Allison Poliniak: Got it. Thank you.
Justin Roberts: Thank you.
Operator: The next question comes from Bascome Majors with Susquehanna.
Bascome Majors: Thanks for taking my questions. A lot of questions on margin, given the surprise. But Lorie, you opened your comments with a look at the macro and I talk about some of the softening indicators from a top down perspective. Is that a message that we think we’re kind of getting to the top of the cycle or more of the plateau type environment that you’ve talked about with maybe not as higher highs and lower lows of the railcar cycle, as we’ve known for much of the last 20 years? Can you just unpack the message here from a macro perspective and kind of your strategic views as you look out beyond a quarter or two, maybe two, three years and how you’re playing the business? Thank you.
Lorie Leeson: Well, happy to know your, Bascome. Yeah, I think at least everything that we are seeing both internally and from looking at external forecasters, it certainly appears that we’re going to be in more of a plateau when it comes to new railcar production. While that might disappoint some who like roller coasters, we’re kind of excited that we didn’t actually have the huge run-up that some other sectors did. So therefore, I don’t believe we’re going to have quite that accelerated downfall either. It will be more modest I think there is a lot of pent-up demand when it comes to rail freight movements. A lot of shippers have had to move their product in different ways. The railroads continue to embargo and not provide the kind of service that their customers need.
So as they’re able to add workforce, those of us who support the railroads and the rail freight industry, believe that, that — those loadings are going to go up, the performance is going to improve and that will make for good demand. The thing that’s difficult is, is there a particular movement or car type change that can sometimes create those spikes in demand that you — is more behind some of those run-ups. Again, we don’t — I don’t see that in my crystal ball right now. And I think that having the steady and diversified activity that we’re seeing on manufacturing is good both for us, for a manufacturing — well, maybe it’s a little bit more difficult for our colleagues in manufacturing because it’s a lot easier to just build one or two car types as opposed to eight different car types, but it does provide us a lot of benefits in the lease fleet that we’re building to make certain that we’ve got good diversity, good quality customers, and it’s good for our operating lessor customers and our syndication partners who are also looking for diversity in the equipment that they buy from us.
Bascome Majors: Thank you for that. Can you talk a little bit about cash flow? Maybe this is one for Adrian. I know it’s a little bit different now that you’re investing more and more in the way that you account for your lease fleet. But do you have some thoughts on operating cash flow maybe before that lease (ph) investment — lease sorry, lease investment this year? And if there will be a working capital releases get through some of these supply chain disruptions that have been sporadic but in material multiple times in the last few quarters? Thank you.
Adrian Downes: Yeah. We would expect cash flow to be positive for the balance of the year on an overall basis. So a few of the major drivers, syndication activity should generate cash. And you can see we invested in putting a lot on our balance sheet in Q1. That cadence would be different to rest of the year. We would have improved operating results that will also help. And as you mentioned, we would expect to see some working capital efficiencies as we navigate these issues that we had in Q1, which are more short term. We have invested a lot compared to historical periods in working capital as we ramped up and we should start to see some efficiencies just from normal course as well as from resolving some of these sporadic issues that impacted Q1.
Bascome Majors: Thank you, both.
Operator: The next question comes from Matt Elkott with Cowen.
Matthew Elkott: Good morning. Thank you and sorry if my question has been asked as I had some connection issues on my end here. I want to go back to Gunderson. Lorie and Justin and the team, how much of the decision to close the facility has to do with maybe chronic access to labor issues even before COVID? And if that was one of the considerations, can you talk about your access to labor in the Northwest versus in other parts of the country in the Midwest and the South.
Lorie Leeson: Sure, Matt. Thank you for that. I don’t think that we are unique in talking about having workforce attraction and retention issues. The Northwest is a little bit different as well. It’s not a heavy industrial area. So it’s a tough area to attract and retain a workforce. I will say that we do have a very solid and dedicated workforce that many of which have been with us for a very long time. So as I said in my prepared remarks, this was not a decision that we took lightly. We know that Gunderson is something that we’ve had for all of our existence, right? So this is tough. Our facilities in Arkansas, again, similar to other businesses struggle to attract and retain folks within a very difficult working environment.
And so we’re thinking about how we make adjustments to where we source folks, how we pay, what our conditions are thinking through the hours in a day that someone works or the fact that more people today want to work part time as opposed to — sorry, that was — I’m sure that came through in my voice. I’m old, and it’s confusing for me that people have a hard time working a full day. But — so we’re looking at all the different things that we can do, the levers that we can pull to attract and retain a workforce that I think are great family wage jobs. Now I’ve got some worked up over workforce. I forgot what the rest of your question was.
