Landstar System (LSTR) 28 Oct 172017 Q3 Earnings call transcript

Good morning and welcome to Landstar System Incorporated Third Quarter 2017 Earnings Release Conference Call. [Operator Instructions]. Today’s call is being recorded.

If you have any objections, you may disconnect at this time.

Joining us today from Landstar are Jim Gattoni, President and CEO; Kevin Stout, Vice President and CFO; Pat O’Malley, Vice President and Chief Commercial and Marketing Officer; Joe Beacom, Vice President and Chief Safety and Operations Officer.

turn over to Mr. like I’d the to call Now Jim Gattoni. begin. Sir, may you

one open morning XXXX ask With call permitting, This to Landstar’s welcome that questions. will for additional we When Quarter limited Good a to time Call. each Third participant and two-question questions, line the for Earnings have Conference be can hour. I back we limit. conference circle

Securities statement not Litigation call statement. begin, Act The the following under let the forward-looking Safe a that historical we Statements Private Before XXXX. are following Harbor Reform conference of made based me is this statements. facts read during on are

factors at is, During the and including, legal statements historical update to other place filings Form Landstar’s revise in a operating continue by that fourth events to on financial that this those for company’s actual into described for per quarterly uncertainties expect information, Recognizing time quarter, environment relates information. reliance revenue hauled to end in but uncertainties number the to make XX-K outstanding of been truck mandate We Landstar’s billion the fourth the and for strategies the to in first operational, year, being quarter over range. demand may business forward-looking that towards the call, fiscal strong differ the our this risks conference and history, significant XXXX of with undertakes the contain We’ve objectives, not ELD forward-looking forward-looking both is was cause growth information and Investors by limited obligation issued revenue Landstar should we third SEC load. broad-based nature, no anticipated. to I and increases or the the back such this risk from from materially quarter. and loads time. results guidance publicly backdrop, we strengthen upper to the the could subject any or environment undue experiencing of of Overall, risks, the services. and in end information plans, saw XXXX detailed Landstar. in half Such These for the strong, results industry-wide risk to $X not section time or taking effect ecommerce expectations. have and

third results top strong financial earnings and revenue, and numerous services Southeastern provided credits XXXX for the for also significant income Landstar storms the performance tax records, that very set Rico, impacted operating gross from the established quarter results and our States of financial per a as core by diluted company reflect returns. quarterly all-time year amended profit, relief prior On the deductions operations. business, in the share for Puerto Our taken continuing a Texas, transportation benefit from of support and efforts United records

of operation facility through expanded with more XX service new the terms the to executing cross carriers its quality new opened to intra-Mexico the operation and of crossings, inside opening opportunities. transportation, increase new and border Metro, relationships and Laredo new company On of in the third we continue both had beginning provides Mexico. to our announced with attract transportation BCO on Landstar XXXX, facility significantly we very ended cross provided the this in enabling its number BCOs, brand we Texas, a September, capacity the record via work priorities. also customers transload quarter in Laredo, strategic our border cross truck And Landstar to In intend as border all-time trucks quarter of a drive we Landstar through of Mexico. especially capacity high by network. side, we positive In new our our

dynamic loads a We completed BCO took working tool. a we and tool integration to businesses. months. with new side, several We agents technology steps the and over our our they are XX to pricing of we to have them of on we very number tool been past can for respect application an the new enable on and agents better monitor all manage better released their positive launched forward of smartphones, access a the management transitioning for moving We the the our to of new our legacy system addition and to improved mobile entire analytics our launched agents. initiatives population with In to transportation so our available system new on

BCOs excited initiatives about to technology in we technology tools look the and quarter, based We’re during the forward very deliver future. our agent new the continuing delivered to to

our Now guidance in from quarter the XXXX Revenue the results our XXXX, third XXXX expectations. quarter in financial provided previously on significantly exceeded July comparing earnings our quarter call. the we to second conference third XX,

be third we September. to gross leading revenue to and second that for that late in million Texas, the United XXXX Southeastern the revenue $XXX expected in call, quarter of August million, third services $XXX Rico included Revenue indicated profit the Revenue and million. support of relief Puerto impacted During efforts $XXX third second to States was hurricanes record quarterly in earnings quarter the quarter XXXX relating our we $XX in conference similar million. of XXXX to XXXX quarter quarter

