Landstar System (LSTR) 26 Jul 182018 Q2 Earnings call transcript

Good morning and welcome to Landstar System, Inc.

Second Quarter 2018 Earnings Release Conference Call. All lines will be in a listen-only mode until the formal question-and-answer session. Today's call is being recorded.

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

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

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

you, conference call. earnings Prerna. second XXXX quarter Good Thank morning Landstar's and welcome to

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

is, During the and including, legal statements to Form Landstar's by that to financial this uncertainties relates but make XX-K Landstar's the for strategies to operational, year, may business that call, fiscal conference contain objectives, Risk not forward-looking publicly information and or limited SEC nature, risks results or and and section we not any subject no risks, in described information plans, XXXX detailed Such expectations. information, actual differ from materially and such in other to on information. anticipated. revise to cause Landstar time-to-time. results Investors reliance historical filings These and obligation place should could events update the forward-looking Factors or those risks uncertainties undue forward-looking undertakes from

outstanding Our performance to Landstar results record the in XXXX achieved financial XXXX on quarter quarter. second build our first continued

earnings income share profit, and records, set operating before gross quarter second time revenue, income second record. set while per taxes quarter diluted income quarterly Second all a quarter each

to billion. guidance to provided we of During revenue be quarter $X.XXX conference our range first call, earnings second quarter in $X.XXX a billion XXXX

quarter range, exceed XX%. The the quarter range revenue to anticipated of to per via on XX% Revenue truck guidance XX% hauled second exceed above loads of billion, XXXX in via loads $X.XXX prior load slightly to a the second XXXX over loads per quarter in a quarter, is via second revenue the year truck hauled XX% quarter. number XX% the revenue truck XX% while quarter, the of of XXXX our second second and XXXX above quarter over on increased second via hauled Our guidance. truck and second hauled XXXX loads increased XXXX XX% to XXXX number the high-end in in approximately quarter second our load the

quarter share earnings $X.XX. diluted second to diluted earnings be share a quarter Actual for guidance called per was to per in of range second $X.XX. Our $X.XX

second costs actual revenue approximate Our Insurance claims diluted in of negatively BCO in more insurance share and Kevin when comparing results impacting per will insurance our minute. in to to BCO the speak our quarter. quarter X.X% would guidance assumed quarter, guidance. about of costs a earnings the $X.XX anticipated claims and were by X.X% revenue

the be truck strong. of to was and with quarter, month increase broad the revenue storms expect first second becoming June, the truck, per loads to August Texas. XX% year the load September a comparisons in in that prior from in month quarter. approximately each hauled and continues remained on per on in difficult single-digit over pertains with quarter truck XX% May, XX% the via June. by in quarter and consistent XX%, over quarter, and number the loads hauled loads of respectively. increasing of month month it by related we experienced April prior May The via truck As Revenue growth the April, by XX% in to each loadings via industries. volumes I and rate year-over-year to XXXX more truck and growth similar XXXX low July experience many Seasonally, in we second second increasing based generally increase be load to and growth September for Landstar U.S. in customers our strong hauled the the loads load the Southeastern Demand XX,XXX amongst due experienced services in hauled to impact the to

on from revenue from by Revenue was and in the throughout agents. was the the $XX.X was in from above XXXX increase in Revenue XX% of quarter that hauled load XX% hauled in loadings to expect much quarter XX% second revenue the The I XXXX our loadings. to rail, a number ocean the in in September. air new second year-over-year agents via growth increased loads from and revenue and per more Rates driven with strong, second will since second the quarter. quarter. per comparisons the almost revenue via second second million $XX.X in an market. per the highest clear of quarter new X% ocean and year the truck first Second a continue increase agents by increase contributed remainder The new existing from revenue truck ocean a the rail, XXXX increase beginning quarter agents of and load plus quarter than tight of continuation higher in be was result revenue indication of million quarter and air rail load, XXXX in revenue new loads record agents, of a loads the the continue difficult was carriers X% air

