Landstar System (LSTR) 22 Apr 212021 Q1 Earnings call transcript

Good morning and welcome to Landstar System Incorporated First Quarter 2021 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.

Joining us today from Landstar are Jim Gattoni, President and CEO; Rob Brasher, Vice President and Chief Commercial Officer; Joe Beacom, Vice President and Chief Safety and Operations Officer.

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

Good to and Quarter you, morning Thank Missy. welcome Call. Earnings Landstar's Conference First XXXX

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

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

was Our in Landstar best by XXXX history. financial first first quarter performance the far quarter performance

were First time quarterly quarter a operating record share first earnings quarter per all was income, records. revenue while gross and profit,

first billion to to in quarter be earnings During our to of share diluted guidance year-end and of conference range $X.XX XXXX billion per revenue earnings the XXXX in provided $X.XXX the we be call range $X.XX. $X.XXX to

and exceed to over was range upper the the truck hauled earlier load the the results via year by revenue load our truck quarter, above while $X.XX, per were and of estimate was load We the of in mid-teen the month number quarter week loads percentage in diluted exceeded truck hauled XXXX first and the number of increased in and single range. our X%, XXXX by U.S. were that loads of loads respectively. first the XXXX significantly revenue truck quarter truckload the $X.XXX in XXXX XX% hit storms Truckload and quarter load of percentage to quarter. a quarter first Central on loads anticipated as first Loads by decreased guidance prior guidance. first Landstar’s storms February, approximately XX%, January, March volume XXXX anticipated, than volume truck the via end initial to first volume February in of increased on via hauled Our in February. fiscal end hauled impacted the XX% hauled in guidance. last XX% the the earnings on in loads via month March XXXX in by Actual over range billion prior significantly per high per increased higher revenue truckload per high digit severe first and hauled quarter the both XXXX exceed over the quarter via Revenue February. both the share XXXX

consistent the XX% load prior fiscal year though, growth building via unsided first The XX%. per and to demand quarter truck durables, quarter. range grew Consumer in to volume, which Revenue the of was to platform the quarter, in Typically, in number small of XXXX manufacturing lower quarter hauled in e-commerce and for U.S. month grew fourth XXXX the consumer seasonally percentage over first most loads to products, improvements revenue loads March. due quarter. first record quarter, van mostly is continues sector also a the than X% compared that volume quarter hauled and the over equipment third via assumption, XX% drive of package March. hauled by per March We XXXX Under within second the record. the XX% first Revenue the Landstar believe, and those in quarter in load month time that rather first XX% in and XXXX respectively. February, truck XX% truck for quarterly month an loads January, the all was quarter increased each via of and year over load prior loads hauled via

revenue result increase March believe strong demand by and disruption late caused truck load truck continued we significant continuing at into revenue the per XX% revenue tight and van of in and quarter truck XX% a late equipment respectively early over increased in March and platform on April, loads the first in February XXXX elevated Overall, part first load per the of storms, levels. Although load was per quarter. the with the unsided hauled capacity via XXXX

new agent The a the trucks Revenue agent a of capacity for We number by in quarter, quarter quarterly model. revenue business owners, the typically attract trucks above $XX.X the continue in quarter. count. XXX year. ended first record during to new full. year-end the We provided any net pipeline with We agent experience from XXXX quarter XXXX first provided our by decrease qualified the candidates agents best a in of BCOs million XX,XXX the remains was trucks

