Operator: Thank you. Our next question comes from the line of Scott Group of Wolfe Research. Your question please, Scott.
Scott Group: Hey thanks afternoon guys. Just following up on the last question it sounds like pricing better first half volume better second half. What does that mean from like the earnings cadence sometimes in the past, you’ve given us some sort of directional color. What person of the earnings do you think first half, second half or even quarters or however you think about it?
Geoff DeMartino: Yes, I’d say at this point, it’s probably pretty balanced with those two offsetting one another, maybe a little bit stronger in the first half, but we’ll have more to say, obviously, as we get further into the year and what the rest of the year looks like. But at this point, that’s our best guess.
Scott Group: Okay. And then you talked about the margin – the operating margins have gone from 2% to 9%. I think I want to trying to understand the sustainability of these margins at this level. When we look at intermodal, I know you don’t report intermodal margin, but where is that relative to the other big guys that are low double-digit margins right now?
Geoff DeMartino: We don’t kind of bring it down to that level, but I would suggest we’re probably in the same range as them if not higher. Our business tends – price is a pretty strong driver for us, and we certainly saw the benefit of that in 2022.
Phillip Yeager: And I think what Geoff was trying to stress in his prepared remarks is also that it’s a far less capital-intensive model as well. So, we have very strong margins without the capital intensity, and we’re generating a lot of free cash flow that we can put back into the business.
Scott Group: And as we insource more and we’ve got new rail contracts, what do you it’s like, is the range of intermodal margin ultimately going to be a lot narrower like maybe those guys look like, maybe a little bit more capital intensive if we’re doing some more of our drainage, but a tighter band of margin? How do we think about that?
Geoff DeMartino: Yes, I think it’s certainly an improvement from where we’ve been historically. There is obviously some level of cyclicality in the business when capacity is tightened and demand is strong, you’re going to get result like – 2021 and 2022. But we think we’ve reset at a higher base than where we have been in the past. One of the really nice things about our drayage insourcing is we’ve been able to really increase the amount of insource without adding a lot of capital to-date and that’s through better efficiency where we’ve improved our driver to truck ratio and improved our loads per driver per day and really been able to see a nice pickup without a lot of capital.
Scott Group: If I can just squeeze one more just to that point, is there any way to quantify what like every 10 points of insourcing means for operating margin earnings however you think about it?
Geoff DeMartino: Yes, so 100 basis points over the cycle is about $1.5 million of pretax.
Scott Group: 100 basis points movement, but your goal is to go from like 60% to 90% or something. Is that right or?
