Ken Newman: Hey, good morning guys. Thanks for squeezing me in. So the first question, I wanted to touch back on the forward visibility that you guys talked a little bit from your customers. Obviously, you talked a lot about the manufacturing activity and obviously, manufacturing had an amazing 2023. But as I’m thinking about your growth visibility for 2024, is that primarily kind of driven by the infrastructure and the power side because obviously, we’re not going to see — I don’t think there’s any expectation to see like another year of multiple $10 billion-plus semi fab projects on the maker project side. So what’s kind of driving that weight of growth here in 2024?
William Ted Grace: Yes, I’ll start there. I mean, I guess, we have kiddingly talked about this term mega projects, and no one’s even sure what it really means and use different definitions. What I would — I’m not trying to get caught up specifically on whatever mega projects means. We’ve talked about a number of verticals where we think there’s growth opportunity. Certainly, manufacturing is at the top of that list. Power is very strong. But then you look at elements of infrastructure, which may or may not be “mega projects”. If you think about health care, you think about education, these are all areas where we’ve seen good momentum in 2023, and the indications are from our field team and customers that, that will sustain itself into 2024.
So maybe some of those are mega projects, but many of them are kind of areas that could be — maybe they don’t qualify as this term, but they’re still important verticals where we’ve got very strong strategies that benefit us. Matt I don’t know if there is anything you would add.
Matthew J. Flannery: You covered it. Well said.
Ken Newman: Okay. No, that’s helpful. And then, Matt, I think at the beginning of the call, you talked about optimism for rental rates maybe being a good guide for fleet productivity this year. I don’t disagree with you, but I’m curious if you could just help us square us with that comment because, obviously, the guide is assuming supply chains are normalizing and used equipment sales were going to be a drag on margins this year. So where is the support for rates kind of staying here positive for the year?
Matthew J. Flannery: So a couple of things. Number one, there’s still growth environment, right. That’s first and foremost. But the industry has shown discipline, whether you want to say that discipline has caused that of demand because it was a robust demand or the need because of rising equipment prices, but also information so much more information in this latest cycle that we’re in versus previously. And people always want to go back to pre-2009 and what happened, it’s a different industry now. It’s a different world now, but it’s definitely a more mature industry. There’s more information there. But the need — and think about it for us, those that probably buys at the best in the industry, I would assume if we see the rising prices, I can’t even imagine the industry overall, how anyone would consider that going negative on pricing would even be a reasonable thesis or financially feasible.
So we really feel that all these reasons are why we feel good about it and then also, obviously, what we see in our business every day.
Ken Newman: Yes, that makes sense. Appreciate it.
Operator: Thank you. Our next question comes from Scott Schneeberger with Oppenheimer. Please go ahead.
Scott Schneeberger: Thanks guys. Good morning. I had two, the first kind of two parter. So the — Matt, you referenced earlier your surveys. I thought you’ve always done surveys with your maybe 300 largest customers. I assume you do surveys with smaller customers, and you talked about a little bit weakness being local when I mean that. Could you talk about just compare and contrast those two categories? And the second part of this demand question is Infrastructure Bill, where do you — do you see funds flowing at per your customers, I know there’s a lot of projects let but are you seeing those funds flow?
Matthew J. Flannery: Yes, I’ll talk to the customer set a little bit and let Ted give you some details on the survey and infrastructure. So when we talk about slowing local market business, it’s what we see. When we segment our customers we see that local markets that were growing double digits are growing mid- to low single digits in some places. So when we see that slowing, it’s the reality of what we see. The survey is still positive overall, and Ted will get to that, but I didn’t want that to be mistaken. And we just think we’ll be putting more of our fleet towards the tailwinds and the major projects that we’ve been discussing that we had historically. Ted, do you want to touch on the survey?
William Ted Grace: Yes. So Scott, the way the survey is constructed as we can look at different customer slices and certainly, we can look at what we call national and strategic accounts, and then we kind of look at the total responses. And the responses are on trailing three-week average more like 800 to 900. So it’s a pretty large survey size. We think it’s pretty representative of the world that our customers are living in. I would say, certainly, on a relative basis, the strongest results, those are — it’s a diffusion-based index. So those would fall into the categories pointing to growth are definitely going to be the bigger customers. I think that’s a lot of what underpins what you’ve heard us talk about today. But people should not infer this to mean that the other accounts are what would be in the total composite are negative.
They’re still positive, just not as positive. We continue to see an exceptionally small fraction that actually see the world going down. We’ve talked about that being in the very low single-digit ranges. That’s still true. So we’re not seeing any kind of like bearish indications from our customer confidence indication. It’s just kind of you are seeing kind of responses that are more — are consistent with the way we’ve talked about our expectations for 2024.
Scott Schneeberger: Great, thanks. And then anything specific to Infrastructure Bill and funds loan guys?
William Ted Grace: So we’ve seen those awards, too. So it’s been good to see a lot of those big awards made in 2023. If you look at the top 10 list that’s on the White House website, very few of those have broken ground. You’ve obviously got an exceptionally large tunnel project between New York and New Jersey that I assume would be a 2024 event, maybe it’s 2025. I suspect there’s an awful lot of engineering there and permitting. But we’ve definitely seen anecdotally more dollars flow into that world in 2023, than in 2022. We said this. We really didn’t see much in 2022, very late in the year we saw some. But across 2023 we started to see certainly rodent highway projects where you could see that attribution to the II JA. We saw a number of airports break ground.
