Bascome Majors: Hi, Jim, on your current outlook, can you just tell us how much is embedded in the full year accrual for variable comp including the share-based piece? And if you return to growth in 2025, how much needs to come back to get you back to that level? Thank you.
James Todd: Based on my nine plus three kind of best estimate, as I sit here today, I’d anticipate about a $15 million to $17 million headwind full year 2024 versus 2023. If you’re looking at 2025 versus 2024, I’d say kind of — at kind of threshold, you’d expect about $1 million tailwind given some of those transition costs that are included in the first quarter of 2024 that won’t repeat in FY 2025.
Bascome Majors: And Frank, welcome back. High level. I know you’ve only been here less than three months, but this is a business that has done really well for stakeholders and shareholders by doing things pretty similarly for a very long time. And obviously, the cycle has challenged things, at least from the peak in a way that we haven’t seen before. But structurally, as you come in with a fresh perspective, do you see any pieces of the model that could maybe be tweaked? I don’t know in how they relate with agents or how you compensate BCOs. Just really anything where you might be able to turn some norms around the dials and generate the kind of growth we’ve seen historically for the next 10 years. Thank you.
Frank Lonegro: Hi, Bascome and nice to hear your voice, and I look forward to connecting with you later in the year. I’d say the early impressions, and again, it’s only been a little less than three months. I mean the model is an extremely powerful model. It’s unique. It’s resilient. It obviously has attributes which are wonderful and have been wonderfully successful, the tech enablement, the asset light, the strong cash flow. You’re harnessing the power of literally thousands of people who are putting food on the table every day through the agent on the BCO community. So there’s certainly do no harm to the model mantra. In terms of the future, I’d say it’s evolution, not revolution. It’s how to take advantage of an already really good company and try to make it better.
It’s a fresh set of eyes on everything that we do and sort of no preconceived notions of that we do things as good as we can do. So clearly, I’m going to be looking for opportunities to improve things, again, from an already good base. And I think the two themes that maybe you’re hearing come through is, one, how can we accelerate the model? And then how can we really focus on some of the strategic investments? I mean, you heard us talk about cross-border and heavy haul, like those aren’t going to be the last two areas that we focus on. Those are just the first two areas, and I give the Board and Jim Gattoni, a lot of credit. I mean, they started down this path maybe a year or so ago. And so I’m the beneficiary of that work and firmly believe that those two are real opportunities for us.
I’m going to be looking at the secular shifts in a bit of a follow the money type of a strategy. So as you think about things like near-shoring, that’s clearly an area that we want to play in. Infrastructure, whenever that money unlocks from the government, I mean, that’s an area that really fits well with heavy haul. So we’re going to be able to do a lot more work in that area. Green Energy would be another area. The power generation needs of the country, especially with AI and data processing and mining for cyber currency and things like that. I mean just there’s a gargantuan amount of power that’s required to do that, which means we’ve got to have alternative sources of energy and data centers for all the computing power that’s necessary.
Like those are all things that we do really well in. And I think you’re going to continue to see us look for those secular opportunities and then invest the capital and the people in order to unlock those.
Bascome Majors: Thank you.
Operator: Thank you. We will take the last question coming from the line of Uday Khanapurkar of TD Cowen. Your line is now open.
Uday Khanapurkar: Hi, thank you. This is Uday on for Jason Seidl. I guess can you talk a little bit about the rate environment, specifically in the unsided market? I believe flatbed spots had a better quarter than van. I guess I’m wondering, are we seeing a different capacity dynamic in that part of the market? Or any color there would be helpful.
Frank Lonegro: Uday, I think one of the things that we talked about was that the platform environment is holding up better than the van environment. Some of it is simply the supply-demand dynamic in that area. There’s fewer flats out then there are bands out there. It is an area that supports heavy haul as well. So it’s an area that we’ve been focused on. So I think there’s part of it there as well. We don’t we don’t bottom feed. We’re certainly looking for premium freight and a lot of the platform items are a little bit higher revenue per load, [indiscernible]
James Todd: Yes, no, absolutely, Frank. And as I mentioned, there was a bit of a mixed good guy there. So we saw increased demand for that heavy haul service offering plus 2% on loadings and down 1% rev per load. If you kind of strip out the heavy haul mix good guy from the unsided platform category, you go from a down 1.7% as reported year-over-year to a down 4.2% kind of unsided platform ex the impact of heavy haul.
Uday Khanapurkar: All right. That’s very helpful. I guess just as a follow-up, just on the year-on-year truckload guidance. Just I’m looking at the model, it implies a modest sequential uptick or even slightly down at the low end. I guess I’m wondering, how does that guide measure relative to normal seasonality on a sequential basis?
James Todd: I’m sorry, can you — the guide with respect to anticipated operating margin for second quarter?
Uday Khanapurkar: The truck loads down 5% to 9% year-over-year.
Frank Lonegro: Relative to seasonal.
James Todd: Year-over-year. Just slightly below. So I think on a sequential basis, we called for 4% to 8% tailwind, 1Q to 2Q, so call it six at the mid, and that’s lagging by a point or two of what we would call define normal seasonality.