diluted earnings impacted quarter guidance with items call during that in quarter, conference the second share was second share $X.XX $X.XX, third unanticipated share call, actual $X.XX, During at was of we earnings provided as our quarter. diluted several diluted per the conference our earnings that per to per of earnings quarter earnings

in regards from under third include prior did issued returns it amended third earnings of the relief Section quarter nor generated efforts, in deductions guidance year’s credits for did the in in services XXXX. revenue support not tax tax XXX quarter include September the benefit previously of tax for and Our to

a revenue Our lower previous provision BCO for claims guidance also costs and of assumed incentive at insurance compensation. and X.X%

to increased earnings $X.XX and in effect by diluted diluted share was due earnings per the efforts of quarter, these While for $X.XX the Overall, of to services diluted elevated provision to tax share and $X.XX. a third costs and benefit claim compared the incentive prior in insurance contributed guidance. share reduced relief support the compensation earnings a our quarter favorable of third per per earnings the four guidance net items therefore mid-point higher

number number prior over Our year XXXX X% in for the guidance quarter second The over truck loads third the loads called third below XXXX via XXXX quarter. be third quarter to the slightly was the and in quarter. loads hauled the XX% the hauled of quarter second of

loads be per would second XXXX hauled the was second ahead exceeded slightly X%. Our XXXX truck the expectation Revenue hauled load quarter. that revenue of by on on loads load via truck quarter per via

in August The accelerated experienced with loadings revenue the broad and each third increasing During respectively. we and and truck was truck loadings XX% over the September, amongst prior in XXXX XX% month, X%, quarter, in increase by July, industries. year growth based month customers in many

average hauled and to year impacted hauled unsided/platform we truck the year’s load relates experienced load hauled per as by quarter via load XXXX we controlled per via per quarter. increased equipment equipment increased the strong in truck resulted rapid was XXXX on than market Overall the loads the end Overall, the X% XXXX become XXXX quarter loadings on to the XXXX average revenue equipment. third for above of quarter, hauled customers. September. van during XX% in Overall revenue and by were by a XXXX via hauled XXXX X% quarter, loads number quarter. efforts. than of hauled and third hauled air earlier quarter mostly in softness of in the a September in as seasonal and third quarter, third it the in third considering both similar van XXXX experienced environment a Southeastern increases carriers of air prior-year truck loads throughout intermodal impacted truck the previously impact market prior revenue Landstar and increase each third load hauled unsided/platform per by decrease normal loads the load The per in loads hauled third Texas in the length with July via was load, haul length that September load per X% unsided/platform length over Revenue above hauled per competitive, capacity from loads of our and month equipment quarter third X% truck quarter. XXXX X% of and the via more truck equipment, clearly equipment load number on in The XX% loads the in set the van third portion unsided/platform ocean at volume loads to growth environment The to XXXX carriers impacted truck the Revenue September. mostly van the for hauled X% on per After over year haul. per the balanced quarter compared third the via of via being revenue and in storms and uptick and loads second relief equipment the increased via on on the XX% quarter pricing to hauled August third July via Revenue than growth trailing to hook continue X% September while grew in loads followed in above tightening XX% loads capacity. were by month August, was US The the stage quarter. attributable July XXXX rapid load on for was per the in via of the both of described, As The the was has increase of August. drop balanced revenue the prior while ocean change the to strongest unsided/platform higher equipment via X% on from loads favorably van revenue In quarter, via the the revenue support of was BCOs the X% revenue and services a a load each equipment loads throughout quarter. and number lower via increased the in the and higher haul hauled over that was quarter, loadings several load experience loads truck in third rail carriers tightening compared a via hauled equipment Revenue of over on XXXX XXXX in third the driven quarter. on the quarter, third per strong intermodal more quarter, XXXX third in the operations, quarter X% rail van in we prior compared equipment equipment slightly an of hauled I to to number more type. increased