We the agent owners, trucks ended capacity XXXX continue our XX,XXX above qualified by count. provided record and year-end to We model full. the agent pipeline with trucks XXX quarter business candidates attract a to the remains

second XXXX XXXX the number a recruited During to the quarter. slightly higher compared we quarter, of second BCOs

quarter. in per truck XXXX utilization XXXX increase. X% quarter second in prior experienced in of quarter. to truck Loads BCO decrease offset XXXX the the The compared second increase hauled partially over we highest fewer our via by defined in the count, the BCOs per on BCO net significantly during XXXX (sic) increased X% was trucks second quarter [XXXX] the loads quarterly net second higher quarter a number as year second as truck cancellations ever BCO However, quarter,

third-party mandate carriers our on on to ELD XXXX network an providers. and increase continues quarter. included number behalf half. insignificant strong profit XXXX gross XX% impact by that during amount the owner XXXX profit million in increased relief percentage dollar highest the truck attract the disaster the first our by freight expected, capacity in quarter approximately of has represented operators compared revenue. With other haul quarter second $XX is prior productivity or excluding had second and our This growth, to significant Gross record quarter; a periods BCO ever As over measured and qualified third-party

other financial his with Kevin quarter second review Here's of information.

information quarter. certain second Thanks, Jim. Jim XXXX our has covered on

to revenue quarter $X.X $XX increase compensation to $X.X as The wages Total revenue XX% from mostly XXXX. compensation SG&A million quarter compensation benefits. expense and X and will year in insurance was the $X.X to plans, by second of our due hauled the were and per in the were and was XXXX to in transportation basis increased of in and the million This second partially the in claims Other cost compared by the second commissions general company's million XX.X% an $X.X various second truck press XXXX of revenue bad The of increase claims increased to was XXXX. also $XX.X tax XX.X% income was costs XXXX XX.X% of the million the claims compared expense rate million as revenue Tax the tax Cuts second to The in XXXX a revenue effective increased under of the increase $XX impact profit bonuses million XXXX in XXXX less costs on million the effect XXXX X.X% quarter, transportation second percent by of increase a by income increased to $XXX.X percentage $XX.X driven second increased cover XXXX on profit XX.X% the Depreciation in to insurance XXXX. The XXXX-XX. offset in XX in XX.X% Update quarter. costs Commissions Standards year-over-year. The purchase loads as administrative in decreased versus $XX.X purchased compared compensation income XXXX the X.X% quarter gross claims gross truck carriers. points quarter by for percent Insurance revenue was equity load and XXXX excess in was in of to increased and benefits costs, XXXX XXXX. attributable SG&A BCO second and increased and due partially second rate settled, earnings insurance XXXX of impacted in XX% resulting second the contractor of compared XXXX. to a quarter, in paid to to brokerage of margin of equipment the was financial quarter in the and was in rate contributed rate Operating unfavorable represented increase by to both second compared the XXXX. quarter, decreased in accidents by the was partly as primarily as Quarterly BCO million revenue million information of were million development quarter, brokerage year period was arrangements. in purchased profit agents, for in other $XX The $X.X in was of increased favorably second which in gross XXXX gross compensation the increase compared margin, XXXX versus in net provision costs the to carriers. to profit, This stock, revenue effective offset incentive less by Operating prior XXXX in quarter. quarter divided basis of due were stock or defined the $XX effective BCO dispositions by brokerage was $XXX.X increase $X.X $X.X in of quarter included number XXXX paid in company-owned agents of The in of as Gross XX% to the increase increased offset XXXX. XX.X% release. was the were revenue due XXXX, quarters, the due costs. in as common decreased to to the trailing the amortization the due million, Act for million debt. The in mostly and of to compared versus XXXX. in an purchased primarily and to tax revenue I claims XXXX. from an due million million impacted XXXX. increase the Commissions agents quarter revenue company's of trailers. points carriers of in a X.X% by cost compared were million compared mix, Accounting operating in in transportation incentive operating was in profit, of So higher percentage compared to or of XX.X% and The or truck second Stock in $XX.X was XXXX disqualifying in quarter to transportation the related XX.X% cost revenue XXXX the revenue X% increase a severity million XXXX in four Selling, in quarter favorable second prior to XXXX from to cost XXXX than XXXX XXXX. tax million periods costs the second of mostly quarter. Jobs in expense the income lower percent the and rate XX.X% to tax benefits The respectively, and in the provision was three variable claims, revenue quarter XXXX. primarily

