Bohn Crain: Yes. Well, I think we have to begin with kind of recognizing or acknowledging. We’re here to support our agent stations on the timeline or timeframe that suits them. So, we kind of stand ready to support our partners but we’re not out twisting their arms trying to compel them to sell. So, it will ultimately depend on when they’re ready and we’ll be here to support them. With that said, none of us are getting any younger, right? And so we have kind of back to the demographics folks are just naturally coming to a point where they’re deciding to kind of raise their hand and kind of move forward with some of those conversations. So, we have roughly 80 agent stations in the network. So, there’s a big I guess in banker terms addressable market right of stations within our network that we can support over time.
It’s hard to say kind of when exactly those would happen, but my is kind of the rate and frequency at which that happens will continue — I mean it won’t accelerate infinitely, but I wouldn’t expect us to do more than one a quarter, but that kind of feels kind of where we are right now in terms of what I could tell you kind of anecdotally is we’re actively talking to more of our stations now than we ever have in the history of the company. And I think it just comes back to the demographics
Mark Argento: That’s helpful. And just also maybe just remind us and if it’s changed at all but the typical structure in terms of part upfront and the rest that kind of an earn out as they hit their bogeys in terms of performance post positions?
Todd Macomber: Typically 50% upfront and then we’ll do typically a three-year earnout. Obviously, the targets the EBITDA targets.
Mark Argento: Great. That’s it from me. Thanks guys.
Bohn Crain: You bet.
Operator: Thank you. Our next question is coming from Kevin Gainey with Thompson Davis. Your line is live.
Kevin Gainey: Hey Bohn and Todd. Actually to kind of continue the M&A kind of piece for agencies. Do you guys have maybe like a quantifiable EBITDA contribution that if you went and acquired theoretically all of those guys it would add up to.
Bohn Crain: Not off the top of our at top of our head, No. At least nothing that we’re prepared to disclose or kind of talk about on the call today. But I’ll take that as a homework assignment and maybe that’s something we can work at some future disclosures and then we would be in a better position to talk about it on this call.
Kevin Gainey: Yes. I just want the size of the opportunity for you guys from that standpoint.
Todd Macomber: We just don’t know what their operating costs are, right? We know what their gross margins are but we don’t know what their operating costs are. We don’t they’re not going to share that with us until we get in a position where we’re looking at the acquisition. So, part of it is known but not the complete picture.
Bohn Crain: Yes. But at least — begin to at least dimensionalize that as you can look on the face of our income statement at that line item of operating partner commissions, right? That’s our single biggest cost, right? And as we buy in the agency stations, that cost will go away as we convert them to agency stations. And then that will manifest itself as margin expansion, right, EBITDA is a function of gross margin. There’s our non-answer answer to you.
Kevin Gainey: Also maybe if we can talk about how you’re thinking about the second calendar, second half? What conditions or factors would you think would lead to that pickup?
Bohn Crain: Greater consumer confidence is part of it, right? We — I think generically we’re starting to see ocean volumes start to pick up, pricing start to pick up a little bit. So that’s encouraging not just for the ocean piece but for the inland piece and just kind of supply and demand dynamics for the inland transportation side of things. Hopefully, that will continue to improve and kind of the geopolitical stuff will settle down, but again, that kind of remains to be seen. But we need a little better balance between shipper demand and transportation capacity and some of the weaker hands are being forced out whether it’s yellow or others, that’s helping the market rationalize at the end of the day in the, I guess what they call, constructive destruction that’s going on in the market.
Kevin Gainey: I appreciate the insight. That’s all.
Bohn Crain: All right. Thank you.
Operator: Thank you. [Operator Instructions] Our next question is coming from Jeff Kauffman with Vertical Research Partners. Your line is live.
Jeff Kauffman: Thank you very much. Good afternoon, guys.
Bohn Crain: Hey, Jeff.
Jeff Kauffman: Hey. It’s strange. As I sit here and kind of listen to all these earnings calls and everybody’s forward outlook, I think the consistent theme is, we feel we’re getting close but the fog is a little thicker and visibility isn’t that great right now. Would you disagree with that comment?
Bohn Crain: No. I think that’s very fair.
Jeff Kauffman: So when you talk about we feel like things could be turning is it more just — well, we know the inventory destock is done, we see trade starting to flow, ISMs getting better or are you actually seeing things maybe in some sub-industries or some parts of your network that leads you to believe that we could be bottoming on the curve here?
Bohn Crain: We’re seeing some early indications of things improving on the ocean — kind of on the ocean side in particular. So that’s helpful. I would say intermodal and truck brokerage is still probably the toughest area at least for us. And good news bad news it’s the smallest piece of our business. But that’s been certainly a tough go in this environment. Again at a high level our core forwarding business continues to do reasonably well. Canada continues to do reasonably well and international ocean is starting to improve modestly. It was slow going in late November and December and early January as we’re watching, kind of, weekly postings in February things are starting to lift off of those lowest levels. And so hopefully that — and there’s obviously some seasonality in that that we would expect, none of that’s like revolutionary right?
