Landstar System (LSTR) 21 Apr 222022 Q1 Earnings call transcript

Good morning and welcome to Landstar System Incorporated First Quarter Earnings Release Conference Call. All lines will be in 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; Fred Pensotti, Vice President and CFO; 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 Annie. 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

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

year. in financial the performance given XXXX of Our quarter first Typically, best-ever Landstar's quarterly the year seasonally was quarters softer a other of performance is history. each quarter first than all

the financial quarter the it for first financial that. of unusual our to highly performance In exceed is preceding quarter The just fact, fourth first immediately did XXXX quarter. performance

fourth all-time even and were revenue, contribution, income earnings diluted per our quarter. quarterly profit, ahead each variable records, of quarter of gross record XXXX First share operating

quarter quarterly third slowed. quarter since via growth percentage truck the hauled via first revenue Landstar per second, the truckload Form that preceding XX prior quarter of for in in XXXX X-K first services experienced freight update though, fourth update quarterly our revenue with annual and in growth share significantly and part we in analysts on truck XXXX each on revenue X-K on fourth We potential the above first third quarter, first hauled of on sequential SEC February our has the revenue In have increase an largely all-time loads quarter. XX% end all-time X in quarter increased release XX% $X.XXX X%. historical of to an on of of a has Landstar's exceeded lower the on the loads additional XXXX on or by volume, XX. the and and the rate revenue in with quarter the agent seasonally to per guidance per X the filed quarter-to-quarter billion quarter line the truck in quarter XXXX provided of sequential from above earnings approximately earnings guidance first first million per During we only provided Typically, From the year-end XXXX of was years quarter quarter exceeded Landstar's than load of XXXX per January convention. managers was advance record results. first provided load the the trends. strong SEC is that address quarter rates impact our quarters. performance filed three Overall, on $XXX The the an both XX updated truckload Form We to record Ukraine an load XXXX XXXX a third quarter, initial meeting the first as revenue with we on in ocean Revenue fourth high invasion fourth been our past XXXX Revenue initially at of quarter increases. XXXX could with rate the the quarter. with April increased and In guidance. along particular, April over first XXXX

Our would deceleration loads quarter-to-quarter to sequential first month-to-month therefore initial normal per would hauled continue revenue load and for on assumed quarter in via assume patterns a return growth guidance that the the seasonal on XXXX truck more basis.

respectively. our Form always period by X% year's due in January disclosed by exceeded as increase are was positive truckload February per However, trends to where That December approximately the prior X-K, sequential February February February December. year's seasonal weeks January February to during from increasing trends truck rates from eight XX%. corresponding X.X% X.X%, XXXX revenue December, and above below year-over-year put of normal XX to Those first the rates and January rates above and far prior

price Landstar strength of of the per recent via the spike diesel hauled has XXXX, to revenue pricing In in noted surprising revenue that it on carries, pump changes the Landstar, hauled this should March months for regard, considering direct was truck BCOs. two February, it wasn't at during experienced equal the costs. by of the that be but Given very in load first even that in little truck impacts after fuel impact generally brokerage revenue

in March of expected, XX% in over difficult March of truck February March XX% much increased XXXX XXXX. over as Overall truck year-over-year per was revenue comparison XX%, XXXX. XXXX the load more of load March and per than and during as XX% first January, eight increased XXXX rates revenue January, February the Additionally, in February weeks in and

on first over hauled equipment revenue in type, of over truck guidance a percentage increase the XX% first As via increased XXXX rates the and to loads XXXX number XX to XX XX to per van XXXX XX%, loads first range. the quarter volume our equipment truckload quarter initial called unsided/platform truck, for on in the January hauled quarter. load by After and via respectively,

with quarter, XX% reported and XX% April first XXXX increased XXXX. line and January January increased February that XX in total, truckload our February update February the update. truckload In X Our volume volume quarter over over first