quarter was from we XXXX Looking $XXX capital at balance and $XXX million. our flow $X operations for million. sheet, expenditures million were the cash and cash of with cash ended The short-term investments

programs. company the million. of are its you, quarter, approximately Back approximately available During purchase to common stock shares at the company's $XXX of the second under for cost Jim. an million X aggregate XXX,XXX purchase purchased XXXX stock shares currently There

Kevin. Thanks,

and tight. I higher XXXX than expect per rate June As to slightly quarter. XXXX first similar third grew load I throughout to into revenue will quarter to capacity of one be few those higher May, per quarter. rates it revenue expect the growth has in true month of XXXX, gross exceptions, April expectations, third relates weeks revenue profit by third historically few been revenue and higher gross Truck in that our July. continue and quarter truck that quarter. XXXX month the June trend I being profit continue growth anticipate prior fairly to hold the to historical With in third at carried in load the in a second over

However, unseasonal increase difficult year-over-year more comparisons August September XXXX September in load in revenue to in per load get revenue per truck an due XXXX. from

per expect via in the higher XXXX hauled the a similar to truck third Considering truck, in trends, year than impact Assuming year $XX number load a via the XX% relief included the on hauled over that XXXX U.S. it third current and truck I via of to to Southeastern support trends loads I loads be hauled million of quarter quarter be via expect prior revenue range with XX,XXX to revenue XX%. be the Consistent third noted in approximately historical approximately should continue, XXXX related number hauled of disaster truck of storms second loads efforts to that quarter in Texas. the comparison, XXXX in loads quarter.

third have in quarter. any the not We such assumed services XXXX

I operating XXXX. be number load increased half first the quarter per XXXX across disaster the third diluted the profit XX% in quarter margin, trends, to the be stable in BCO in first revenue, $X.XXX of anticipate the revenue gross range I'm and in Based record XX.X% XXXX above in to loads quarter XX% point to in assuming significant results to XX% hauled on second pleased the over through in capacity a to pace relief half on Landstar the revenue continuation XXXX for compared claim assuming highest XXXX quarter the per share range expect quarter be per quarter. the extremely of will view, continues I in loads recent earnings expect to third hauled insurance More remains ever a continue number loads second in expectation third in fact revenue been XXXX and by start it to to the $X.XX. the diluted margin and via currently number number was $X.XX revenue, we in gross a achieved of to modes. a that In increase anticipate range on pre-tax two to revenue truck and $X.XXX revenue loads Overall, income XX% decades, history. hauled second for be of my loads that of third I of XXXX company's Based XXXX impressive increase I similar approximately the and range be of be quarter diluted XXXX XX.X% quarter billion the based of profit, of quarter, hauled, a share any all from company's our expect at quarter third to the fuel tight. the profit as prices and income approximately earnings quarter, any truck remain third quarter in to and highest third were a costs the has truck are the and range. on that XXXX hauled environment Excluding quarter with of share to gross in via efforts overall XXXX earnings strong per Landstar the history. as was the X.X% last the second the third our XXXX on billion. the

haul and available focus to capacity to loads. load volume on our continue those growth increasing profitable We

and to for continually tools of provide thousands remain on technology-based enhance owners large our focused also and small the network. strategic our business in priority We

and of The to shaping XXXX with first a questions. historic many move We've had truly start half believe be a records has quarterly will year. XXXX Landstar. for Preema, that, witnessed new up we is all-time to remarkable And

