back to normal, you sort of back into not 29%, 30% [ph] net rental CapEx to your rental revenue. So just to be clear, it sounds like you’re saying, yes, we’re just sort of normalizing it And hey, it could go a little higher if we can get more areas. But when we think about 25% and 26% [ph] is should we still be thinking about net rental CapEx in that 25% to 30% of how you think about your rental revenue growth just for framework, just to make sure enough.
And then also maybe I missed it. The used equipment sales, the margins for 24 that is baked into the guide. Just curious how you’re looking at those margins and maybe if you can help us on the revenue they use sales as a percent of what we see being sold?
Mark Humphrey: Yes. So I’ll take the second first. On the used equipment side, right? We sort of closed out the year with, I think, about 44 at cents on every dollar of OEC. from a disposal perspective. And I think if you sort of look through the guide, it’s probably not slightly north of that in the implied guide for 2024. And I think that’s really coming about as weak shift out of that auction channel into a more retail and wholesale focus on sales mix. I think that’s supportive of a slight increase from a I know we see proceeds perspective.
David Raso: That makes sense. Yes. And I missed the margin comment on that IP autos, but at the margin assumption?
Mark Humphrey: Yes. I mean, you’ve got you’ve got some you would have some slight increase in your margin. Obviously as a percentage of your revenue come in 2024, that number is going to go down, right? I’m selling somewhere between 20% and 30% last year. So you’ll get some EBITDA lift there just from a mix perspective and let me sort of partially take the CapEx guide. You’re absolutely correct. We’re into a more normalized environment and our visibility is very good now, certainly over the short term. And as our visibility improves. And some of these megaprojects and reshoring projects are multi-year projects and they’re going to ramp up over time. And we can always because the supply chain is much healthier than it’s been over the last three years.
We always have the ability to ramp up that CapEx intake as we experience improvements on the on the rental revenue side, yes, I’m not trying to have you give a 25 CapEx guidance, but making sure I hear from you that this is below 20% net rental CapEx to expected rental revenues is below trend because you were above trend kind of normalcy.
David Raso: But if I think about 25 and 26, just to get a sense of your confidence in the growth beyond 24. I was just curious if you’re willing to say like now you should expect net rental CapEx and 25 in that normal 25% to 30% of whatever you think the rental revenue was?
Mark Humphrey: Yes. Yes David, I don’t think that’s unreasonable. I think that I think that’s a reasonable assumption.
David Raso: I appreciate it. And thank you for the time.
Operator: There are no further questions at this time. I will now turn the call back over to Leslie for any closing remarks.
Leslie Hunziker: Thank you for joining us on the call today, and we look forward to updating you on our progress in the quarters to come. Of course, if you have any further questions, please don’t hesitate to reach out reach out to us. Have a great day.
Operator: This concludes today’s conference. You may now disconnect.