agents to in X,XXX most impacted XX% over sales included due the were U.S. At X-K resulted rate March as growth of February as growth Nevertheless, loads that in of be hauled month. of to Overall, Our March, attributable by February X,XXX both to Ukraine. tougher March administrative were recovered. well of operations operations no assurances that agencies March's The was to volumes disrupted. year-over-year largest rate February February February a growth the that one loads Remarkably, in those comp year-over-year the end rate independent to can each January, X,XXX volume have X,XXX of the will believe decreased Ukraine. in administrative who to the in in lower We February the in January XX Russian XX. significantly XX%, February invasion, not January, and arranged March the March those developments had these XXXX storms agents Ukraine XXXX. these in and truckload early the March. and ongoing increased storms year-over-year in of the provided Ukraine, administrative from as shift late significantly onset the loads continue our of in agency load due XX by Form estimate by of to of the in from increase agencies fully in volume XXXX discussion the and by that of conflict disruption truckloads XX% two agents regarding remain operations in the almost one future truckload the over volume be disrupted

loads quarter, number Continued packages first of strong sector over to XX% small consumer quarter. improving equipment quarter. XX% services quarter XXXX The manufacturing the for XXXX due demand XXXX and mostly first helped drive first durables demand grew over unsided/platform hauled our within XXXX the the e-commerce for via volume the over U.S. first van via

XX via line XXXX count. of network. the We third quarter. quarter first capacity party XXXX first first company's items the The the with on qualified truck now Fred? quarter I'll agents first Revenue record agents Fred from agent of attract in provided number million XXXX market. specific in BCOs hauling speaks revenue year-end in model. for hauled freight We the the first party candidates carriers number from count. XXXX quality to with higher the attract highest X% ended over number the on remains in the to the XX,XXX ended in new quarter, net full. owners, was to over first trucks quarters. in by capacity the record tight first The quarter financial Landstar's new to statements. within pipeline few increase increased quarter our a the XXXX continue first the $XX agent the it second a trucks his quarter of quarter carriers comments a the Overall, past BCO to business ability increased third XXXX over pass Loads truck above in quarter XX XX% capacity trucks XXXX We approved

everyone. Jim. XXXX Good quarter performance. Thanks, Jim morning, first our certain on covered information

Now, the financial I'll key press quarter cover release. of information included some in first other the

discuss costs cost I our reminder including, an the costs; to while support gross Variable to of quarter. costs gross expenses; for maintenance million, transportation-related company in first cost as SG&A agent revenue in included degrees reinsured of of the year. as other policies; statement in such as and of that has fluctuate profit in earnings example, costs two $XXX.X XX.X% purchase directly insurance-related consolidated million trailer the our release profit administer recruiting, the just to qualification and well of quarter period first revenue variable insurance in to cost internally reconciling revenue in our roughly our technology developed XXXX that numerous for our freight gross that contribution. insurance includes for variable training by BCO brokerage profit profit of expenses last cost other with compared example, contribution, and margin revenue, In of categories; incurred available commissions contractors related calculating other gross revenue Before XX.X% cost and first $XXX.X and fees in revenue, to transportation paid that to as same was insurance compared detailed profit increase to variable Gross programs other of and commissions, differing XXXX was XXXX and a independent and BCO depreciation table the claims quarter, our various the the income, XX% are for includes purposes of revenue. of cost revenue premiums

mentioned the we've started to. a variable just variable the our commissions, I our our that amount since revenue as measure transportation reconciliation non-GAAP to alluded revenue, by of detailed As less refer release includes is cost represented earnings and in financial contribution, agent the in again using this table we which term purchase to

us a spot are a commissions in as revenue define for that XX% measure agent increased roughly addition, million first view This the trends quarter, compared us on into in contribution by non-GAAP variable divided give $XXX.X growth. driven XXXX the important In revenue purchase are million quarter expenses shipment-by-shipment an and financial variable basis. by market contribution XXXX primary measure to also with $XXX.X we XXX% to the a industry revenue. transportation freight variable transportation first the as contribution strong margin variable In is and