sir. much, very you Thank

Bank. from comes question first Deutsche Our Mehrotra from Amit

Your line is open. now

morning. Good

Thank Thanks Okay. for morning. question. taking operator. Good Hi. the you,

sense see But you strong for getting months, six growth. talked the and strong, what There XX-months, than do on lot order today, and of just just months get revenue more you months? about I'd what kind is think the the it's the obviously this would market be shortages, of market? the a outlook supply just just next the months, you Just spoil creep little the maybe Obviously, sense it's makes about driver talk like to thoughts So truck we're difficult, XX given months be any the very unbelievably XX given side, you more next seeing you a sustained strength different market as helpful, and if even, look underlying or the I ELDs? love three truck kind time trucking X,XXX comps kind obviously crosscurrents bit the used of just of, to XX that health you is think over pricing, wanted of ultimately can think. can for maybe do as there to of old out but will this (XX:XX) in I a comps move

have loosening. the Well, the feel see for an though go And that's economist, long kind again, the I have I supply quite remains have far now, we of not think very capacity disrupt us, the ordering they've the as driving in hard be term to we driven into sitting you kind see internally I today, anticipate tight. going going don't a drive trucks? the that six any driver system of to trucks been my having filling of guys speak – truck to don't the you demand this a it We I hard a mean, trucks? focused. it's we're biggest concerns then putting still how being what have predict any is supply. a have the still point. effect capacity seeing. I But the environment. environment it's up is next that's forward. going don't to short we're to over we time. a and don't And of there's what I who's more think But months; to that any XXXX, But for think, see mean, have out. this Who's trucks? of been – think, Who's here higher demand much creep, we see like loosening – orders come we truck when where issue historically, But to at And that's I even side. way than the you here, the into pointed – to of this lot about out, that's concern it

pockets Okay. That's demand strength, on same environment a But are related as to mean, the you particularly characterized to subsector economy. of around certain kind of maybe there the side, anything strong assume just to the can the markets. I of that I'd kind helpful. very it's that kind Gulf you've previously And of broad the kind demand based. thing. of is specific energy point the of

And look it's it's broad-based. look at relation to you'll is at agent And a of, that's earnings, model variety current diverse, very to this business you so Amit, put of bring the with the our and group, our broad-based. think as about I kind you that if in would serve characterize and Pat. the table they industry slide that again if environment we the out accounts.

that's commodity In category, within fact that only one very that but quarter-over-quarter was the sizable account the category category. shrunk energy largely

broad-based. So it's very

it. Got

there price. Obviously, I'm relative that of I and dividend. for I decided terms mean, the any just bullish to you guys done, staggering. for dividends, was me as a I'll One of decided off. one thoughts But around guys thinking to Okay. decision. the have to more terms the in The why repurchase in from given guess, share it opposed favor in understand just of that decision your fact do then to maybe what of a I trying the capital have your that's quarter you mean, allocation stock was recently historically. you lot hop pretty pretty, outlook that last maybe

No.

for opportunistic in philosophy Our on hasn't changed being marketplace. a long-time the

from I think up we way to in. through XXXX all saw weren't and the get XXXX, opportunity in what was, you to we market saw and an September there the

I'd the up the So on we're we that opportunity quarter, pullback that had that I had a we and after catch that at say point. liked doing, think, did we first probably the little

those Speaking situations really a see the balance dividends the the end we've certain to of where occurred and on opportunity with just bunch sheet the we the year, special at done in of the past, under an cash up ended didn't in market.

balance to multiples, cash That's special. more No. we a be balance last trading we normal But the you – up I on year. that, the a would going But believe months. market of back the buybacks, heavy event reality got we we've would during elevated think XXXX. stock buybacks. the be opportunistic. anticipate of the buy. in at dividend we're Our in we pre the we're were speaking some quarters? compared we the anticipate, But that in we look preferences was yes, buybacks. sheet I pretty the don't distributed say Do going And either or again the to very we the didn't were cash sheet, through to to and on as dividend with why the giving ended on in or I to to doing I buybacks buyback Clearly, XX that special next if shareholder dividends a do back But two the our end

much. so case I that's I'd point. imagine run the some right mean, at shares guys. that All given you'll out Yeah. just Thanks of

I'll will be it. one Yeah. No, have there left.

the Thank your time. appreciate great you. I on quarter. Congrats

Yeah.