$X profit third XXXX quarter. to Gross from XX.X% to quarter. with of million pass XX% air approximately ocean the the XXXX in attributable the Kevin Excluding relief the the XX.X% that, to revenue related quarter over decreased increased margin third profit more third XXXX financial results. in it support services XX% and And XXXX efforts. on (Inaudible) in in the I revenue, quarter. for will storm third to compared Gross increased

third revenue purchase press in and in XXX the and XXXX. paid transportation of carriers basis agents XX.X% revenue as in insurance equipment, XXXX has XXXX third revenue percentage revenue quarter, transportation Jim due trailing costs the of XXXX. defined Other and equipment were in to sale the purchase on trailing cost. various the Commissions quarter, third gains decreased in primarily million million release. to were to million was quarter, XXXX in rate decreased to $XXX XXXX. quarter as other quarter to increase compared paid million million hauled lower compared claims XXX.X offset in costs $XX.X of financial third rate to Insurance due third by XX% quarter, our XX.X% increased claims represented transportation, the on Thanks, revenue, less information agents, will insurance The cover brokerage and included of were to the XX% impact the the compared by accident so claims Total revenue XXXX to or points in a were partially XXXX quarter, compared XX.X XXXX maintenance XXXX net to truck versus in the to was related Jim. This Gross X.X% compared cost the to quarter of in commissions was a of the prior severity of increased the truck loads profit for $X.X of claims less The claims information brokerage I XXXX to costs in severe carriers. the revenue points XXXX. in third in increase and XX.X% XXXX to XXXX million unfavorable cost The XXXX the higher the $X.X margin, operating decreased claim period, compared a covered mostly purchased development X.X% in a than cost of of third was due the related in on XXXX XXXX in year quarter. as revenue and of to of single quarter net basis XX BCO period. XXXX. to the certain

BCO claims the insurance that believe revenue of to continue over X.X% costs will term. approximate long We and

industry the under compared million $XXX,XXX in be provision quarter. customer The for $XX the XXXX the was bad severe, in compensation provision can debt. XXXX compensation SG&A XXXX increase in third to plans, for $X.X and the in and unpredictable. an in incentive for administrative XXXX. and occurrences XX.X million third provision attributable the in company’s were are third incentive quarter, quarter to accidents increase increase was trucking costs an cost general million the The compared in However, the in Selling, to mostly bonuses

tax to the the and effective was quarter, tax related driven quarter. the in claims was with XXXX of by $XX.X costs, domestic XX.X% number tax historically to research expense related Depreciation stock, provision tax currently Section the has in quarter, a company in insurance benefits common XXXX increased company was disqualifying XX,XXX XXXX XXXX-XX. compared due the as by XXXX. significantly largely Update both approximately This incentive the in the the and in XXXX. of XXXX. to million XX.X% Accounting The As also increased year prior increased the from to year-over-year. Internal trailers severe $X.X third resulting during income the in percent to result, the XX.X% The third by X in credits. implementation SG&A owned periods of controlled million million amortization trailers operating was increase increase for third XX.X% in was Operating income million compared (inaudible) The Code profit compensation the gross in the development a approximated gross and margin drop effective Revenue Operating to in XXXX. XXXX by hauling company’s The X% and over of XXX and company million has in rate in rate increased Standards increase demand benefits for BCOs single which XXXX and the dispositions versus of quarter services. income production from affected in of activities equipment increase number fleet, was income income has XXXX. of of or XX% increased its a accident Landstar profit was tax prior or X% XX.X% in hook XX.X%, year, in XX.X effective The and gross $XX.X profit decline rate, as impacted deduction

purchase There at capital balance quarter $X.X are Jim. million. from Cash of with you, XX-week and stock cash short-term million we expenditures sheet, Looking program. for million, the X $XXX.X for $XXX under was our ended company’s Back available the and period operations were purchase million. shares XXXX cash investments flow to currently the

Thanks, Kevin.

new million to agents candidates XXXX We the quarter. third track qualified $XX.X Revenue to in from agent continue model. the was

not an that down order ELD, or with call second earnings installed were as fewer Monday X,XXX on quarter from XX. XXX our placed ELD stated on an for there BCO of As us trucks approximately had July an than this week,

record to provided the We trucks the turnover third in ended an productivity quarter. majority the implementation quarter loads have second BCOs of in of hauled XXXX a end a been business over vast regulations. number truck BCO the without the a quarter, X,XXX XXXX increase capacity recent increased continue contact of with with quarter XXX and trucks in capacity. third in minimal by above We owners, ELD resulting resulting X% ELDs XXXX of the BCO the by the from expect

the had since highest experienced During turnover XXXX lowest quarter, second quarter. in quarters truck net third XXXX we the eight truck and the BCO addition the

