obviously, you just have to look at the numbers, we’re not even close to that. And so we have lost a good amount of operating leverage. And really, the relative declines in MRI have been worse. But I go back to – we are still thinking we are still hitting our targets, our – at least our original assumptions for EBITDA within MRINetwork. And so we do expect to get back to where we are sort of excluding the workers’ comp part. That’s a bit more of a wildcard. And again, I’m not going to sugarcoat it. It is something that will – it will – it is something that will dog us for at least 6 months, and it may well be 1.5 years to 2 years before it goes back to what I would call normal. And then maybe a new normal, because I don’t – I’m not the CEO of Chubb, I’m not the CEO of AIG.
So I don’t control workers’ comp rates.
Mike Baker: Yes. Yes. Okay. Understood. So yes, couple of there. I guess, as one other one in the sort of the offset is the TEC acquisition. Where are you in terms of – I think – so those are company-owned offices. I think the plan is to refranchise those and in some respect, that helps pay for not, maybe not all of the acquisition, but a lot of it. Where are you in terms of the refranchising process for those…
Rick Hermanns: I’m glad you asked that question. So we’ve had staff out in Arkansas in the last couple of weeks. I myself was out there. And like I said, a lot of senior management has been out there. And so I would just say that we are in very, very advanced – at a very advanced stage to have all of them converted. We’re trying absolutely as hard as we can that when we have an anticipated close of November 27, and it is our goal, and I think it’s a reasonable goal. I certainly cannot make a promise, but it’s – but we are well on our way to hitting our goal of having them all refranchised or all franchised on November 27. And if they’re not, we’re still far enough along that I’m saying it wouldn’t be long thereafter.
Mike Baker: Yes. Makes sense. Okay. Appreciate that. Yes. It sounds like a great acquisition. Alright, thanks a lot.
Rick Hermanns: You got it.
Operator: Thank you. [Operator Instructions] Our next question is coming from Kevin Steinke with Barrington Research.
Kevin Steinke: Good afternoon, Rick and David. I wanted to start off by asking about just the overall tone of demand environment and the economy as you see it, do you think it’s been kind of stable since you reported second quarter 3 months ago? Has it worsened a bit. I think you mentioned maybe Snelling decelerated a bit more in the third quarter, but just kind of maybe your general overall read on where the demand environment stands today relative to a few months ago?
Rick Hermanns: Yes. Kevin, thanks for the question. I think that from an, let’s say, an aggregate standpoint, we – probably by June had hit from a comparative standpoint, we’ve leveled off, right? So you would just have to say, well, okay, we – I’m saying we found our level, so to speak, in demand, which is certainly off from the prior year. It is still absolutely true what I said really the last couple of quarters is, it is very, where it is weakest is definitely it’s not uniform at all. And I think, in fact, maybe the best way of looking at it is construction has held up significantly better than logistics and warehousing. There’s no question about that. And so while I’m sure there are a lot more factors at play than, let’s say, than what we might see, I would probably argue that the sort of the weakness you see in e-commerce is probably what is affecting, let’s say, Snelling more whereas, again, our construction remains significantly, significantly stronger than relatively speaking, than our logistics, our offices that are more focused on logistics.
The – and that tends to be geographical as well. And that’s why, so for example, HireQuest Direct has remained stronger while it’s also more heavily centered in Texas, Tennessee, Georgia and Florida, which now the question is, is it just because the economies are better in those states? Or is it because we’re more heavily towards construction. And it’s probably a bit of both, whereas Illinois, Washington and a couple of other states that are probably more tied to distribution and logistics have been definitely more of a challenge. And I would go back to probably ties back to sort of PeopleReady and TrueBlue again, was down. I think they reported, they were down like 19% or something. Well, they tend to be more heavily concentrated.
West Coast, more heavily concentrated warehouse and logistics than where we are. And that probably explains a lot of the sort of relative difference between, let’s say, our relative performances in the third quarter, as we’re just geographically, we’re in a better spot. And – and again, our business mix is in an area that is more stronger. Now the – and I said this in the last quarterly call, and I’ll say the same thing is interest rates are of great concern to us, not because of what we pay particularly not that I like to pay any more interest than we need to, but more importantly, because of how it impacts real estate projects going forward to the extent that we have a lot of business going on with – in the construction industry, clearly, it’s important to us that those projects, the new projects continue to be approved and funded to follow the projects that are being worked on now.