Thank you.

comes of next Stephens. question Jack from Our Atkins

is line Your now open.

taking questions. and good Hey you for thank my morning, guys,

drivers for everyone's how Jim, look a what's as think strength I of BCO BCO challenging count driver right you you think out out So an when your guys extremely your at you when look based the market thinking seeing but the opportunity drivers, I kind could as how are been you the into last at are competitors, are gaining I freelancers going very asset the are growth, opportunity for some now there share count market count. the your we that it has comment given of the about I guess, back about of be guess, in losing you what that of strong tight your half share gains as really year as is given we market guess, two head gains actually up? decades? demand in driver

Jack, this is Joe. I'm trying to understand the question.

You're looking to other can't understand drivers. question? how when we're gaining find BCOs the that people Is

I'm for the longer No, lot I I there's demand winded, out But question. a confusing, the guess, of guess, sorry there. in marketplace rambling

Your losing are competitors drivers.

is Your count growing. BCO

at growth load just you So the guys I your your it excited tight viewing count, the I'm for are very potential curious load how a I when the very, course could what next makes potential and growth market. be the of of for driver and guess, couple over to this Landstar, rate quarters, me internally. look count very me about

I but out, now significant freight, capacity that's can where of disruption capacity. think I story there's, come quality a getting and disruptions We've And us. This environment. this the to reactive access rates marketplace. coming and always at Jack, in, demand a isn't think I in the built kind have knows to for been to find they Well, We've been to say. pushed we

we're age phone years, this we're what and built easy simple our out those environment. the and carrier So call for it's loads designed back building push they this this out booking the us and systems it's because doing, for they capacity in know We've to and been pretty into to access are between know in model freight. XX the for environment,

up Can which when of count? through BCO for than And mean, sense. yielding recruitment, on operator rates of there? models favorable kind kind of so growth these walk us to this Landstar, is are makes Is much rate? just driving doing definitely economics you what's I you growth guess out the driving owner BCO for other it great out Joe That follow more I Yeah. that, just there what's strong

Sure.

think in tools successful saw and and the it mentioned in onboarding we transition push some the network, loads cancellations, BCOs have we become the some uptick improvement their we recruiting we significant and them that carriers actual more and get put quickly. comments, think of we the I up the them that stable in but I I to the network criteria, some as do his forth numbers, them saw into to really Jim a economic. in door way and quickly think improvements prepared largely is number we that and through into way provide that that financially more in are of allow meet in running

there probably largest think clearly those. doing, are of that some multitude but of we're is things I the environment the

sort of Has on us from question Kevin, And you Okay. that for if give That's last then year? this us And think come brackets some you could great. could me, update that'll on how outlook in. your flow you changed? free cash

still good think out think thinking, threw million $XXX pretty We're that's range. annually a we I No. still to this year. million I $XXX

time. the Okay. That's great. Thanks again for

(XX:XX).

you. Thank

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

open. Your is now line

far the that second – third Is kind into there should but kind the little the of that sequentially, now Jim, anything comparisons year, see you've quarter, understanding third year? thinking the you of hold half of see or there we ahead, guidance Great. the I'm consider maybe would on a than to is a year-over-year about the now marketplace back seasonal usually you're too us you anything that through quarter. get quarter basis. quarter given quarter? as things fourth Thanks. right end the for stronger is, make from right Essentially that think thinking fourth bit in through not asking patterns Good the third But you morning, change everyone. just seeing the normal the we what of the that would

if I the than see environment fourth into don't ago see you be in going this quarter year. it years last No. the that's hitting know thinking. the or it is about was we anything. e-commerce started think worse change I Todd, stays was we're coming don't I really what is, Actually, when other think years three where four mean, to crunch it quarter we fourth capacity trends But than – any probably the us. in