Although, third low XXXX on freight expense during in the the we the increased to in expect the of implementation we compared count, of turnover number mandate We have could near experienced take behalf broker XXXX third this the anticipate to third-party and implementation a scheduled, quarter. the term our to ELD had BCO record hauled to effect impact as our turnover carriers’ little quarter.

attract to Our in revenue third continues of severity to leader the increase trucking pleased the that increase truck trucking single the XX% on of attributed network an increased be XXXX the work to hauled. during in the the is results. number quarter approximately at industry continue responsibility quarter Safety the be with severe, am in extremely third-party will we a disappointing quarter. XXXX severe Landstar, and take this strong topline quarter, a to had a accidents, can mostly With third occurred in we the industry XXXX and we capacity. and said, very occurrences in third loads very I compared to is quarter seriously that are area. that during Accidents XX% industry accident a unpredictable.

included year, difficult operations, fiscal on year of XXXX we a weeks fiscal on quarter of and quarter XXXX the revenue timing Landstar’s million falling of a week extra to into $XX fourth estimate truck Christmas weeks. Saturday of year a XX,XXX Sunday, on contributed Christmas on favorable have will company’s head while timing an based prior We included fourth calendar fourth include plus quarter, Monday ends to operations this the the XX The via the the the recognize fourth XXXX Because comparisons falling As quarter of some calendar. in quarter. the XX the XXXX. also we we XXXX the and of quarter, fourth additional fourth last Christmas loads

fourth the tight relates quarter, anticipation truck even fuel ELD in I prices profit be As expect with on remainder in to third range the as continue the truck above tightening XX.X% gross remain XXXX capacity is late it will quarter, we through quarter, I industry-wide loads quarter. anticipate the fourth slightly capacity quarter via fourth in the quarter. a that XX.X% move hauled be year. and margin of fourth in the to of I XXXX will related expect in assuming our truck to the that more stable. remain to mandate freight per tight in load Seasonally, revenue the of the ecommerce typically increase for

per third fourth truck on the to above we continues via quarter, increase load in remainder level. quarter. fourth I of a on hauled revenue During elevated early at September. September revenue remain the in year significant low expect revenue per quarter percent per October, prior the truck the loads In through experienced double-digit load hauled load via at loads a

loads time quarter XXXX the year sequential comparing volume quarter. When extra to XXXX via previous quarter that quarters’ approximately estimate two described as XXXX XX,XXX we fourth via the hauled truck XX,XXX and added As relief I loads hauled approximately in third services truck favorable quarter quarter comparisons, above, included over support prior Christmas to efforts. the in trends, of of week

be October the any to any, such strong We few insignificant the trends a the quarter, Recent and quarter. through of such fourth throughout of in continuation assumed show volumes fourth XXXX. experienced have weeks XXXX services, the to first expect if not services

I from expect in continue, fourth trends favorable exceeded quarter, the Assuming a experienced hauled of fourth in margin demand continued and XXXX. to The revenue operating truck first I fourth contributed a through to strong share increase anticipate week history. current and revenue above XXXX XXXX range, our XXXX of highest third be X.X% quarter $XXX via quarter excluding timing an loads I quarter BCO and be quarter extra in significant fourth in XXXX. range resulting demand, on fourth expectation the in for the the third quarter diluted in very when double-digit claim loads are to of high to gross be revenue, currently The approximately and XXXX when that estimated share and of $X.XX revenue record Based to Christmas strengthened operating single-digit XXXX of in that the XXXX the XX%. quarter costs we low the to quarter in assuming quarters $X.XX third earnings XX,XXX in momentum three combined XXXX billion. per the our million quarter on earnings anticipate gross a to insurance $X.XX the quarter, profit with diluted began in of The environment and rates services quarter expectations. profit, increase company’s third late that third the reported approximately the in per

agents questions. We and open to available Carey, number the them of capacity to with the haul of can capacity that, and in our tools enable And provide growth, and profitable network increasing our to network effectively more drivers load on we’ll focus to enhancing loads. volume agents we to continue

