Scott Andrew Schneeberger: Thanks and yes. And you did mention the acceleration of carrier exits in fourth quarter, and you are adding new team members. Maybe elaborate on where you’re adding new team members and sneaking another one into, what are some areas of strength and weaknesses across your end market? I’m just curious where you’re winning and losing there?
Drew M. Wilkerson: I’ll take the first part, and then I’ll let Jared take the second part. The first part on where we’re adding people, it’s all the customers. We’ve got a lot of great relationships with existing customers, but we’re also bringing on new customers. And to have those people come on and be trained up and learn the freight industry, learn the differentiators for RXO takes some time. So we continue to invest in the people who are talking to customers and people who are building relationships with the carriers that we’re partnering with.
Jared Ian Weisfeld: And Scott, it’s Jared. Good morning. From a vertical perspective, all of our main verticals grew on a year-over-year basis in the quarter. Retail and e-com specifically was up 21% year-over-year, which accelerated pretty substantially from last quarter attributable to not only overall vertical health given the customer inventory levels that Drew talked about, but also RXO expanding business at existing customers. Additionally, Food and Beverage showed nice growth year-on-year. Industrial and Manufacturing did slow down year-on-year, but it did still grow relative to prior year.
Scott Andrew Schneeberger: Thanks, guys. Appreciate it.
Operator: Thank you. The next question comes from Jordan Alliger from Goldman Sachs. Please go ahead, you line is open.
Jordan Robert Alliger: Hi, morning. I think you mentioned October some softening in volume trends year-over-year. I’m curious, would you assess that, that’s more of an underlying demand softening? Or could it be amped up competitive pressures as folks – or other brokers are trying to stick around and go after the business harder?
Drew M. Wilkerson: It was more of a demand softening that we saw, and it was broad-based and it’s really across all verticals. Obviously, we did see an impact with the UAW strike, but it wasn’t just limited to automotive. It was broad-based across all verticals. But I do want to be clear, we are still growing volumes on a year-over-year basis in the fourth quarter and continue to take market share in this market.
Jordan Robert Alliger: Okay. And then, thanks – and then I know it’s still early on 2024. I think you mentioned in the fourth quarter, though, expect sort of maybe usual seasonality on EBITDA growth. I mean all things equal, do you think we could have normal seasonal sequential EBITDA patterns as we move through 2024? Or it’d be times where could it be less earlier, more later? I mean is there a way to think about that?
Drew M. Wilkerson: Jordan, I think there’s still too many unknowns for 2024 to call that right now. As we sit here today, we’re not sure where interest rates are going. We’re not sure what the Fed is going to do. We’re not sure what fuel prices are going to do. And those are three big factors to be able to call out normal seasonality. So we’re not at a point where we can call what’s going to happen in 2024 yet.
Jordan Robert Alliger: Great, thank you.
Operator: Thank you. Our next question comes from Brandon Oglenski from Barclays. Please go ahead, you line is open.
Brandon Robert Oglenski: Hey, good morning, everyone, and thanks for taking my question. Jared or maybe Drew, you guys did talk about normal seasonality, I think coming off the fourth quarter being down from an EBITDA perspective. I know that’s not necessarily guidance, but can you just help us what is the normal step down in 1Q EBITDA? And then I guess maybe a longer-term follow-up to that. What’s going to be really required here to demonstrate the operating leverage in the model, especially given that you think the bottom was set in July. So what incrementally do we need to see from here?
Jared Ian Weisfeld: Sure. I’ll – I can start and if Drew can chime in as well. So it’s Jared. Brandon, so you’re right, from Q3 to Q4, we talked about a 3-year historical average growth has been about 20% on adjusted EBITDA sequentially, which we expect to achieve roughly that growth rate from Q3 to Q4. Heading into Q1, there’s been a lot of variance. I mean if you look back over the last 3 to 5 years, that range has been anywhere from, call it, down mid-single digits to down, call it, low double digits. There’s been a lot of variability over the last 3 to 5 years. But that’s the appropriate range in terms of how to think about sort of the historical bridge from Q4 to Q1. In terms of incremental contribution margins, we touched about this a bit in the prepared remarks.
We expect strong company-wide contribution margins in Q4 with that sequential EBITDA growth from Q3 to Q4. And longer term, when you think about what we’re doing here in the business, not only are we continuing to strategically invest, and we size that opportunity at roughly $20 million to $25 million of strategic investments in 2023. But we’re also taking actions. And year-to-date, we’ve achieved cost savings of approximately $31 million on an annualized basis. That’s going to achieve – that’s going to drive really, really strong contribution margins going forward.
Brandon Robert Oglenski: Okay. I appreciate that, Jared. And then, Jamie, talking about leverage, I’m looking at your chart in the presentation. I guess you have a net cash position now $4 million. I mean, is that a proper level to run the business? Or did you draw on the revolver since then?
James E. Harris: Yes. So Brandon, when we redid our capital structure – updated our capital structure, really, what we did is we increased our liquidity on our revolver. We had a somewhat inefficient use of cash. We took that cash, paid off the term debt, picked up, let’s call it, 130, 150 basis points of negative arbitrage on interest. We’ll have an excess of $1 million of cash savings a year on interest on a pretax basis. And so we feel like, at the end of the day, we had a big pickup, a nice pickup in interest savings, kept the exact same liquidity. Our net leverage was the same. We feel like from a standpoint of running the business with that level of cash, we’ll dip into the revolver from time to time as the normal cyclicality of intra-quarter cash flow occurs.