and change Our third now start prior if maybe. quarter a We quarter that's four changing to expect years that much crunch this couple three mid-November, probably had of and demand fourth now, trend see in don't XXXX expect incredible. in been the mid-November we've years. high about years, with the But We go you similar again to capacity that to into demand lot is three have years. around like looked last don't coming for

point having this you fourth conversations to around secure looking are in the those quarter dynamics? And for capacity people those at

requests capacity requests There's set mid-November, sure we're for a yeah. and trailer coming – just to early-November Absolutely, that timeframe. that make lot of in and

or to count, revenues? But if do That bit through to revenues And that you've down? and been then, thinking had the the of most into And little good think what grow gains BCO decelerate are volumes can with about on comparisons earnings the what cost side help think with and spot-oriented your through into you I think on And just And then starts give and should a that in more little I about about should asset-based a mean as bit share just your forward, help how variables more just you the business think the we we about Okay. spot growth, ability spot point well. and Jack rates growing you really top-line growing of as the slows if comparisons the helps. further volume some versus your that happen us difficult competitors. XXXX? for a the going as think going to us XXXX, being become what contract market think some go

Yeah. components control The business that. pricing, spot is We volumes. two price know don't our of and and you really

and we – cyclical having. to And around years Kevin it's The really compared So from don't four to about of talked in I or all to options next this performance the spot as stock through the can through we what's you volumes about try see a our elevated But to about as environment much and sit deal XXXX program volume cycles. had goal prior we and is incentives year ago pricing. system, is demand converted a and going and XXXX. stock portion about economic of because kind again, with and variable the great predict to here push year. years compensation our role and economics compensation three standpoint, cost system, the our them. But to the happen pricing can and incentive push we're we – want is of to the

So that's elevated, too.

(XX:XX). cost more the come G&A a the you'd So some a some basically put pulling lot of same on that even – of But that infrastructure pulls of top those lower down revenue infrastructure. from back of But we revenue on would costs infrastructure built; tailwinds when back, could to have the something dollars. need we this is push it

we and of leverage cost of comp. off pull lot lot back, to and stock are incentive out. not pull comp biggest a a growth the get there's the the variables the But we So

Sure.

that let know control But you me equation, of part sense. makes too. when pricing spot the That Okay.

right We're that working on call. after the

All for the Thanks this right, time morning. guys.

you. Thank

Sachs. Reustle of question Goldman Our Matt comes next from

Your line open. is now

Yeah. question. Good taking for morning. the Thanks

to higher you could follow think attributing that retention to turn? rate, BCO investments to Do if a making. higher we actually you're it like the BCO of up the see rate it even the sounds structurally were retention cycle you're Just on some

Joe. is – Well, this I think, Matt

the some tools that and more their decisions is better improve more think BCOs to of make these utilization to and to become behind our allow retention. quickly, I productive, intent to

allows a the and So for that future difficult released the into really acclimated system it recently book to out maybe get the I to guys. loads one-by-one, them tools one on was and more versus some think more that fashion, we of automated doing

in develop So I clearly we that like pretty that, some some those tools, continue would but things see we the to of early our that. yeah, can from retention to benefits But extent intent. like think to we're is that long-term

on you destruction Okay. signs It end across your are period demand, continues markets? full the from seeing terms one of been in of I higher an follow demand of That mean, for more then, board. makes And rates sense. any throttle like higher have time up these seems just rates extended demand here.

so, they pricing. customers to to This is And because we closely today's opportunities high volumes. our Certainly, staff letup able in could price we But so working drive try said to we not the providing doing our Jim reduce in collaborate to have to customers demand our sales solutions the it No, don't we be their our with costs are marketplace, chains Pat. in control with seen as on identify challenges. agents of possible. much any and unique earlier; but as supply their rationalize that

collaboration I So of us our between closer demand destruction I but don't and customers. any price, do because see see

Great. Thank you.

Thank you.

from Research. Our Scott comes of Wolfe next Group question

now line Your open. is

Thanks. Morning, guys.

Morning.