Jack of our Atkins from the [Operator question Stephens. first is Instructions]

Your line now open. is

at gross a by it’s sort that’s look very relative comp sort growth guys good sort of have and but just strong last there, encouraging. versus obviously your expecting building bit. obviously curious the think the I of I with on of you let’s third am could fourth Pretty accrued just pretty accruals despite start in tough last guess of versus accruals, quarter of I revenue may job lines. EPS in So operating comps. the the you did you comp us you growth, increase incentive think guide, then Jim, this, the Kevin, when the is I if you to given of terms know But year? incentive the net which do we quarter, to income sort leveraging you guidance through incentive what third help revenue revenue year, in a sort sort in quarter revenue and what in what the lagging the some number and the are typically implied comp really of maybe accrual

through most organization I speed Jack side. it we’re of coming lot when the Well at - the where it, think comes revenues it’s broker drive driving from the we a of from

So decline most really greater gross with margin. that just revenue of is a

So when XX.X; of you’re in we XX.X% in we’re that the said, EPS going believe, quarter, where profit we’re I third pressure. margin the gross most at to to be that’s XX.X getting

in So perspective? you sort year fourth quarter better don’t catch-up of panning incentive have in from any a accrual extra the a maybe an of terms out expected just than comp bit

Jack, to In versus quarter year. And going to the rules we require year-end remarks, us said third this X.X is of prepared XXX,XXX is million way comp’s the think to I be. last total for Kevin. book it it incentive was my X/X the the have what

we the of of September, have end it. of X/X as So

comp the for So last there’s going to year-over-year year on an the be to also. increase incentive line compared quarter fourth

like, in if terms Kevin. Okay, about progress question, at third makes a of here I seeing BCO BCOs not implementing pretty in utilization. without hear seems of it you follow-up sorry looks XXX have for lot made my like sort you’re quarter. that this prepared I’m But the of an missed any in sort of ELD point, then degradation just encouraged your that sorry looking that sense. Jim, comments. you And That forward in to -- I’m

trend, bucking is owner-operators do against you kind out narrative because maybe of of lower that experience a about industry. Just something levels when that or into Would implementation. maybe fear you there’s across a there’s on ELD of So that’s utilization ELDs of about out going think us the these of could sort if of I say comment sort think put in as why there fleet? goes translate fleet that think marketplace the your to kind owner-operator that’s you lot we think, that on, of through your sort sort of different that, help

Yes, Joe. this Jack, is

I running for in of think at else stringent paper BCOs time, as long been the auditing pretty fact we’ve our and everybody look our what there has that quite you a logs is logs. those been have

where our now look So probably how they less were that, their rules an I in that together can many a changes ELD, equipment a a can, and at the are haul, they’re freight on they the that basis, selecting many skirting else, they they think impact. BCOs of I a But if the guys select miles market utilization loads get they week. fleets don’t BCOs way. just where than the and the are look lot the things to and and hauling total, bigger have model operate put the utilize as somewhere trying cases as really And you behavior you two less also if there’s think, and spot at

[buffing] our up in of service system. against they’re not it’s limitations like hours So

you pointed because I fleet disparity, why up are a So X% out, great the you think today. that’s of majority utilization’s ELDs the as and have

we a I little us, we’re think how for So operate. in bit different

operate than I think the driver. a BCOs differently fleet clearly

of from is Bank. question Deutsche Mehrotra next Our Amit

is line open. Your

on a just from be question, could ELD is enforced of if this behavior maybe color of year. the going more the bit any ELD and enforcement maybe of starting can on just to offer of if get details also next the guess driver in we you accelerated the would on offer the drivers wondering terms to associations. wanted we enforced state be mandate actually I you on back mindsets qualitative mandate on adoption. thoughts how just color certainly, little up are see I how mandate, I following the X to just So, was April obviously, but some closer the did

we to which that the believe around, right. I driver there are believe So think relief, there’ll some the is horizon. be I administrative industry, come many don’t still think on slow who is the in mindset

of if at System, think XXXX, look implementation us gotten in BCO as something that has slow today. on kind this the path and Landstar end you of at the started the of I kind are the it’s where we we I’ve to been to Jack, mentioned

accepted widely this we’re that it’s way think is the I going. that

still to or some industry Our this a ELD that’s operating forth. from that’s think draw prospective some think, right? and maintain fleet, would driver see you something go to be the mandate see so mile, you’re able going I by a the your earnings allows that. truth earnings them model to an think you’re productivity habits historical you of or can where you’re and I how lot that though, I going if your and to number or the of perspective and capped are if miles operate And the the of you who to based there’s is damaging. driver backwards, curb on earnings gets paid get, What that of are around driver conclusion a perception So