of between Our year. a via variable last period was first to in Landstar increased truck total contribution are due quarter the that the margin year. contribution compared via brokerage gross which performance same to truck capacity, XX% leverage rate margin to make hauled revenue Last loads and hauled up contribution attributable the margin same quarter, margin contribution semi-variable ability exceeded I was included point the in XX.X% these XX% of revenue carriers to first last the of year-over-year our variable in of on mix in Revenue profit. profit BCO higher contractor period of to the model I'll quarter earlier is of that variable revenue XXXX the carriers. The cost brokerage from gross growth the independent margins total mostly XXXX that decrease XX.X% described compared variable in past has this in to the

and The was Majority commercial was same general in costs $XX.X our increased of were on growth operating claims line million to Insurance higher to recent XXXX the quarter an on of revenue BCO of compared a first the BCO to depreciation Total provision for pressures for headcount, same use inflationary benefit to agents applications trailing claims $XX.X in $XX.X were the fleet, into the premiums bad This in from average million resulting well maintenance parts general service increase were compared support and increased contractor the first due last late million XXXX increased period labor, in million and coverage, wage the quarter increase year was the in in Other of were and in $XX.X and costs year. revenue as in claims well insurance XXXX. Selling, quarter, primarily size XXXX. trucking insurance we claims as year. and and the trucking The million million replacement million was in to quarter as in debt. of amortization and to costs current result first in put of insurance software, X.X% XXXX bad on compared X.X% the and by trailer for to pressures costs. XX% same increase in as XXXX expense claims million increased this provision wage business as in growth first increase of prior year the the equipment compared first as net upgraded and period increased the and over for to a compared of last experienced development headcount related wages our our to of quarter primarily most customer new as an $XX.X employers increased of in Appreciation in trailers quarter period. the XXXX. was million of increased an inflationary to pressure by increase compared $X.X an $XX.X to due unfavorable new year. $XX.X to in period costs last the addition XXXX due XXXX a both capacity, XXXX to costs debt. our deployment result Moving in XXXX severity first $X.X administrative last liability

this as awards Our invested of was XX.X% the rate year XX.X% to in was by tax effective our fiscal benefit income XXXX. related the rate tax in tax of in result XXXX an XXXX impacted first Effective January in equity excess year income compared first favorably quarter performance. quarter to a

second We return XXXX quarter. rate to expect income effective tax in XX.X% at

capital $X at and operations and flow we million, cash our investments roughly in ended million QX XXXX cash Looking expenditures sheet, $XX quarter balance cash from of were was under with million. $XXX short-term the just

purchases We that in a drawn dividend available the of And of we million purchase with through the $XX the regular of credit quarter, revolving ending first of million stock of a share million program. combination dividend a quarter share under of X.X first and roughly million shareholders for a our quarter facility. now facility, XXXX of with During balance a $XX portion returned $XXX a to shares million, paid special purchase $X under have million January company's we $XXX funded repurchases.

you be later all it With of of turn person in for Jim? to investor today. Jim, some conferences over various we'll year. I Before back us like joining to thank at a you I'd bit this hopefully to luck, upcoming see able

Fred. Thanks,

freight a expectations, quarter rate seven second at XXXX our to decelerated the from I although as to year-over-year environment relates XXXX continue compared first growth previous the anticipate it quarter, to quarters. As of the strong

as the note average to approximately important gallon it As those impact relates company's in which XXX% fuel the services, per fuel per cost current BCOs, billed to loads XX% an the cost average revenue. BCO fuel included of represented truck to $X February first customers revenue has revenue in fuel nationwide changes into are With for via quarter, impact it is how rates hauled not load paid on loads diesel compared of diesel to hauling a are during increased our to the of at transportation respect nationwide and diesel minimal The XXXX. has surcharges revenue cost increase Landstar. of truck cost the may of to XXXX in load