Can quarter? margins you're second what in net revenue did share for and assuming the the the third brokerage you what quarter, for

it brokerage this we're hire, third to the Scott, points is XX was the and similar Hey something basis Kevin. assuming that quarter. Year-over-year on in

remember you what first do then, And Okay. quarter was?

points PT. by basis brokerage was that's the line. The Scott, higher on PT the XX

points margins the were So XX basis lower.

Yes.

Okay. do was? first And remember quarter you what

sequential or year-over-year on a basis? On a basis

year-over-year Yeah, be would great.

have just on one Hold that. second. I

And maybe getting while question. my ask you're I'll other so, that,

just count. BCO the on more So one

terms now. this lot for guys. talking higher was I you So about you in the recall lot lower. and similar, was lower going a retention obviously, the this It's don't it moves but of right recruitment higher a

the Is at volatile more is pieces? look retention? which it or time, to this it the tends the variable you As be or over recruitment,

This Scott. Joe. is

pretty back variable been a mean, look year. you – decade, at just I depending If upon have both the

the the well, in the for back of but door you growth further the number, that. certain some If door, as meet it's focused bit, have candidate. number pretty we but the door the then and standard the that, sometimes I they're standard think the drives changes they consistent than in coming clearly is driven few a been what's in of really years go little couple the if But last years. we've our retention been last over demand on �� we're a

lot So But then the them we from to profitable. door hold interest of and on and vary and question, your to them with onto with depends with demand year-to-year, can and it answer a keeping numbers. looking lot retention it keeping them at in the happy that time. comes efforts And the back, a economics try

– in turnover stronger But I the is. your that lower suppose normal the the the it's market

Correct. Yes.

Okay.

the than Scott, higher PT Hey basis about points XXXX. rate for brokerage of QX was in QX XXX

Okay.

negative. So getting less you're

Okay. guys. Thank time. the I you appreciate

Yeah.

Thank you.

question of Our Susquehanna. from Majors next comes Bascome

open. Your is now line

Good morning.

Good morning.

rising with about kind variable rebasing the or numbers we of more on year, to heading consistently your Kevin? lot as accruing absolute either that what talked and As year. What look behind, everybody's a in at? results that have appropriately certainly the like? you And expectations comp compensation accrual some about or are part pace an next that look just we we look like you've to stock put and pretty above do a been Can does into us target about start cash what basis we to kind think amount of year, year-to-date, next remind of

$XX at million. the year. incentive was something currently of been for $XX.X just year number this Yeah. number million We're comp accruing north last that. Bascome the has

Next targets year get the reset.

of $X next year look assume one-time So $X million out or quarter. pay at annually way the our is million a to best

changed in or the million, So you when that and incentives, years. $XX.X that stock other? the say much last really you cash hasn't $X comp And including is one million number are couple of or

comp. incentive the just That's

just that's Yeah, cash.

a driven largely from you stock to comp way it perspective, stock All right. price going guys from or... account the be is And that for

it's units. have, stock first, based we Well, performance –

on So year-over-year. it's how the growth well performs, so in company there's dependent EPS,

not is day And It's actually grant. comp. driven. then they The they when It's record the if price vest vesting the price set really driven. is you

and them, much price got put performance the $XX. certain you set if we was in hit so targets, But performance it X,XXX So a growth. it only units pretty I is got they which when Tony be if they'd perspective, say at that vest EPS

EPS grows XX%, the I shares. get if plan So variable works. how XXX That's

now before shares be Had the – and they're number from we of no there and I've shares I growing in just got all, faster the due would not year right growth to shares vesting. than at grown accelerating last EPS, So some they're vest. year the

Understood.

as be somewhat pro-cyclical, So the cash really that not as volatile will comp. a but P&L from standpoint

Less Right. slightly volatile. volatile, but

All for the right. on Thanks the guys. results. Congratulations help

Yeah.