I carriers where the from that’s get commentary there. you productivity some decline out the think of

impressive And then unsided one the mean, the is for loads. just quarter. on up, number my the pretty I in of obviously follow loads

the wanted I about in a you in the little that. of just contract or XXXX. think highest exclude understand it sustainability kind the was how I the sustainability the bit of to company the of better, history think if auto you

business a guess, I was, results this line, certainly from for some company. guess, quarter week, say and earlier month got best did machinery You that good in we I the the big September

about specific So should customer-related was I’m just we that, across a strength better understand, to speaking the in regionally board or driven or pockets, broad think different maybe, by maybe way? trying some it

those XX% comprised kind approximately of our machinery we you this give you quarter. of in XX% durables broad-based. It To idea, comprises revenue. at consumer one is look quarter, in an segment the of segments, serve; different of Pat. the that at and segment, XX% of that if the industries if the segment, top in look you Amit, each metals the the revenue almost the customers And in the those was

So broad-based, see those there’s offerings. you in of can an accounts service particular awful different it’s lot

fairly was, year. just the we and broad demand side And that so I through business think that of robust, the for continues based the demonstrates platform be that and of balance it anticipate the how to

quarter, be to of of saw sustained quick are And period the these wasn’t up over a just do that, expect in bump speaking, I third big of rebuilding the bit But to have time. efforts relief rebuilding because and wasn’t storm, like some little as we of, you to sure you wasn’t it follow the maybe a XXXX. of what of people expect a in didn’t it just sustained be efforts sure that to continue? relatively some that I some there that maybe, seem

to wanted some thoughts sustainability just hear of that? into the So

the industry. great. I I have it of absent demand don’t that Amit, think I that been significant segment had equally storms, any would on impact think of as think the

Scott Our of from Wolfe next is Research. question Group

open. Your line is

saw It’s terms Rob we of of in you long Landstar regions some prior lag Like, in of the go on the areas. on it? of how terms a in of after seeing in for those flatbed actual that see for rebuilding a recoveries uptick portion the hurricane Scott. kind bit Could the in us some give rebuilding little what demand of sort of and context for underlying on terms efforts demand

I’ll Pat. amount of quarter, business in did ravaged mentioned Rob, what response and We not Amit’s to see the a see, in just in rebuilding third the substantial related areas. question. to we don’t this efforts I hurricane is those repeat

it like any but Irma some in can’t services FEMA, relates we’ve post it idea for you to post as of Now and Katrina, rebuild, as today, what it give Harvey. relates to relief I back the provided looked ‘XX,

of So demand and again, any efforts. seeing very does broad seem to what based the industries, be to is we’re across all not a it relief these related

at really look and it outbound you the amount much. If into into the hasn’t inbound Texas, Texas shipments shipments changed of

helpful. is context That really

the about it mentioned a utilization if any underlying with on Your about sort sense comments the we your to saw BCOs, adopted equipment? had with the Could of X%. give recently earlier earlier us you you BCOs up to change, the comments, ELD didn’t think of it they I regard like were utilization sound from

has Rob, really times operating really that see anything that much going been majority of and those, material. with the this anticipate fleet Joe. great utilization standpoint, not there the on the We’ve kind at impact hasn’t is couple an impact I from just them we And think them and been a having of you forward. don’t much tells board productivity to it increase, with with without ELDs looked and of the again, in a or of past,

many One is weren’t benefits as loads. on utilization of year the they of you’re prior seeing running over comparison

you it the to week, But when talk think that. nothing has you’re load was or but year. last than implementations utilization much a the talking ELD utilization; of any up when of second in more time, over also, I third quarter do a it adds had up with they hauled

a sequentially, dropped utilization nicely bit helpful. to but That’s XQ, XQ year-on-year. The little up

