Justin Roberts: I would say no one-offs. This is a combination of good mix. This is the combination of continuing the momentum that we saw primarily the last six months of last fiscal year. And also part of that is we did rationalize some of our capacity in North America. And so we’re seeing some of that flow through. And we are starting to see some of the benefits of the in-sourcing initiative and in Mexico as well. So it’s a combination of factors that falls under operating efficiencies, but we do not expect really any of these to go away necessarily.
Steve Barger: Understood. And when you say the rationalization, that’s the $15 million to $20 million that you’re getting from the Marine and the Foundry sale?
Justin Roberts: Correct. I think, Lorie spoke to, but we’ve kind of landed on about $19 million to $20 million of realized savings is what we expect going forward.
Steve Barger: Got it. And I know backlog excludes the rebuild and refurbishment activity. But how much revenue do you have line of sight to there? Is that tens of millions or hundreds of millions? Can you frame that?
Brian Comstock: Yes. It’s Brian, Steve. It’s tens of millions. We’ve, we’ve in Q1, there were several thousand cars that we acquired. The ASP on those are probably about half of what a new car would be just from a high-level perspective, but the margin percentages are much stronger.
Steve Barger: Yes. So that’s part of that mix benefit?
Brian Comstock: Correct.
Steve Barger: And then, and Brian, really great to hear you talk about the disciplined approach to leasing deals. As I think about the 6.5% ABS for the leasing business, what hurdle rate or weighted average cost of capital are you using in your assumption to vet deals and make decisions?
Brian Comstock: So we’re using a kind of a cost of capital that is probably around kind of 9% to 10% for these activities. And so it’s one of those where, as our cost of debt has been increasing over the last — as everybody’s cost of debt has been increasing. We are seeing a compensatory increase in our lease rates to make sure that we’re having this flow through appropriately and that we are generating the returns that we expected to when we first took this trip two years ago, two to three years ago.
Steve Barger: Yes. Okay, and one quick one, final one. Which of your business units have the most open capacity? And I’m just trying to think about where we could see better asset utilization or operating leverage across the portfolio?
Brian Comstock: I would say probably, ironically, Brazil has the most open space in our fiscal year at this point. And that’s hundreds of units, not thousands. Well, it’s 100s. Otherwise, we do have a little bit of open space in July and August. And then at that point, I really see this as a year of execution, and we’re in a very good shape to be able to control our own destiny.
Lorie Tekorius: And I would say the other thing that we’re doing, I believe, a very nice job on is being disciplined. So not only are we being disciplined in how we think about the investments we’re making in the lease fleet on our balance sheet, but we’re also being disciplined in our production rates and really thinking through how the ramping up or having to slow down impacts manufacturing efficiency and to the extent that our product portfolio, our strong commercial activities can keep that activity balanced. We’re very happy to just continue having that balance move throughout the organization.
Steve Barger: Very good. Thanks.
Brian Comstock: Thank you, Steve
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Lorie Tekorius: Happy New Year, again everyone. Thank you for participating in our call today. As Justin mentioned at the top of the call, we do have our Annual Shareholder Meeting at noon Pacific 3:00 p.m. Eastern time today. So please join in. And if you are a shareholder and you haven’t voted, please vote. We look forward to talking to you in the coming months.
Justin Roberts: Thanks, everyone.
Operator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.