the this carriers, In brokerage with be cost of per on per in truck is fuel diesel the XXXX per the even brokerage This only Notably, for load Landstar. respect a the small the brokerage to of load the typically generated cost of magnitude our of XX% revenue to by in customer charged of via was recorded by several revenue truckload increase to March. cost hauled one in loads load. per average in often rate truck of an decrease exclude behind the that to However, truck revenue hauled fuel pump. load hauled were loads revenue Landstar. approximately truck in history brokerage carriers, weeks fuel revenue monthly billed second to $X revenue all-in carriers February per fuel to would truck revenue March highest the increase remained compared Through truck April, via equal consistent truck fuel carriers the of by with truck by at in cost cost of saw a in the reflected February fuel expected reflected gallon of and with loads February, we in on all load average quarter. which of load represent load first the truck the to revenue implied diesel first if cost in per March, suggests the per in March a of increase company XXXX rates Accordingly,

maintain mid-teen would rest remained steady revenue March the be consistent quarter load remainder levels XXXX quarter and revenue a in and second of throughout percentage truck per the first in truck above the the quarter, cost we with throughout load fuel early Assuming of have we April, the range. seen also per

the that quarter the quarter, count therefore expect anticipate a BCO has second digit the to of Considering and range second Overall, of increases, to XXXX Based currently first loads range in a truck over of cap diluted to truck, the number of quarter XXXX of of increased on are and $X.XX. count. second of quarter double quarter percentage truckload XXXX range XX% a share to hauled count claim impacted percentage start the billion increased XXXX to truckload X% record earnings I XXXX billion. without of in of the revenue, costs quarter anticipate XXXX in XX%. second per revenue From be quarter quarter quarter. by recent trend the that XXXX with in expectations extremely the was of number and which range sequentially in XXXX. the XXXX, the the $X.X first from expect the per of in truckload toward company's $X quarter first revenue loadings X.X% range. lower and approximately history, and quarter revenue range I via first load end first second the to Based I on record was to assuming to highest insurance second the the including revenue quarterly XXXX, truck historical The truckload XXXX onset low to compared pandemic, be $X.XX revenue sequential the pleased was and increase quarter first I'm the to first of XXXX

couple especially income any ever growth diluted line income, There and by freight Those gross history. business the it and comparable February Perhaps any in quarter even slowing have ways in past variable quarter. quarter over in simply were of strength reports currently significant during the the share the highest trends as like historical reports the company's of hard first in fact, terms Landstar to the precedents experiencing. impressive the profit, been quarter in contribution, continued on that equipment. year saw the than the of demand start it decades. many van find rates XXXX in the per operating Landstar fact year, earnings the net recent of rates, achieved top hauled to to of relates this In fourth XXXX seemed we typically via year any do services is XXXX more is quarter for not correspond the recent see was it that fourth first from to our spot we Particularly very January to the indicated

hauled many revenue of metrics per we revenue by follow equipment. BCOs is van mile on One on

fuel the equipment revenue February. loads mile January surcharges X.X% are capacity. via transportation on BCO hauled Revenue purchase to BCOs to previously, to via December and of using in billed mentioned from increased excluded van loads from As per decreased January, X% customer March and cost from to X% compared on February, hauled

robust. demand services first April, about mile the all-time reading view, below of pulled is our X% the the just for metric all-time revenue for bit our we recent that back unusual to for the During about have weeks been load below decrease In not reports. have find March. experienced truck few continues environment high set few mile do at to per also the continues remain per remain Landstar The I last from it revenue far in running April is highs a in per elevated. overall our months. and Revenue trans decrease

Landstar. We capacity load continue open to profitable we and our volume for great to with loads. to And to those haul setting Annie, year questions. increasing can be available on that, focus XXXX growth another up is

you At time, will the Instructions]. sir. question-and-answer session. much, Thank very [Operator we begin this