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

costs few partly contractor million paid used commissions The BCOs quarter hauling the financial primarily third to quarter point revenue, number Loads with increased XXXX. specific XXXX. was the in traveling first rate offset carriers to quarter costs was statements. BCO period first of in compared Gross trucks arrangements quarter, XX.X% equipment offset revenue of $XX during XXXX costs the utilization mix while commercial margin first and of reduction to a BCO XXXX $X.X the The mix for XX% per quarter capacity on attributable first decreased debt trucking by to profit to net the to claims in freight is from to in million -- compared hauled primarily claim XXXX the BCO first in and in termination revenue We of increased I first during first took tight the significantly $XX.X on higher the XXXX higher million of XX decreased transportation to of the quarter. a agents million storms in $XX.X Landstar’s place XXXX approved in point Insurance and to profit first speaks due by a maintenance the commission mostly While decrease I'll third XX.X% via in in on renewed the offset million few margin the margin, were contributed slight truck fixed BCO XXXX. X.X% first was of quarter. decrease ability partly the costs party ended was insurance XXXX the cost XXXX quarter revenue in was provision few the that XXXX capacity due on in total increase in disrupted in of our The profit of decrease cost gross at gross bad compared in million accident quarter. attributable quality partly a decrease the The increased to travelling from X% BCO late claim a with utilization BCO of attract party XXXX $XXX.X of Other arrangements provision total below liability first XXXX in which XXXX items a the decreased XXXX attributable coverage The in Gross cost costs, truck a due loads of in network, severe percent XXXX the compared of quarter. partly carriers revenue mostly Total of general, and increase a period of period. line number to decrease per in party to XX as a X.X% quarter to transportation $X.X decrease million commissions a a carriers the was of was a gains XXXX quarter. X.X percent that development of XXXX increased sale XXXX claims February. business better XX% items quarter in in SG&A unfavorable count, the insurance the to and May to third XXXX. first items decreased of offset for those quarter paid company's year-over-year. in XX certain first significant period, first in were record basis million market. premiums, in resulting significantly XX% margin a purchase truck compared over in XXXX in a and by partly XXXX the domicile costs quarter, were from basis This the for quarter and impact items attributable increase equipment was operating points. BCO than freight in under basis to $XXX.X the prior increased comment as revenue Overall, was BCO as net insurance to Selling, margin decrease believe as in over the by quarter, and XXXX the million truck million, the cost. $XX.X profit retention significant and period, X% agent in as number first BCO decreased viable XXXX. number administrative increase year-end primarily at were the now $X.X impacting well the in first cancelations defined XXXX. XXXX of

incentive the quarter million plan, XXXX. For $X.X financial plan a to XXXX one, first estimated the forecast due expectations cost and equity the in cash incentive cost, of variable compensation increased company's record over the setting of

million tax in XXXX quarterly the Operating The rate medical costs income in million Offsetting fees, gross cost year XX.X% exceeded versus quarter, income Landstar. with year-over-year including to decreases due were lower and the the an XXXX. margin, all-time technology operating compared excess increase profit was XX% benefits XXXX benefits, share was was in contract, profit travel XXXX. effective income The $XXX,XXX. and software professional compared costs. represent to amortization effective in and rate quarter prior first XX.X% maintenance during in non-deductible was the the and those employee XXXX. arrangements in to million XX.X% for by bad $XX.X along provision XXXX of Additionally, million of quarter, new first records compensation increased period. on based XXXX tax estimated primarily compensation and executive the period XXXX tax increased license entertainment in gross in increases income or XX Operating $XX.X in debt, XX.X% and Depreciation customer $XXX.X costs or

Looking in sheet, million balance to at the flow with net the investments accounts during Cash was cash flow operations receivables quarter $XXX $XX increase was payable. significant decrease receivable of up and the the in which from mostly accounts quarter operations we short-term The drove due March to XXXX million. first our as from million ended in revenue cash $XX XXXX less compared defined period.

pandemic. to XXXX quarter relates the various in prior of financial costs it the the its pandemic, not comparisons projection, took are of and company's economy significant year over response the the As BCOs COVID-XX second Landstar with agent for in quarter due support to to U.S. initiatives quarter freight network quarter services to the downturn due demand second in along to meaningful

expectations, to revenue Through the with As it remains weeks the March. to truck anticipate environment per revenue first April, of in generated quarter. XXXX the truck several relates consistent the quarter second load from first XXXX strong load our continue per I freight

the XXXX entire revenue March truck revenue percentage a per and above March the recorded second through revenue per would that mid-single-digit the maintain load XX% or the truck and load history early level the we per of be first load monthly above quarter. Given the range the of XXXX April XX% highest in company, in assuming quarter truck quarter, to

a at the a first truckload was was Landstar’s count. it in second was quarter XXXX The first record. first time record XXXX and count highest of quarter truckload quarter

second quarter, quarter second Following a count XXXX truckload first truckload I count count mid-single-digit record and quarter increase the record to slightly expect trend ahead Considering to the X.X%. range. first quarter truckload number quarter of count of first to percentages, XXXX XXXX first in increased loadings truck the second expect XXXX the over truck to similarly in to load a percentage therefore this XXXX XXXX in the quarter the

