Matthew Flannery: Sure, Tim. So, first off, that’ll always be our goal to outpace inflation. And we think we will. We feel confident we’ll have positive fleet productivity, and frankly, we need to outpace that inflation. Right. The whole point of fleet productivity was to make sure that we generate revenue growth higher than the fleet growth. And that fleet growth, some of it’s inflation. So you got to exceed it. As far as the point and a half bogey that we put out there a couple of years ago, in reality, it’s a little bit higher today, where that extra inflation gets captured in mix, which gets captured in the fleet productivity report. So whether we change that bogey to higher, if we make that two, two and a half percent and then we add it back in and the fleet productivity looks better, it’s really just right pocket, left pocket.
We’re keeping it at one and a half for now, just for simplicity’s sake of keeping it consistent. But we still absorb that extra inflation and that comes in as negative mix. So you guys still see the whole picture, and we’ll probably continue to do that going forward. And we’ve talked about a little bit internally and we think it’s easier to keep the metric consistent and we do expect to exceed that inflation even with the extra mix headwind.
Tim Thein: Okay, understood. And then hopefully that makes sense. It does- thank you, Matt. And then you guys have a good lens into the kind of the supply demand balance in the industry from a number of sources, but including the Rouse data. And it seems to us, anyway, that you mentioned earlier, supply chains are loosening up, and some of the OEM dealers that seem to be getting more active in rental also seem to be catching up in terms of product availability. I’m curious if that’s coming through in terms of that supply demand data that you guys see and just how, if at all, it’s influencing or informing you about your CapEx plans for 24.
Matthew Flannery: Sure, Tim. Well, it’s certainly gotten better, right? So supply chain certainly gotten better and I think you’re seeing, I think you’ll see most of the industry run more normalized time utilizations. You’ve seen that this year. And that’s a good thing, right? Because you can run the business more efficiently and frankly be more reliable partner to your customers. But I think the next big leg of growth from the OEMs still going to be replacement. I don’t think that as OEMs grow their volume, this is going to be all this extra fleet in the system. There’s still a lot of replacement CapEx that needs to be served and especially in some of the areas that’s been dragging. So I think that’ll be more the characteristic of the next year or two.
We’re getting ahead of the curve. You see how much we’re trying to focus on the used sales to get that fleet age right. So we feel good about where we are, but we’re still going to have a lot of replacement CapEx next year just like the rest of the industry.
Tim Thein: Okay, thanks for time.
Operator: [Operator Instructions] Our next question comes from Neil Tyler with Redburn Atlantic. Please go ahead.
Neil Tyler: Yeah. Good morning. A couple of small questions left please. Firstly, just going back to your comments, Matt, Ted, about the ahern synergies. I thought you’d made comments at the previous couple of quarters that the revenue synergies might take a bit more time to crystallize and probably wouldn’t be expected to come through in the first twelve months. So I just wanted to just check where you stand on that and the thoughts. And I understand that to use your word, the egg is fairly well scrambled at the moment. But if you can just sort of help us understand how the cross selling has been going there. And then the second one just a bit more specific on the used proceeds as you move into next year. First of all, it sounds as if you’ve broadly sort of caught up in terms of exiting or shedding the fleet of the older assets.
So presumably the used fleet will be slightly younger, but I guess we’re all expecting used prices to normalize downwards a bit. So if you can help us sort of think about the percentage of OEC perhaps at those proceeds we’ll track through the next twelve months or so.
Matthew Flannery: Sure. Neil, thanks for giving me the chance to clarify. Our cost synergies will be realized. You are absolutely right. Our revenue synergies will take longer. So I’m so knowledgeable of that that I heard it as cost, even if it wasn’t asked that way. So thanks for that clarity. But the cross selling is going well. We’re on schedule, and that usually takes a couple of years to fully bake, and we’re on track for that. I think the customer base and the sales teams that come with that are very pleased to have a full portfolio to sell, so that’s working well. And then as far as the used proceeds, yeah, I mean, certainly we’ve talked about these dynamics for a while now, and as the supply chain normalizes, the expectation would be that that incremental buyer who couldn’t buy new and was left to only buy used fades.
And so on a relative basis, you see not as much demand versus supply. Now that’s something we’ve talked about and expected. And in 24, that likely is going to be a dynamic that people should be looking for. On the other hand, you’re still going to have fleet inflation. And Matt alluded to kind of the cumulative 20% that’s for us, in a very good position. I would say fleet inflation more broadly is higher, and ultimately that provides an umbrella for used pricing. So these are kind of cross currents that we’ll be balancing next year. We certainly would expect to have recovery rates well above historical levels. 22 set an unsustainable bar. I think everybody understood that there was some temporary benefit there that led to us getting $0.74 On the dollar, if I’m not mistaken, selling eight year old equipment.
That’s not normal, and that’s not something anybody ever expected to be sustained. You’re seeing a normalization this year with that channel mix. Next year I think you’ll see us kind of normalize again. So ultimately those recovery rates, they won’t be at 22 levels, but they won’t be back to those kind of pre 20 levels either. And then the other part about fleet age, Neil, it won’t be tremendously different. We just got back to more normalized fleet age. We’ve always had plenty of eight year old equipment to sell, so we don’t think that that seven to eight year old average range that we’ve been hitting will be changing that much. Okay, that’s really helpful.
Matthew Flannery: Thank you. Neil, do you have a third question? I thought you said you had three. I don’t know if two were based within you.
Operator: Thank you. Our next question will come from Stephen Ramsey with Thompson Research Group. Please go ahead.
Stephen Ramsey: Good morning. I know it’s early days on megaproject getting ramped up. I’m curious on the secondary effects that you’re seeing there, if the rental market in those geographies is tighter and helping utilization and rates more broadly, besides just the project itself.
Matthew Flannery: Yeah, generally, yes. But I think you’re talking about mostly the larger companies that are going to be supplying these jobs. And we’ll all mobilize the fleet to get there to take care of the customers, but generally it will tighten up in the surrounding areas. And then the other part of a lot of these plants, especially the ones that are built in more rural markets, is you’ll have infrastructure built around them, whether that be feeder plants, whether that be residential, and then the retail and the schools that go with it. So these are big boons for these markets overall that we certainly expect to get our fair share plus, but that the whole area will benefit from.
Stephen Ramsey: That’s helpful. That’s all for me. Thanks.
Operator: Thank you. Our next question will come from Jeff Weber with Wells Fargo. Please go ahead.
Q – Unidentified Analyst: Hey. Hey, guys. Good morning. It’s Seth. I just wanted to go back to the used equipment discussion again for a second. Just to clarify, it sounds like you kind of tweaked your channel mix here to help get rid of some of the older fleet, the acquired fleet. Can you just talk to what you think your channel mix will be going forward? Whether it’s more wholesale, less auction, what have you. Just how should we think about the channel mix to sell used equipment going forward relative to where it’s been for the last couple of quarters? Thanks.