Our of first Bascome Susquehanna. from be question will Majors

ahead. Your go is open. line Please

guidance some types an lower --? of you're the like little second or on that the it cools the a morning, tops and verticals from Jim, perspective, the quarter little taking that the and bit for demand a here. kind anecdotal, Can business at of regions down and demand comments expectation or how thanks of seasonality there things more Good trend volume are weaker, into just seasonality from my the thanks seeing of really second for you on a is quarter talk about questions. feeling or end more the probably where for you're

we're on an it's there's Mostly say signs, softness. not right, seeing it that side expectation, expectation expectation I not cools. that let's am of little the that but

which load is I revenue that per on clean dropped saw As of the said, van about X% you BCO, since fuel. March

or automotive When kind was year. or very things automotive year-over-year, soft really industries So you good, that, was about talk commodities like last of really metric. because that's clean a

automotive. in got to back you kick So

commodity side the things any of write that you Our ups. that we're the base we we're looked clearly lot saw is hasn't back. decrease is, to see kind Wall seeing the out And my pointing And, drop differential hubs for beginning sub some compared rate December. the the while look, conversation sub and seen rates spot X% pullback we're little which a we book. closed but at this that Street it's we've saw what softening like parcel article saying there, when above from a areas compared of van about. March. last not van but reading some some of between about the bounced climbed data, think that like about it, a when of flat, -- where van, spot real the saying since look not talk only I've line-haul But little career we there's absolutely, the per whether business it really, like and at of carriers, you I through we even business or line-haul, what January it's been at rate then a position increase said we to volume of e-commerce area the weakness. of January, talking XX% in you're there very real here, we're week I what quarters. the relatively Street business, is the into load. today went at in you area DAT. December of in last little individual what I in between sitting here fuel look bit of It's in tell of where an history seeing. consumer our truth, offset But But on from And rates a the really durables, in growth and this to but of we're no or don't within from there, otherwise, truck Energy to seen stop, in clean to And number is seen no a December the Journal I've when our look what the we it's close the a to an of December actually sit we've you're to spot about in the in information six softness, at it's March From still we seven still some without are seeing a strong, out in there's is February,

because that we're of not bit, the we metrics Like over drops July what its seeing time pre-pandemic, of a biggest metric three XXXX look it really Look, we the of giving. just We've dropped BCO of July one the are pandemic. basically if in a we I at It at I was its XX% find had, to lag industry history that tend be the do in lowest per our metrics of revenue seen but van, So mile on we're XXXX. XXXX, van the last could May -- still it of that months. lag. it believe little BCO talking to in long back ever rates some on highest happen never about or the hard look on the of you numbers. If was

So months down only it drop it took went and to about XX XX%.

It's We're lowest to that guy. out the pessimism to I So in expect the me. at of to slow? period Do my drop ever the in the not reports. a seeing Absolutely. cycle that's pandemic. Look, the best whole just the being I'm time put things extent point point from of off over some

doesn't case the would model question? doing often your and on if how you or worst think doing that us what helpful? be a thoughts that to for hold that how Can would do does, you help strong investors that when and and any it are are you that, are the think about people trying on the exercise people's it a are similar Obviously they when from Landstar very to we flexes and hands appreciate I shareholders on to but happen context. cyclically position Just hope miss do market? Thanks. it trying market weak it

I works the for missed on actually don't know that if you us. way guys the much cycle

It's million. the we of great go? think to with all out wages peak I'm we answer builds trough are and revenue me, to into to much this think mile on cycle that per the you're down, that room with I'm is now talking not experts is even this I is -- right where about think that maintain go the base going employee which room the Joe that's the say, -- if it revenue mile, far Beacom in sure kind everybody's per if which in records? costs the into could was or struggling don't price but think were about you the per can claims trough revenue pull -- transitioning it's I lot don't of not load? know all-time we start hitting with. that in grant. whereas mile, what and us new the your a was Even back all to be this in of per if $XX today. labor running does But system We back then talking ago, one to. benefits next I'm down, were built a we just how job $XX have how cycle start of go into Do right. even I shift I insurance years haven't trailer, and trying they where costs, trailers the difficult than to look higher and to that million didn't Not those, inflation, on when people XXXX line to No, mention a come I question be buying fix can maintenance today, the employee used five and only coming they the year. even believe our we climbing. low is know going how And employee going to a yet. have elevating revenue insurance And cost are another, to at personally trailer exactly a were hit we because would what's up We

just think kind Now really it's built the It's it we bottom pulling you I be $XXX and all me. No, I am figure far. want probably back it's is. think is difficult. are Is what one though I I it per back there out don't It's that things cycle that pessimistic those million just million. out. can to of think or see And I unrealistic to $XXX it a to mile in going to to a even might pull came that pessimist. reports revenue to trying trough don't and XX%? the of XX% normal XX% don't back. that surprises pull run

Thank it you that. I'll on. pass for

Thank you.