as income, to pleased increased with range the XXXX expectations the quarter. XXXX. approximately XXXX second As gross XXXX number XX% via loads net was billion overall are load in quarter that Overall, at revenue range over second diluted the and such, first the mentioned, of Landstar to I on the revenue and truck in highest strong company's first truck in revenue, earnings Landstar over of the company's history and the currently of environment the in well range fact decades to positioned is hauled earnings sector I assuming truck last More and on was has start Europe achieved XXXX quarter first quarter share of success. two insurance the ever Based point claim In second was loads per costs share expect previously the view, Based anticipate anticipate be highest number the for revenue any XXXX via first Landstar in $X.XX. revenue in of the the impressive as XXXX a $X.XXX profit, the to our be the $X.XXX tremendous quarter that it XX% quarter quarter. to billion. to XX% and is per quarter extremely been X.X% XXXX diluted for of I'm hauled revenue, increase income, and any BCO the approximately history. $X.XX per compared ever by to operating in to

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

in tools our enhanced We the setting small on continue up setting of priority that owners is to Landstar our technology focused XXXX also business to for remain up annual based XXXX we we we will open network. -- in look with provide as thousands setting strategic -- Missy, first X an billion for the questions. record be to in time year a history. surpass to revenue our And for

[Operator you Thank so Instructions]. much.

from is Bascome Susquehanna. one first of The Majors

now Your line is open.

a for on taking on Congratulations the basis incentive an the fidelity on projections? Maybe accrued give that results can trend the question. stock given you where and morning. quarterly cash the cost the my for our year little are and just cost comp for comp the perspective, side, you thanks to from start good us modeling Yeah, just and on just a how might annualized more

And perspective to perspective it -- XX into in to earned the quarter, we the and simply we put by it equity put additional $X just to first is maybe we it EPS the and you're EPS EPS P&L year, variable XX that right, if the you in looking our the other cost first programs, at the the comp. X, comp $X Well multiply that typically lightest for quarter if quarters. an okay, would of the of take million in the incentive comp the drive million about both kind

way, to in maybe little was million would this see that million $XX if this I or quarter was $XX this over increase a SG&A at So higher, look million, equal you $XX EPS it next our three you'd XXXX. believe to either the

about a normalized? XXXX that be normalized with think on we could something being basis And,

actually going prior million. some at I equity I were for to think that year, comp the are units in that to about that we incentive kind yes, they're vest was But now going an expectations but because rather equity comp year, targets at they was the performance, instead of the like which think we're XXXX have actually say $X were weren't there's We equity on what million, is and the from or performance comp, want all target. So to low now typically looking standpoint, $X.X a our I hitting we of we last low look that's weren't.

million million. $XX see $XX to would up that You climbing to

So million. equity little XXXX, years. projections the kind comp those the two XXXX, a The drive equity to variable of [indiscernible] the because a $XX more next volatility will with in our five ride get to four of switched that and over combination comp about they we programs

something XXXX, we the actually of just as looking equity out our performance of be XXXX. caused And five estimation we anticipate event, clearly upwards one-year and we upward to five EPS coming a what's changed, in so just And going change at revision those of projections not did $X comp. have years of that in year not end the into it's it's vest. could So do over the the

the in Maybe play give you I'll have things out, script business level, the perspective, more recent mean, as to to environment to the the back revert be financial ask to high kind do this they of one the you. some go baseline? model how I us mean about and is would and that your starting you start that for unusual quarters, aspects year -- of whenever from is a an model in can how they this however to Thank need better do, way as

on of come mean, about quarter Yeah, records, than time quarter quarterly our gross like typically the operating talking are talking out is three with we to And first unusual operations up that is about rest you other get the unusual records, as quarters. almost all that's I things. seasonally softer quarter the and profit for unusual. we metric kind setting some unusual, when an you're thing that all the EPS is of the because From very income, first are our trailer trailer trailers just have the year. the to of through And anywhere, for demand know. other demand. first the our lighter fourth the quarter from We're usually that's guys, floor coming here trying

