We’ve been confident in that service, so we’ve improved our transit times that we submit in those bids and have a lot more confidence in those competing very well against over the road.
Bascome Majors: Thank you both.
Phil Yeager: Yes and just one piece on that before we go into the next question too. I think in regards to those customers too. We saw capacity exit with the departure of Yellow, and we’ve been really successful one in protecting our customers with that, but then also providing solutions for them to consolidate that LTL through our network, our logistics network, and convert that into intermodal as well. We see that piece growing for us and for our customers going into next year as well.
Operator: Thank you. Our next question is from Justin Long of Stephens. Please proceed with your question.
Justin Long: Thanks. And maybe I’ll start with one for Geoff, on the guidance, last quarter, you talked about the tax rate for the fourth quarter being in the mid teens. It looks like, based on the guidance you gave today, it could be a little bit lower than that. So I was just wondering if you could provide an update there. And just given the decline in the tax rate, it also seems to imply that operating income will probably take a step down from 3Q to 4Q. So I was wondering if you could comment on what’s driving that. It sounds like logistics margins may be down a bit, but I wanted to make sure I wasn’t missing anything else.
Geoff DeMartino: Sure. Yes. Your math is correct. On the tax rate, we think in Q4 will be around 10%. That’s driven by a change in state apportionment project we’ve been working on all year. So Q4 will be low as we file the 2022 final tax returns. To your point, on the operational side of the earnings, we’re expecting seasonal strength in October is going to fall off, as it usually does in the latter half of Q4. We are expecting some more softness on the brokerage side. And of course, brokerage is in our logistics segment. So it’s really the transactional parts of our business between intermodal volume, brokerage volume, and some tailing off and profitability into Q4. The rest of our logistics segment we think will continue to perform based on recent wins that are being onboarded, but not enough to overcome the performance of the other two pieces we talked about.
Phil Yeager: Yes, we certainly wanted to be conservative in the approach on what we think volumes will be, just given that it does remain somewhat unclear, right. And there’s certainly upside to that if we see the demand continue right up to and through the Thanksgiving holiday, that is certainly upside, but felt as though with the guidance, we should be conserving.
Justin Long: Got it. Thanks. And maybe as a follow up for Brian, you talked about some onboardings and logistics in the fourth quarter and early next year. Is there a way to think about the collective impact that these onboardings could have to the top line? I just wanted to get a sense for how you’re set up for potential growth in that segment as we move into next year.
Phil Yeager: Sure. Yes. No, Justin. Yes, I appreciate that question, and we love our logistics wins for a lot of reasons. One, it’s great to continue to get out there and win, but a lot of what we see within our logistics wins is that it helps feed the other lines of business and creates that overall Hub network of freight. So as we win in the final mile, we’re able to leverage our assets for the middle mile management of that. As we onboard these new buildings that I’ve mentioned, we’re again leveraging our assets to manage the inbound and the outbound across all modes of transportation. And then it also just continues to add to that long tail of customers that we cross sell into and provide more solutions for. As we do that and we get deeper with our customers, they become less price sensitive, they become more sticky and our retention continues to go up.
We’ve seen our deal sizes continue to grow in logistics and I’ll also mention on the dedicated from a contract win perspective, our dedicated project continues to stand out against some of the headwinds but strong pipeline, continued demand. Our win ratios are the highest we’ve seen them. Our largest dedicated win of the year will onboard right before the turn of the calendar and set us up really well going into next year.
Operator: Thank you. Our next question is from Bruce Chan of Stifel. Please proceed with your question.
Bruce Chan: Hey, thanks operator and good afternoon everyone. I just want to look at the brokerage side of things for a minute here. It seems like the market’s going to be grinding lower for a bit longer and just assuming that’s the case, want to see if you have any more opportunities for cost rightsizing there, whether it’s headcount related or technology related or maybe something else.
Phil Yeager: Sure. Yes, no Bruce, appreciate the question. And one of my favorite guiding principles that we say here at Hub is that we innovate with a purpose, right. And that we direct our IT investments in a meaningful way that focuses on our customers, our carriers and our team members that drives profitable growth. And that’s exactly what we’ve seen in our brokerage. And Geoff called out some of those productivity gains that we saw. While we did see volume grow, we saw that grow on top of a lower cost base and drive more efficiency in our overall operations. So we do sense some more headwinds coming in the fourth quarter. We feel well positioned to handle those, but with some of the softer volume, we’ll make sure that we’re scaled appropriately and that, again, our investments are appropriated towards driving that profitable growth.
Bruce Chan: Okay. Great. And maybe just one…
Phil Yeager: Go ahead, Bruce.
Bruce Chan: Go ahead.
Phil Yeager: The one thing around our program is that our commission model really incentivizes volume growth around. But we obviously pay out gross profit dollars, but we also incentivize volume growth and handling additional volumes. And that has really allowed us with the growth that we’ve seen to remain very lean in our operation and not have to add additional headcounts and actually become more and more efficient. And I believe we saw about a 20% in aggregate productivity improvement year-over-year in our brokerage. And so really significant improvement there and we still have a long way to go and need to return to growth but that will come as the market does, but we’ll keep focusing on taking share as well.
Bruce Chan: Okay. That’s great color. And I was just going to ask with that 5% volume growth was that related to some of those incentive programs or is it fair to say that was tied more to disruption from Yellow in the LTL market?