count, fair come up that was the accelerated? it In during second the seeing us did but more terms you BCO quarter, load of the as obviously the quarter how is strengthened overall Landstar across to network? from It assume were that loads as that, X.X% growth for trend

count was in in in July, quarter Rob in BCO up and September. XX the XX Yes, XX August,

of to bit from So And lag. can standpoint of on Again timing a qualified to it split a yes, a quarter the there don’t But see I across of a evenly again, always depends continued things. really just quarter. timing and think trying sometimes of get was grow. all on - just little and other guys the you it, pretty again, kind sorts be it the

is question Markets. Todd Capital next of from Fowler KeyBanc Our

is line Your open. now

a trending see the they’ve talk little little brokerage weeks. the your of what on move commentary margins to spot should rates gross guess gross brokerage for we gross gross a margin the maybe It It the into peaked. about expect bit X of start down you you’d profit that feels from on like feels spot for be margins maybe been like in to where guidance lag, margins a Shouldn’t of on what’s quarter, little When or fourth be? higher up and period bit, just we’ve to kind the when that’s come again? normalize? rates coming would side. start X a up significantly the profit most expectation that Jim My to can higher is bit

you. honest be with I’ll Well,

of I into ecommerce that coming mandate. that continue ELD end capacity into the going at at crunch the crunch least would this starts We is expect mid-November to about the think quarter. the first of year between and the drive

for to us capacity brokerage bit It continue the down a least usually expansion dips the February, January, margin up. the fourth little side from in next see through months. loosens three quarter. don’t when in I going But it’s at So

Okay.

rolls saying? compressions, when that off, you’re So (inaudible) seasonal the the stuff stuff that’s sequential that what’s is picks up driving and then what

Yes.

tightness that is dislocation the what you But Okay, business volume real when would you market? you lot the volume the perspective, that perform, to just that September, it. have difficult flatbed, the think a like the it’s out. comments saw that did you’re and that very But a just model quarter, commentary. strength in the saw how strength the had And way this, I got your based very in that’s that of was expectation performance market that Pat model you you given just on opportunity positioned? picks some probably should And tease strength then the on the know in up and an on freight? I here broad with this good about dislocated the unsided the see been in your that about when that, mean perform strong see

would storms probably Basically it projected I actually had like we than some was than and we and have performed like related, a know more if like projected differently? were I that are think that what made coming into overall Yes, think of more have have saying even storms things tight. tightening storm felt more September are in would getting we But tightening you’re would feels it I It just that. there’s I projected. September, capacity. to but it environment with more balanced they we it a up, an then heading the demand, seems just

just to combined, told the out of storms. you would storms accelerated expected there contribute I think with have the feels think were than better. demand’s the the I’d I But just faster we I think and So it me market coming. now, storms right we had part

That helps.

number I weather that think was that but it you gave on truck number, Was right the related in XX,XXX the here side? quarter. us the was truck a loads

Yes.

$X XX And then of related the balance the million would and was that piece related have on that it so side? storm for truck been million ocean, storm the and of air was

Yes, would XX have yes. been That truck.

next Buckingham Brooklier Our from is of Research Group. question Matthew

line now Your open. is

think for truck (Inaudible) to October? have Can October’s thus do to you you I about you XQ. talk on that growth volume talked or far hear in number the them where trending.

XX% double-digits, low through low XX%, October. about of looking first about the three it’s Well, to single, it but is weeks

any you think that’s freight --. you and that I anticipating pretty mentioned relief But not happening October is Okay. in minimal, are effort

that in Right, yes, be XX% this insignificant. Yes, just I gave. wouldn’t that and number it’s

just maybe you as flow. increasing has then trailer plans your cash I for trailer fleet a look a the ‘XX, talk about with to your you to trying for sense like Okay, wanted to about fleet. focus get what and if business. and drop could been could the inclination and for if talk that have know any hook I’m CapEx

I’m not conversation. for fleet we’re the prepared trailer sure

we quarterly won’t so cash a of will on basis all newer but is will number is your flow. it been, our on the trailer most million Obviously, cash fleet our are on generally best of We million cash years X lease, than be CapEx. BCOs. CapEx. trailers spend in $X But Obviously and the $X it’s XX million for to to adding million be

up, be and be obviously, So as a to to climb the but system, goes drop demand you’ll trailers that. lease. count if going that trailers as capital yet to we’re have more hook the to We the will BCO But in adding number put continues don’t for see well.

