Mark Marcon: Great. And then one last, Tobey asked a history question, I’ve got one as well. Rand said, you’ve both been involved in this business for multiple cycles. How would you compare what we’re seeing on the commercial side in terms of the trends right now relative to prior cycles? What elements feel different from your perspective? My recollection was Apex actually navigated the GFC really well. And so I’m just wondering how your — how does this compare? How are you thinking about it?
Theodore Hanson: Yes. Well, it’s different for sure, right? Business cycle to business cycle, but no two are kind of based on the same foundation or act in the same way. If you think about the great financial crisis, certainly, that affects the big banks in the financial services industry, things related to the banks, predominantly housing and mortgage, if you will, and the retail and the consumer got caught in some of that stuff. And I think that what’s different this time is it’s been 2 years now that we’ve been watching this interest rate increase and in turn been talking about an impending recession and large enterprise accounts have slowly positioned themselves in a much more cautious way. And that’s happened broadly across the board over a long period of time.
And so instead of seeing kind of a faster ripple through certain industries, you’ve seen it broad-based over a long period of time in enterprise accounts. And I think that makes this cycle, if you will, a little more different. That being said, how we manage through this is not too different. I mean we’ve definitely done this at various times before. So we have an understanding about how that business should operate and what the management actions are that we need to take. And we also kind of realize the things that sometimes leave you into these downturns are the things that leave you out. So certainly, our TMT industry was one that really led, I think, for many of us into this cycle. And while it’s still not there, you may be seeing signs that their businesses are returning to growth and better profitability, and that will be good for us because they’ll want to lean into more IT initiatives that they need us to be a part of.
So that will be a positive thing for us.
Operator: Our next question comes from the line of Jeff Silber with BMO Capital Markets.
Jeffrey Silber: In your prepared remarks, and I’m going to quote it, in our Commercial segment, we anticipate revenues to remain soft across both assignments and consulting, and this is referring to your guidance for the fourth quarter. Should I assume that means that you think both assignment and consulting will be down on a year-over-year basis in the fourth quarter?
Theodore Hanson: So, Jeff, thanks for the question. I think that our guidance kind of reflects what I would call flat to very slightly down in the Commercial and up in the Federal, if Marie were talking to you, that’s what she would say. And then secondarily, I think we’re taking also a little bit more conservative view of permanent placement and how that could influence the margins. So I think those are the competitors on the commercial side. Look, there’s — although there’s no real material change in the operating environment. The fourth quarter is always lower than the third quarter. So the third quarter is always the strongest. And in the fourth quarter, you see a little softening, and that’s because you’ve got holidays and less Billable Days.
You also have various projects come to natural end, customers working on budgets on things that they may not start until the next year. And then you have some clients who will get kind of into December and say, look, I’m not going to finish this by January 1. Let’s just shut the lights off here for a week or 10 days, and let’s come back at it after the holidays. And so those are all natural things that happen here in the fourth quarter. So that’s what’s underneath the guidance. I’ll tell you at macro level in the Commercial market, there’s no real change in the operating environment. I think that’s one thing that is kind of clear here, and we coming out of Q3 and into Q4, things are what we would say is fairly steady. Our Q3 was a little bit better than expected, and that then translates into how we set Q4 guidance.
No turn yet in the commercial market. The Commercial market is still not found an inflection point. We’ve talked about little things on the call here that we are hopeful that as they begin to lead us, as Rand said, to a little bit of life, but no turn yet. And the business stabilizers, obviously, are working in our business and continue to work and we feel good about them maintaining EBITDA margin for us even in the face of a really difficult commercial market.
Jeffrey Silber: Okay. I understand. Maybe I could shift gears to the Federal Government business. I know you mentioned in terms of the potential government shutdown. I think it was less than 10% of your business will be impacted. But can we just talk about the mechanics? I mean what happens if, God forbid, we do get a shutdown? Do all the projects stop? Contract negotiation stop? If you could just help me walk through what we could expect if that does happen.
Theodore Hanson: Well, I think in that, the first thing that could happen in that is, you immediately kind of come together close with your clients and you determine what’s critical and what’s not, right? And thankfully, we’ve already started that process based on some of what was going on in that market, leading into October. So we’ve got to foot ahead on that, if you will, and we have a pretty good idea. Once you go through that, you continue to work on the mission-critical stuff. And you make a determination, the client makes a determination on the few things that may not appear to be mission-critical and said that our client will do that in concert with us, and so we’ll know that. And then what happens on new work is it pushes to the right.
So awards that are in processed get delayed a little bit, the adjudication of those, no matter what stage they are in and things just slightly slip out into the first quarter or the first half of next year. And Jeff, maybe one thing, too, to note here. And who knows, it’s been such a crazy turn of events here over the last few weeks in the — that Federal Government space with what’s going on with the house. But it’s not presuppose there’s going to be a shutdown. I mean we mentioned that in our — as a caveat in our guide. But it looks like we could be moving here towards another continued resolution of some period of time, whether that’s a short wind or a long wind. We’re in one right now. And so we’ll see how things develop on that front as we get a few more weeks down the road.
Jeffrey Silber: Yes. We finally have a speaker, so that’s a good sign.
Operator: Our next question comes from the line of Seth Weber with Wells Fargo.
Seth Weber: Rand, I appreciate the comments about kind of stability here at the end of the third quarter. I’m just wondering, would you be willing to talk to kind of cadence of business through the quarter like if things — were things sort of stable through the third quarter? Did they go down? Did they get a little better? Did they get a little bit worse? So just wondering if you could give any color on sort of the intra-quarter trajectory on the Commercial side.
Randolph Blazer: You’re talking about Q3?
Seth Weber: I was talking about Q3, yes. Just the kind of July, August, September trend lines.
