Phil Yeager: Yes. Yes, we have. Absolutely. We’ve changed our entire pricing organization and philosophy to be able to adjust to that. We have a new Chief Marketing Officer who is doing an excellent job and making sure that we are winning in the market and able to price to win, and that’s what we’ve been doing thus far. So yes, we’ve made some significant changes within the organization and to our approach and feel as though it’s working.
Brian Alexander: And just to add to that as well on price too. It’s also targeting what we go after to make sure that we’re building the balance across our network as well as the velocity in the areas where we need it. And that aligns with the cost takeouts that we’ve also been able to do within our intermodal operations.
Phil Yeager: And last point I’d just add, this is Phil. I think right now it’s the time frame where we launch that volume last year, right? So we are in the process of capturing that, which is why we laid out in the guide that we were going to be down in Q1, but then start to see year-over-year growth.
David Zazula: Super helpful. And then on the brokerage side, can you get your thoughts on spot versus contract, how you’re trying to set yourself up to be able to take advantage of a potentially positively inflecting market there and how you plan on handling customer relationships?
Brian Alexander: Sure. Yes, this is Brian. I’ll touch on that. When we finished out the year, we were 53% of our brokerage volume being contracted, 47% on the spot side. And I think what we’ve been able to do is take a lot of that volume that’s coming in and that we’re buying low on the spot and move that into contracted so that we’re able to secure that pricing as pressure starts to come in through the later parts of this year. So that we maintain that lower cost of purchase transportation and then we translate that back into the price that we give to our customers, which then creates more of that volume. So, we’re structured really well with a good balance and a good strategy for that.
David Zazula: And then if I could just, a last cleanup. Could I get a non-driver employee count?
Kevin Beth: Yes. Non-driver without new Final Mile is 1,900 versus ’22 at the end of last year. That’s a 15% decrease.
David Zazula: Thanks so much.
Operator: Thank you. Our next question comes from the line of Allison Poliniak of Wells Fargo. Your question, please Allison.
Allison Poliniak: Hi. Good evening. Could you maybe talk to on ITS margins as you’re looking towards growth in the second half? Any impact in terms of – or if you can quantify how unstacking the boxes would impact that margin in the second half? Is there a cost there and just any holding costs there near term to be mindful of?
Phil Yeager: No. Yes. Allison, I think a very good question. But when we’re unstacking, we’re very much looking at it from a returns perspective. So we want to make sure that the business we’re bringing on is going to be helpful to margin. So it shouldn’t be a large impact in one quarter or another anything likely worth calling out. Where we might give you a little bit more is repositioning costs are increasing. I think that would be a larger driver than stacking costs.
Kevin Beth: Yes. Allison, I think one of the things we do pretty well is we stack close to the markets that we anticipate are going to have the deficit. So that allows us to react quickly. And there’s been a lot of cost to get those boxes revenue-producing as quickly as possible.
Allison Poliniak: Got it. And then just in terms of M&A, maybe a little color on kind of where your pipeline stands and you just hit the forward error in the process of that, just management capacity to handle future M&A, just given your ability to do that on the financial side? Thanks.
Phil Yeager: Yes. No. Still, yes, we do have a strong pipeline. We’re very focused on kind of those core non-asset logistics areas adding scale and specialization that, bring higher margin profile. And yes, we’re continuing to look for opportunities. We want to be thoughtful. Obviously priority one is being successful in getting back to growth in intermodal as well as a successful integration of the Final Mile acquisition. So those are the top two, but then certainly out looking for more. And as you mentioned, we have a significant capacity to do so.
Allison Poliniak: Great. Thank you.
Phil Yeager: Thank you.
Operator: Thank you. I would now like to turn the conference back to Phil Yager for closing remarks. Sir?
Phil Yeager: Great. Well, thank you for joining our call this evening. As always, if you have any questions, Kevin, Brian and I are available. And we hope you have a great evening. Thank you again.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