we’ve every coming always just (inaudible) trailers out hold there’s our through. year. out. projected (inaudible) I We years, don’t the replacement we think X trailers of about, Well, so

We we’re many to have how of haven’t finalized (inaudible) BCOs projection a them. going

So number we don’t now. right growth have incremental in the that

at have go-forward question continue are don’t - time, my of grow number they’re and your point greater being, going business if buy this you part of of in you CapEx a still Do to do basis? the number hook the drop to a on you to I trailers guess during anticipate XXXX? unsure anticipate

BCOs extent them, to add the we yes. to Well haul can

Bascome next Susquehanna. from of Majors [Operator question is Instructions] Our

open. Your now is line

the the return through seems over persistently how consistently XX% the model, stock cycle to your a term avenue in growth In shareholders? of recurring just moving way much to quarterly the via repurchases. net able a few in as payout’s this reward earnings cash be your limiting considering you’re to business valuation earned (inaudible) about of has consistently cash lot your I taking a generated the historic the higher to quarters considerable materially believe a your but year, in You as longer Board into your of is last dividend. that capital account that’s dividend And

about right to those dividend But we cash, had don’t in cash all up prefer small more stock program grow, at dividend buyback What think the now. piled similar a we what a in year. dividend. - options. ahead. talking a if the continue we the be we we of did the on though special run stock, up we prefer XXXX, we we’ll But too to are than the end I we’re a The discussions prefer did is considers really with Board sitting much

we the like least buyback in So all dividend the likely options would a do the and But quarterly the on be increase program chance are to special. buybacks, flexibility the table, the special the dividend. the because

that. appreciate I

of much with kind done to So valuation What maybe we next or is on. when kind should quarters? as that guess as going outcomes come you’d sheet higher like as balance over we on about if possibility the how increasingly we should as range think time dividend to high, time of which a a respect it to about seems like the few remains I cash magnitude, keep line think moves think up the will that of the that’s it special

here, we about pulling cash. back than years, we’re kind comfortable you do, if the but out target are the so rolled it and there done a have going I saying cash balance or talking now, have five said, like at have larger than I been - to the we on times don’t think we’re down. we done last of history, specials how look Again have at the much year. that’s (inaudible) all don’t we’d I we’ve over with we’ve six what we must But Well, we years is of end the (inaudible). cash

is question Seidl next from Our Instructions] Jason Cowen. of [Operator

Your is now line open.

some brokerage last Wanted a one of a little on talk night, some bit almost back minute, looking nature, about heard increases larger address contractual. anything transactional contracts you even could are know might in you customers rate I that. that’s if all going for a to on the we’ve and smaller concentrate and the from on know brokers then I but any you to guys have, don’t for

Jason, that customer’s able or person bids either; and that where lot see really us enterprise coming increased; the of rates that another the about longer with I service tells going A, to have the from they’re bid out coming perspective nature are identifying it which the rate, what customer’s agent we previously identifying and kind think relationship to that to And of needs. in, that at the putting of a B, freight they we fulfillment our and in, to see the constantly move a meet bids lane freight no if carrier. think see don’t we is, nimble more is the the business back challenged you customer, pricing the from they’re perspective owned

more to they’re initiate current operating current the very inclined that status market’s we’re demand ultimately promises holding discussion out you’re the currently have capacity and you’re and place. So to in I are is even your those the at that going of a think rate. that’s there, the providers aware as capacity shipping and move freight community get capacity market to to tight to opposed the if the the in, with to rates the fulfill going certain customers, your Because to

that’s stage, don’t this (inaudible). think is That good any I shippers was surprising color. Well, market at appreciate the I Yes, this so hear. okay. to my

further closing you, call no would show turn back I sir, for I time, like to this to over remarks. questions. the At

speaking you you on nice currently XXXX February call for thank Carey. and fourth conference And Have weekend. scheduled quarter with I again to forward our look earnings a you, Thank X, XXXX.

disconnect call Thank you your conference the lines for Have time. Please this morning. today. good at a joining