Matthew Flannery: Sure, Seth. So if you go back to pre COVID levels, we’re usually about two thirds of our volume of retail and less than 5% auction. And whatever fell in the middle there between trades and brokers varied a little bit on years just based on what kind of negotiations we did with vendors, what were the assets we needed to replace and so on. I think we expect it’ll get more normalized to that type of atmosphere. Obviously, you saw 17% auction this past quarter. That might be the highest we’ve ever done, but that’s certainly a large number for us. And that was just blowing out some of the older assets from the 2.2 billion of acquired fleet that we had through M&A, right. Everybody had their 5% to 10% in the back of the lot that you had to either decide to work through or get rid of. So we just decided to clean that up. But we’ll get back to more normalized channel mix. That what you saw pre pandemic.
Q – Unidentified Analyst: Okay. That’s all I had. Thank you, guys.
Operator: Thank you. Thanks. Thank you. Our next question comes from Michael Fenigerwith Bank of America. Please go ahead.
Michael Feniger: Yes. Thanks for taking my questions, Matt,we haven’t really seen how rental holds up in a higher for longer interest rate environment. How does that kind of typically weigh on project activity, but also impact that rent versus own trade off? How does this kind of higher for longer rate environment differ from other periods when we think of the impact to the rental equipment space?
Matthew Flannery: For my 30 plus years of doing this, anytime capital becomes more expensive, it’s logical to think that people pay more attention to what they spend their capital on. So when you think about customers that were owning or wanted to own, it adds another barrier thought to them to then think about the opportunity to try rental. And once they do, the math just works. When you think about the lack of even in a flat interest environment, when you think about once they get over the fact that can I get what I want when I need it. Our industries come such a long way that we don’t lose customers, they don’t go the other way after that because the rental experience is much better. They have flexibility to turn the assets in when they don’t need them.
They don’t have to deal with all those soft costs of storage, maintaining transportation, and the reliability, right. So our mechanics are usually going to do a heck of a lot better job than somebody who’s working on equipment once in a blue moon. So all those variables mean greater rental penetration and I think a higher interest environment just adds another layer of that higher penetration. So that’s what would be our expectation.
Michael Feniger: Thank you. And my follow up is just clearly there’s some moving pieces for the construction cycle next year. Offices, commercial versus infrastructure, industrial, upstream, energy versus downstream. Just help us in the context of fleet intensity. We saw this in 2015, 16 with fears of the oil downturn. Just how much fleet would come out of some of these weaker pockets compared to the fleet necessary to service some of these other markets that are seeing tailwinds. If you could just kind of help us conceptualize some of those moving pieces. Thank you.
Matthew Flannery: And Michael, pockets you’re talking about, are you referring to what areas? Because I think you heard my opening comments. We’re seeing pretty broad based demand. All the verticals that we serve, ironically, other than oil and gas, I think we’ve all seen the rig count come down, have been we’re positive in Q3. So we’re not seeing a lot of those soft pockets. Say a little more what you’re thinking about.
Michael Feniger: Well, I guess if those pockets do soften next year. Matt, how should we think about the business model reacting and the fleet that services maybe some of these pockets that the market is worried about. Commercial real estate, private office, relative to the fleet that’s required for some of these other end markets that are seeing really strong verticals or strength on a multi year basis.
Matthew Flannery: Okay, great. So we have always somewhere between three and three and a half billion dollars right at our disposal to reposition fleet profiles, if that’s what necessary. But one of the great things of the model is we have very fungible assets, right. The fleet we use may vary a little bit depending on what type of construction is going on. Maybe in some of these stadiums you’re going to need bigger booms and maybe on some of these megaprojects you’re going to have a higher propensity for a full breadth of fleet from more dirt moving because there are bigger footprints, but our fleet breadth can really account for that. And it’s one of the great parts of the rental model, is as long as you don’t get overly specialized, which we don’t, that fungibility allows you to move it from different types of work to the other.
And that’s something that on the margin. If there’s some changes, we certainly have just within our replacement CapEx, the opportunity to reprofile and send that fleet to the right place. Mike what I might add and it’s really difficult to get into demand intensity by subvertical, if you will, but the way we’ve kind of talked about this publicly and we look at it internally is just more from a top down perspective. And if you think about the verticals, where certainly we feel very good things like manufacturing, power, infrastructure, transportation, healthcare, et cetera, if you look at the dollar value of those projects and those markets versus the areas you’re alluding to which maybe it’s aspects of office, it’s aspects of commercial just the absolute dollars are much greater in the areas that seem to be opportunistic.
And so from a weighted basis, that’s where we see our opportunity growing next year.
Michael Feniger: Thank you.
Operator: Thank you, Mike. Thank you. At this time, we have no further questions in queue. I will turn the call back to Matt Flannery for closing remarks.
Matthew Flannery: Great. Thank you, operator and that wraps it up for today. And I want to thank everyone for joining us and remind you all that if you have any questions, please feel free to reach out to Elizabeth anytime. Operator you can now end the call.
Operator: This does conclude today’s call. We thank you for your participation. You may disconnect at any time.+