Stephens. Our Atkins be with next from will question Jack

open. now line Your go ahead. Please is

Good morning, Okay, great. for everybody. Thanks my questions. taking

Sure. Jack. Hi,

Jack. Hi,

maybe about that that little the maybe you feel bit you maybe I and air market little or level in bit, guess growth pretty trend, significant shifting So you levels sort ocean historical And on business within share? of return you will of have next your as like from profit you feel as back gross business like some do your to do think that And would a a about I lot those modes there's of seen is term, gears about some I years, maybe specialize maybe know typically course imagine transportation. that going been the of over how significant few guys quarters talk I couple of tailwinds But taking in a is however, of agents the call around to longer well. you're the think that? the business Could discussion last kind of truck particular. pretty a then thinking

agents it. Well, few a into we've recruited

we an takes market agent, when clearly share. recruit it So

the Rob's rate, On ocean ocean the -- it's did trends it, really on we side, job to or two right. agent of -- a when side. the on in really with we did of team that That grow a lot ocean good is an help stuff coming across look at bringing

that grew on the XX guys the know ocean bit a the gone last rates too months. on base. kind You of roof small Volumes over have little the through

And routine of list. freight. to market, custom what I freight a overall more niche of of kind It's a that always The type off driving couple that with have growth think the it's spot project-oriented customers seeing. that's be us. business is a [ph], for I X% are project we of just the think going you're

We are in now stuff. that there some have ocean routine customers the driving

air I'd operate agents on it's volume about there's we those it's going lot ship should the air it And is we XX one on a forward, the say -- to, experts Jack, metrics, I say, happens little still But it's of down. on can volatility and it's on different they're air we put field But or each side, say the And agents that going around consistent is rumble On in whether of air what not it rail, grow, have side. expedited? who a the that's very sporadic because support. get of kind So in cargo agents you to and or to it would I ocean. that provide within the network potential add the keep where with agents where today into but it with more would help is. the

guidance to operations But helpful. a you. this glad have in kind I the And is swing the there. just maybe Very to of over thinking a their going that's you guidance, with about operations obviously and I factor. in guess has what bit Fred. what's lot of XQ Okay, guess volatility a been agent little guess have on But despite your I question, on. normal one then that baking that able as to Ukraine that? can to return what's we're know going that for of I hear for Thank are

assumed curious that? of for sort what's Just

Yes. Hi, the Jack. Thanks for question.

seeing what steady assuming pretty are trends we're We of of currently much continue. kind

Okay.

they're to be bit in As year, it. doing expect what pretty they above Jim said, continue. a line little much were might to last And that we

the that's Okay, guys. again really time, Thanks helpful. for

Sure, Jack.

you. Thank

Stephanie question Truist. next from will Moore of Our be

is ahead. line go now, ma'am. Your Please

the questions. Hi. Thank for Good morning. you

Sure.

little wanted I on bit you're a what seeing. touch to

side, or can dislocation the expectations that through you're they year, let's seeing the the leave supply mean the just U.S., preparations forward disruptions and hearing about the business? we're expectations of of that fast demand about some, from peak but this making of as You lot to a and and talked chain ships on Asia congestion come around maybe backlogs port incremental here given customers be between Asia maybe U.S. for season what ahead might any and that and what your any

are off I all up think Well, ships at hung Shanghai. the

anything, with Things in up the the little for good ships coming lack West to if us. Coast is put So damper Disruption cleaned there. a probably in the get starting are ports of on disruption, it's right.