now. right unusual pretty that's So

to a on into high The least So unusual if my some difficulty back don't and I'll would fourth in there's cycle the pessimism, typical some dynamics back to I XX marketplace. now. continue, a quarter still a we're going the into climbing up. phenomenon, months would looking pessimism in phenomenon. for at a is -- right that high now My satisfying of while cases, we're Based we're but year. trailer back now. typically rates say, that said it's and cycle I it's quarter the having a know of typically down I'm and that January, at demand the demand for coming In see But first right not not equipment into expect I things softness XX half, the to half we'd there's as say going -- lot not March, slow coming in not goes

after like this a I'm XXXX think, XXXX an where third more really is feeling XXXX good softness little I relatively the and quarter the the bit was XXXX first but saw quarter. maybe after the to transition year throughout

the are or to things I can if you were. that costs to where costs costs, compared of are is anything trying lot drivers wages about claim Claims can it's us expensive on asset things to guys up think more will driver whether base getting XXX% and through seats. a cost and are going insurance do carry and read Some premiums today with to get they the what's they

so quarter come probably costs fourth wages as think, the whether or as have they're sometime or a XXXX, in due up XXXX spot system. the numbers driving it starts XXXX market I will the back So pulling cycle, see numbers that into I see just the don't normal we to next year. the far

having just getting crash, the trucks -- pulling in this think our rates it's cycle, Customers today. new we're a spot XXXX, get And but normal And all at rid in that we going some benefits looking XXXX going I'd where come think a at of normal to us. bit. cycle I find of a see my So pull to extent build not environment little all back who looking we're say I -- with the future relationships we're to not customers. not kind thing, right, benefits into can't to we're

take So on my that I what and we would are be where going out. see

there, response on to it the Jim, next the Appreciate candid I'll pass guy.

much. so you Thank

of next Stephens. from Atkins Our is question Jack

is now open. line Your

congrats quarter good great a on again morning and here. Yeah,

with years, vision more about how border asset So here just into your think I at sort next seems M&A could with and but, there there. your because like activity, cross-border really activity activity to rail to the facility rail of of you really like that take more the guys for what it especially seeing process and and we're from cross talk seeing in given about, and guess, Could Jim, that? plays near maybe advantage investment to M&A start really or really you with guys kind is if long-term you I maybe Laredo an over focus shoring sort have proposed which cross-border unique of a coming into benefit things the position are regard several we're it down

at Joe. is I'll that. a take this crack Jack Yeah,

up our capability. and better. a So about the it we didn't I quarter, border previous in could opportunities grow. well-established to saw us fewer have when We've clear was you, brokerage do. XXXX volume there. customs in see facility we a trailing we're add we as the in the I in have to not that built and with we We would equipment the revenue -- while We be Laredo capability. the If really got agree cross didn't And think nowhere we we good had we're add we in markets we've seen still opportunity in could trailers that a market and that shifts, the offering, invest capacity people, and continue And for docking service XX%. what across

-- while So don't have we and I'd again, say there's room and we've do also party similar other company in points locations. third we capabilities the that move border, there and across have facilities to

as So the with we're in and California, Texas. only doing just stuck in where Laredo gateway the across we're Arizona, things border similar not

we're to effort down -- do very visibility. things relationships to But carrier couldn't of And are people there only what Jack. better lot the other got And doing. of you'll carriers that provide going I we've a that see and with we it's border gotten going dedicated those think are think, there, support south be now, strong, I think work doing stronger. salesforce So I like what we're that trying

opportunity some that about, guess an being set another idea share for the question freight the larger talk see maybe as over that years, recently take think over one platform of opportunity over contractual leave you I think years, few think related Yeah, you people the no, then more had could do think to you level to And of absolutely. that as I I'll -- other a spot next about and talk market in a Thank an opportunity this is sort be the But, Could guys with high next of and others. for maybe that'd Landstar just customers you agency, cyclical bring packages. agency house. for maybe larger the is on moment you And to purchase that I as several use bidding traditionally sort if about great? I market just but you. focus player, questions a

simply those started modes. standpoint, in contractual believe The on opportunities and a brings customers this other And relationships other everyone brings and we other we develop out, Blue. market or out points play a for for test opportunities. also market. reasoning with opportunities. capacity and develop within we the committed Yeah, out technologies, freight you as absolutely also well agency we spot brings opportunities customers other purchased But so Landstar we It in Rob. and the was in else called our model as heavily go because to go it spot committed and these contractual Jack, company have Sure the initial so fits to it doing is new