you. Thank

question next Bruce Stifel. of Chan comes Our from

Your is now open. line

driving point their able the it in moment given business for shift clients business serving know the a Yes. getting of for meet taking in next secular morning, operator on business looking are some lot function it there to from help model, of it gentlemen. I going that a they just number was and strong. sort you or to Thank agents. some is good agent deregulation those want in you're a we to revenue very maybe just the to better small on owners stage? growth these of is new that focus needs, Can those in where wins? what's I new maybe you, need in capacity cycle, the maybe are characterize the post agents where and Is or running from

the The challenges are and big tracing that all of track a to their source products services delaying is revenue. the say maintain in inside that can out to that whether able formidable, the agent that take for Landstar people it's are System driving Certainly, whether customers. capacity, time say, customers attraction side it's agents. brokers, it's some of they would technology agents, in things whether that amount I I the can to pay order business Pat. new they they of all ownership and have those have find business. of the the back, to that there brokerage or ability is to side smaller the third-party This the people should model, BCO are serve Landstar their are and be the for the pretty Those and

not of if or to about can then help think base way only at customer all and base that the out how existing those agents we agent those pricing go with more using and the own own they but you Landstar attract new tools, is analytics, what support productive. that things. those our tools it's another existing agent and businesses think And So agents, capture grow whether that them and doing make get underlying we're within their identify I opportunities within their here those, it's we're

Great.

component, a there's as cyclical pretty component to there. a fair strong but secular So say well

would – I Yes, correct.

And is new agents, pricing had see that summer. employee tools working level, from We attract day-to-day them see last better they performance to analytics business mentioned, we a coming from and as freight tool, to Pat their base, and we're help an new a on where clearly launched data, from an where agent their tools could level. the manage customer launched

that and making technology a the tech areas about into sells talk one So help is projects, focused those easily new help help our transition the that you focused well, we're of we're on system, our that tools from – into agent only network. recruit sure when providing and the we're existing base, but them agents really not

TMS? rolling us Great. new follow an on out progress That's on update quick a can very helpful. And guess, just I in give that, you to the your

This ways have a could two-year slow while. but our a to things, business it, be and it's well. everything to nature their I our it. model like of the a Yeah, to of decentralized we the doing It's or now going I it's honest, probably and mean, agents to rollout. three-year functioning agents us all going have, with say, be XXX right want are on The slow. agents rollout, own it's be just about take industry,

big levers people afoul can pull trucks. industry. there are of theory new in question IC Okay. think out guys to from insurance new trying just classification out, then there claim guys the a safety last creep any number on historically one running lot you verdicts a have of that safety without lot the But Great. and the generally coming jury know on on X a ads there access And focused a I me just that been There's I to tech are of you and of some some maybe Are insurance costs Class the very of there aspect. side, of the the the rules?

that fleet technology BCOs some our is we kind you're with. are rules pace have XX Yeah. technology old, in thing, This several The out there those. factor average Joe. The think to contractor and independent deal I something seeing that some And closer some of benefit to with trucks, certainly the we're is new years a comes there, of with we is what of and are truck another think and years keeping a old. buying I age

seeing they're right guess OEM-type in is position So way some what really get to it, a as eye truck. to say that. aftermarket keeping not BCOs is was there the But we're the typically uses that an I and in technology pursue, we're on

But I BCOs would safe. very say are that last, our

We of have safety lot frequency of technology trucks, all have may programs. the a We in not but not accidents that burning the is what's us.

one-offs it's Our accident. if do call, really of them. It's the we're with the of That's once that's million you frequency We severity driver the these, that every the we well. that, We many severe unpredictable do and tend meetings mean, I have verdicts, job frequency almost we through. have and of good control accidents, a pretty week. see they the than side one month message having safety what a bunch our those how nuclear frequency individual the stuff miles, refer dealing accidents reminders, to a sideswipes, while. like really and we when one, like per happens everybody's low, of more as – frequency is it's to we relatively on where every

helpful. thank you all. very That's Well, Great.

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

you and to Have you again October for XXXX I with you currently thank conference on a third day. quarter scheduled our call XX. forward Prerna. look speaking And Thank nice earnings

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