Allison Poliniak: That’s helpful. Thank you. And then can you maybe talk about the absolute lease trends? I know the lease trends, the renewal rates are certainly high. But is, are you seeing some stability there? Is it the lease rate, absolutely lease rates still going up in specific car type? Just any color around that?
Brian Comstock: Yes. We’re still seeing lease rates continuing to go up fairly sizably. A lot of our lease renewals. Keep in mind, some of those leases were done a couple of years ago, and so they’re catching up to today’s rates. But we are still seeing deep into the 20%, 25% increases on cars across the board. As far as if you were to look at point-to-point, maybe the last few months, we’re continuing to see increases even on some of those as well. So the trajectory is still, lease rates are still appreciating.
Allison Poliniak: Great. Thank you.
Operator: The next question comes from Bascome Majors of Susquehanna. Please go ahead.
Bascome Majors: To follow up on the leasing question. Can you talk a little bit more about the secondary market. How you feel about valuation? And any comments on the depth and types of buyers that you’re seeing? Whether or not you’re participating in the deals? Thank you.
Brian Comstock: So we are participating on a very selective basis in the secondary market. We believe that a lot of the portfolios are overvalued, continue to be overvalued. So we’re very selective in which transactions that we engage in. And we continue to see a lot of transactions in the marketplace. So there’s still a lot of trading going on. But yes, we’re being very, very selective Bascome in that arena.
Lorie Tekorius: And I would say one of the nice things about this being such a broad-based demand market right now is with the deals that we’re originating that we can build, we’ve got that diversity that we don’t — we’re going to pay attention to what’s going on in the secondary market, but it’s got to be the right pricing for us to participate.
Brian Comstock: Yes.
Bascome Majors: Can you talk a little bit about the CapEx reduction in maintenance and whether that’s deferral or a change in some of the views on investment there?
Lorie Tekorius: I think it’s just timing, the timing of actual, and some of it is reviewing where do we need to make the investments and other is just the timing of when is. Sometimes when we go into the beginning of a fiscal year, we are bright-eyed and bushy-tailed, and we think we can get 101 things done in 20 minutes, but then sometimes reality sits in a little bit.
Bascome Majors: And lastly, you have one of, the remaining piece on one of your convertibles is due pretty soon here. Can you talk about your intent on the balance sheet. Will you use convertibles in the future? Should we expect you to shift more and more to a secured funding model given the success you’ve had there? Thank you.
Adrian Downes: I would say as for leasing, we will continue to look at our options as they present themselves and as we need funding sources to continue to grow the portfolio. In terms of our recourse debt, our focus right now is repaying. Again, whenever we would look to refinance, we would look at our options, I would say for me personally, you know, the convertible market has been a good one for us over the years. We do have this stuff coming up shortly that we’re expecting to repay in cash. So I don’t know if that gives you enough color.
Bascome Majors: I mean, do you feel like you need more recourse funding to take care of your capital and buyback needs? Or do you think that’s something we just pay down and wait to have more opportunistic need for capital there?
Lorie Tekorius: I think it will wait. I mean, I think we’re going to pay down this convert and the focus is on reducing some of the recourse debt. The non-recourse will adjust depending on our investments in the lease fleet. And then if there’s an opportunity that comes up that needs to be…
Brian Comstock: Specific transaction or something. We’ll deal with that once we come across that.
Adrian Downes: Yes. I mean we’ve got a very nice ladder of maturities. If you go through our various outstanding debt facilities.
Bascome Majors: Thank you for the time.
Brian Comstock: Thanks, Bascome.
Lorie Tekorius: Thanks, Bascome.
Operator: The next question comes from Steve Barger of KeyBank Capital Markets. Please go ahead.
Steve Barger: Thanks. Good morning. Thanks. Good morning. I know you want to avoid the quarterly margin walk, but the press release did mention improved operating efficiency as the manufacturing gross margin driver. What efficiencies specifically were the swing factor? And I’m trying to just get to was the increase driven more by mix or one-offs or some more durable factors?