we we work grow we're embedded with So needs, offer them deeply love as absolutely to frankly that their with understanding have everything our continue about more grow and company. to help and relationships deep customers, get that, them, to we and with to quite better a

for that sense. makes Okay, time. the Thanks again

much. you Thank so

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

is open. line now Your

Hey, on with guidance build good morning. It expectations and March March. think some be going great. XQ. the follow I about flat your commentary. think want just to is elevated. it's that Jim, to for that revenue sounds per like was quarter seasonal load Thanks Typically, I understand we second throughout up

you're seasonality can little quarter? square about a kind So you thinking the bit the of second how into

over what back run. you -- maybe taken elevated we're mid-single-digit to seeing just seeing bump, But put going we're first in stay really mid-single-digit when that do March XXXX, bump. basically X% think XXXX that XXXX, a first We we're going QX us the think because I historically at of obviously. saying going tracking to over that X% increase I quarter Yeah, is quarter. QX, look to rate, the out see we're to growth a what would which the XXXX, XXXX you're

So it's actually in the but seasonally just right. up better, had that March, it's jump really because we

mid-single-digits XXXX just the like, last would to last So excluding way years, looking at continued And it, we drove we up. March repeat years, a and in historical, of see back see through is part excluding disruption of at in believe that summary because pulling just acted four we from things spiked five about X% March bump rate. It least month. the we're how April. the early don't even was in that and that But

throughout number of rest May, a April, the June So periods. and strong we're good the anticipating

that's some the Yeah, at where sounds guidance see. it we like sense. see that with But be from conservative, And seasonal upside okay, we consistent now? we would -- makes May that right do if could if that numbers and strengthening that June be see your in we're

a be would true That statement.

van would was in or little to you've talk do you, you've design, normal business, or about quarter you Is that be seeing lot been get XX%. back in that the that of mix industrial Can Got kind pool, that that forward you're going of thinking a obviously, offerings. a helpful? unsided wanted And that back of to follow-up, in by XX% bit at see of revenue, first business just as the revenue is kind remain your trailer I the about got over and that come that the of haul you the how strength platform Obviously, okay. Thanks. I to of grow some of then much something to line there. so think investing know, I expect initiatives, think markets mix level you you substitute

there, the the the the and And good end there. very think go I driving if in are Like it's that if end we're us. is at up up we the environment thing on live Yeah, hot. demand, one markets we we we And e-commerce good reactive, attacking spot demand is more of in market, the right. the about a us flatbed, very demands we're to

into drive system. market business So more very move attractive just van it's not right deliberate It's a the to a now.

when at business you're in haul the to stuff shift in where or we deliberately seeing wouldn't of where consumer the that bit that. growth van -- where we're or the doing look compared and durables substitute say on I really as a line the percentages, stuff flatbeds that little really So that's what the you e-commerce van, the are. that's call

it's way think van Clearly way just -- I the works. the it's have the agents model more freight. moving we

good van but the side, don't right really And on now play hot, van the heat When guys side. flatbed they get in it that to are guys the there is. when running freight agent those just on good. not up, as So as penetrate where gets it's flatbeds starts

morning. okay, Thanks Yeah, time That's helpful. this sense. for the makes that

Thank you so much.

Our next is Truist. Benjamin from Stephanie question of

now open. Your is line

Hi, good morning.

Good morning.

seeing side, the side industrial move really just Hopefully, unsided of that on side through and business market fourth view your you the the you're from on acceleration quarter, what of the on from nice just and we economy XXXX? your LTL the could standpoint maybe as touch overall

but why look to now. anything than were what's Yeah, contributing -- Mel's we talk better, great got the general or that right if a it's on to it's our just not just customers it's is like list driving you about of there's specific to of we through But improvement like bit That's it machinery growth. the point -- the at kind little read are flatbed, that more demand when that. that customer on it's XXX sectors

of specifics really diversified it of improvement talk that because came saw across to improve where customers to last that pretty So was from it's customers to But various ago. more of months are or whether specific drove machinery six metals helping of a as compared equally to and was it's that year. compared that it sectors group we industry flatbed it's or to eight kind hard -- machinery, it business of that little

-- Thank go you. And then Absolutely. ahead.

I yeah, you also LTL. asked Oh about question think

did. I

as line LTL? substitute or true LTL as LTL

Honestly, both sure.

