Michael Coffey: No. Generally – the seasonality generally is a Q1 phenomenon on rentals. Q4, the backlog, with most of our customers are strong. If there’s inclement weather, that can always impact project production and rental activities. But Q4 is typically a strong quarter on the rental segment. And when things really freeze in Q1, they slow down a little bit, but that’s – we’re not expecting any adverse Q4 reactions from rentals.
Michael Zabran: Got it. And preliminarily, just how you are thinking about rental revenue growth in 2024 just given where we’re at with the launch in Lubbock and then prior commentary you’ve given around opportunity in underserved markets?
Michael Coffey: Well, we feel – in general, we feel really strong about our position in Northern Texas, and the economy is strong, backlog of infrastructure and commercial projects is strong. We have a really good market position in North Texas, Lubbock. The response from the customers in Lubbock has been exceptional, but we’re the new kid on the block. And so we’re going to grow as quickly as we can, but just have eyes wide open. But thus far, we’re really happy with how that market’s performed, and we expect that, that will continue through 2024.
Michael Zabran: Got it. That’s all for me, guys. Thank you.
Michael Coffey: Thanks so much.
Joseph Doolan: Thanks. Thank you.
Operator: The next question is from Ted Jackson with Northland Securities. Please go ahead.
Ted Jackson: Hey, good morning. Congrats on a really nice quarter.
Michael Coffey: Thanks, Ted. Good morning. Good to hear from you.
Ted Jackson: Okay. So I’ve got just a smattering of random questions. I’m going to – since we just were on rental, I’m going to stick with that to start with. So the latest store that’s opened, I know it takes a while for each of these locations to kind of hit their stride and ramp up. I mean, would you view all of your locations now at stride? Or is that latest store still in the process of kind of filling out in terms of the revenue potential within it? And then a follow-up in that on rental is you’ve got four locations in Northern Texas. At what point do you see yourself adding a fifth location? And would you continue to be building out in North Texas? And then I got a few more behind that.
Michael Coffey: Yes. So I appreciate that a lot. So the way I think about Lubbock is Lubbock is a larger market than Amarillo. And so not all the stores are equal. For example, our Hereford store is an industrial store. It serves industrial ag markets. And our Washington store is in the center of Amarillo and is our largest to date. When we built Lubbock, we built Lubbock to be as big and then surpass Washington because the Lubbock market is bigger in population and general economy than Amarillo. So we’re looking at that as a long-term project, and we’re seeing – and Lubbock is designed to surpass Washington and help us to grow the overall business. So we’ve got a lot of room for growth there. Really happy with how we’ve been received, and we’re ahead of schedule on the growth curve since we opened the store in April-May of this year.
So I hope that answers your question. On the second one, as far as opening new markets, we’re not prepared to talk about that publicly at this stage. But we really like the strategy that we have for the rental business. It’s a high-growth strategy, and we’re being selective in the markets that we’re choosing where we can make a competitive difference, and they are very similar in size and scope to what we’re doing in Lubbock and Amarillo.
Ted Jackson: Okay. Then I want to just jump just quickly over to the gross margin, which was touched on before, meaning just a fabulous improvement in gross margin. I understand that it’s with a combination of chassis and mix. And just bluntly speaking, is that like kind of a new baseline or margin that we should view as sustainable and that you should be making adjustments to our kind of forward outlook? Or is this kind of like the weather was great, the temperature was great, you just – it really helps you put up a PR time?