What do LTL in you right. got got disruption, you've the kind we're of reseller other markets, that

stressed other of same that kind others thing, the maximize that are They're a and spending their because increasing right kind with opportunities. LTL And in customers, can are overflow services going The in where their into areas, new capacity. deal stressed. the on with of seeing now, rates not of they lot new they market it we're is so follows high, sky we taking any the consumer they're that areas They're high. limiting it. So

onto market increase doing companies the in exactly their So we've to -- we've with help able to LTL been get we're able got our our we've spot side what to great been their partnerships and leverage profitability. and relationships

just January, recalls reason line But would we I pessimistic on little entire significantly that the on a part the not January, reason was end slow the was through did anybody I the why substitute the expected through maybe of that's subs where system. conversations And we out the as great more for one. exceeded too quarter. me And if of I year why it's haul coming demand e-commerce line coming had the I the a think on into haul of have

slow expecting down it didn't. was to I a not and bit So little

So correct expect us that along what the anticipation we're one that who companies to that is provide to hearing but now actually It my I that continue the freight the bit. the the and from there assumptions got into further capacity or they on little wasn't a year. year,

another continue. they it's the as compared late prior Right I this So would little I'm bit coming get that my it e-commerce and system. it does thought their next business as will back it why feel maybe cycle to now optimize comments reason systems thing year back and like still year, January, pull and because taking more saying freight there's And a through more routine. in my

stay elevated think I thought. I to for than going So it's longer

from through you year, of is you us then talk more just what how at helpful. just question. normal given shaking of XQ is the kind Can Great, housekeeping no, out? gross are XQ that's looking for this a margin and that really seasonal remind are now, best you pattern can the that dynamics And what for to kind to the

margin Well, who's bit to the opposed little is improved on right. first the tend seasonally as if by gross the brokers. typically prey more being BCO, you see it depends a freight In you'll feel a hauled to little bit the quarter -- calling

not So, broker back we quarters a a margins fixed less market, there's of, come but tight but of the kind there And squeezed. trend anything lot margin like and gross three that. you're the more freight, Because then got with get in up sometimes or consistency business. a there's were

squeezed little your So get margins a more. bit

is to be because comment a little speak idled of say, estimate, a that utilization XX.X a And quarter, those I'm about of you reason will is going our one it's it's hard the trends. because margin, quarter So to kind believe using down BCO being we storms, the a the weeks BCOs ahead of about the quarter. slightly I for themselves. XX.X, first which half a ahead really I made had I second gross and one, in where if recall, first

of quarter, which end the I so that the utilization the did second quarter. XX.X, of BCO with expect higher an on climbing what a BCO we have So utilization And, second in don't the XX.X bottom impact to first could in into and I quarter. see is upper stays

conditions the I to they like the expect of rest would second I beyond are, the the that year. that's would that stay XX, expect if XX.X quarter, throughout So

Thank really Great, it. guys. appreciate you,

Thank you so much.

[Operator questions more on two have We queue. Instructions].

person next from Our Research. is Group queue Wolfe on Scott

open. Your now is line

with morning, something earnings. good there the thanks, to your a assume Hey go guys. everything just do thing Is back of of into should the half the similar given Jim, $X If you we weren't second closer quarter, be you $X over you're be you earnings. it'd with, of back similar earlier is that year half saying? about the you that wrong didn't had with that comment assumption that --

you just softer. look, our math. valid comment. with wrong the trends if and years, to And if it's X.XX nothing does quarter look assume usually There's just XX at that conservative over the mean, X.XX, QX your I pessimistic. is QX, QX, you last I'm a first you're --

know, higher be guy $X. X in get to tries just as the talking would mid a to it everything. It not You ahead yes, of you're would to opposed somewhere be to who

Right.

one other And if things is of to you to that start I I the the net stands that start XX% earnings think margins, now, about out here mean, a I sort above do rates we guess operating here, stay side want rates when XX% well operating to of above net happen so, back the what happens? and to and normalize when that XX% we can or as think normalize, below you to fall margin if think could

I I the I would Absolutely. pessimistic again, remember who am. take view. always

I chance think will XX. you we back -- gross -- we pull just a that good push be easy, we going XX%. quarter -- if we're over million of will that to there's a mean, Right. to profit it's pull if continue we'll not $XXX I out but under yeah, we

look it down. costs, really infrastructure. the up That can to operating that's volatile, because Other at we to insurance one you So right? grow is it or got how SG&A, don't have drive

depreciation. If continuing get a yeah, the miss to year we blew mid-single-digit elevated if goal that XXXX, can was path stays out. coming sometime to and I'm we like going XX% do the you it -- in growth follow across we we XXXX, will of we're -- XX% and back that stay the and we could cause XXXX XXXX gross pull one that Though we investments profit but a was profit believe this like XX%. XXXX, looks if to So technology do cycle back have our at below XX% gross way If to sorry. cycle just we're in in

last just and drivers about so and just much trucking success world. it's Okay, now? then talking Why everywhere question, right on the beyond BCOs is everyone

Joe. this Scott,

we've done door. on bit here. I lot hit really But think I nice in And his a it in the We've better Jim a a job keeping environment. trucks job are done bringing that is that comments. those think of of little

fully right efforts. I think things but on how things more tech how you're structured to when productive owner help Landstar yet feel operation some we've deployed done small is some We've our we've organization aim their created deployed, to centers to we've run with We've internally and businesses done be large better. a retention field them are that make which right. operator, a not an

provide just So differently. services

coming as So drop carrier side. and largely hook support, pretty helps. bring just are again, were here. load. And maybe on I there network to van who good particular, really around And sidelines as And All the going the in And the in per think continue grow the on the reason I -- the clearly of our XXXX. I to carriers agent employees strength the capacity to way business year. wouldn't to through those having don't it's retention and seen move our on we that it think effort I BCO rate it's see for really like think things helps strong grown. small and we through family. the both I carriers environment help any rate and the offering continue are on together that's the sidelines, off then the has a move environment side, The that's be based from

thank Okay, you guys.

care. take Yup,

Thank you so much.

Our is last question Schneeberger Scott of on from Oppenheimer. queue

now is open. line Your

start curious CAPEX your on Thanks with to be be cash it and like to to doing differently, very it's robust just the year, strong you're thoughts going going cash of flow. are very just year? flow regard a curious, and the I'm and/or technology to use the looks much. that Good what I'm morning. cash anything trailers free Congratulations. given initiatives

ready we we're couple months to really equipment are to demand satisfy peak the over buying to borrow try system it be see that get those But season. cash when impact going those. doesn't trailing the No, you'll next the and definitely those so we into for more the current some be adding and

be anything than year. to going not it's different and spend tech last really it's So

capital unusual year. last compared So to allocation in there's nothing our

cash really, it's So XXX in would or run little this looking you're more. probably bit about be flow rate at a million

the the at it when we let when and look know and investors share stock's then about in they time, get we'll as and the versus buybacks get up to we as up, running get Now all settles chase run we in, you in. don't want dividends talk we it

projections, looking the we at future, year management at our we're sit we doing really And buyback could dividend. cash going programs. the of balance end end on at the and up again, into what's happen likes it, the So if a to looking

situation the haven't that philosophies unusual be said, would start, that abnormal capital nothing in big CAPEX going through in year we there's we're to but really the our no changed trailers, leases. in. that's but I be we're So will adding some Like

you're getting when it And facts? doing or kind of it business then be but off is seems ask, But I particularly the bill Thanks. so down now, strong to applies. I the have distance to with for sided going set right up in is the to any guess demand now regard positioning infrastructure that,

like is us, like road that absorbs or market, the gets it anything that doesn't but stuff it construction impact directly tighter. capacity bridges whether flatbed typically No, the or

of the helps have it lot, biggest right. we Because flatbed billion a every indirectly dollars one -- we're providers. doing us of and So a year, worth

with us So market, or We're it's infrastructure in an the a flatbed advantage significant direct anything of the entities bill. that or staging that might setting be to up conversations having indirect not impact way. of that more taking tightens

pass say it's eat capacity. flatbed flatbed, they bill, I would up for that they an everybody's start that So doing the infrastructure it's if and on good just, if

thanks. Understood,

Yeah.

questions you Thank any on we this have queue. don't At more so time, much.

You Gattoni. may continue, Mr.

XXXX a Missy. our to thank with you And scheduled second and speaking look for call forward currently XXnd. again on earnings you, I thank quarter July conference good you day. Alright, Have

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