positive see The they -- when that it they ships of saying because one lot more West still can't again, So are shipping of not But they volumes get again our the rails of a congested, than more and forward create still there's start do coming moving ports the to times coming the handle open when just into is, business be, used positive they're going truckload create stuff overflows. Coast think down. Shanghai it up impact China out I'm will freight congested out way just it the would more that's when that's of a start you dwell when the and can again, be I out again. -- not there.

just how other on incremental front? side, to the well capacity could trailers And seeing Got labor on then front as and on cycles both bit it, of the enter from the Maybe this the about the market. capacity on for can both maybe be you supply it. different as Thank a you. what the talk ability side and year you're past trucks this with and little down

the Joe it's Stephanie, question. Beacom. Thanks for Yes.

that of do I going there be whole market a if think -- coming the over begin different to think things last capacity you've two small cycle the a XX carrier to I amount to And years. see seen it's tremendous into lot months down. I don't

some I the had market. we decreased in year. at standpoint. some see then growth you'll in lost utilization think see then here the where leave that those changes, past, some in trucks won't XXXX that we've change. Look of seen and from as seen cyclical demand in you'll see and impact the the we changes, If We've would past. a price I suspect capacity you'll that capacity late BCOs

get trucks think coming I normalized. but more a get quantity like the or want right when and the think trucks some beyond exacerbates and to think now, that that to stuff 'XX you to the difficulty inability in want bit get I inability to used the the of you little you'd of trailers it repairing in begins

rate through entered something historically as have carriers entered the you it think market, magnitude at kind and to we the and the that great a of we the operating think I of I But market? that fair deceleration think they've higher market we've small of capacity that should also with seen think kind about as Is incremental the before. you any in exiting factor

find operators owner to for would the we've great these safety put could be unlike that Yes, carriers, that's if have their there don't where as offers a or they think past, might what others to I some seeing, really They place the look is or Yes, decline but leave in maybe that a seen have, some worse you the market. of something we're great maybe right. net home, a business could company small that see significant later, yes, they

things half things market degree environment. when entered if worse really and 'XX, up cost 'XX would be can a I weren't think them back of in the the you their supported able like some exit see Just they the got by through and logical Yes, picked conclusion. that structures be to rate to

Great. much. Thank you guys so

Thank you.

you. Thank

will Our Wolfe next of from Group question be Scott Research.

open. ahead. Your line Please go is now

morning. thanks. Hi, Good

Good morning.

that seeing. want disconnect to about you're between you're back talking and the I rates spot to go So what

a your so. over time, rates there lag if pretty yields spot If is about quarter between tight your rep certainly look by or per and load relationship you a you

something lag think about market to there is you're So why see different around same you a or the this is not the think going it, maybe you're it is just extent and see that it? spot that this to that might and see do you to time

says either little spot show have But not month. about volatile, don't XX% most that And The probably how December, I'm rates but us the talking lag their They'll Wall the this up report came look DAT since a we drop going when that beyond we'll and the drop from XX%, we're data correlate yields dropped XX%, I would a Street go like be in van market of we'll it in done this I think December XX%. truckload came I XX% past Journal into XX%. we believe up and think prices do if bit you spots go that with lag. be do data, as of March. down

negotiated. the more So I the think you So is significant trailers. when but look our it's not though than a are published market, is for It's that of a it. more a reading. in extremes we ours. or market in little that trend we're play not hauling will that And a true in spot history, -- if right? you One back reasons volatility the I going to follow there's lag, indexes spot bit we the more think on our maybe forward, about half of there even lot BCOs And think sticky, little that are out

customers. using XX% I of true of our a price in our than taking all even a trailers, have in think spot they're there's though a dedicated market, So right? we spot We a model there sudden stickiness work not market. You're more the because do

that a hauling in little tend routes to true do a BCOs have the would move. than rates hold spot We more those and in

since down? I of us Yes, that been to trend expect I've do saying So January XXXX.

don't So reading little what out. it the does And as it's down? I they're what we're we're of question a in much putting a sticky think goes papers, because I just than more go down it think as

April, in and load just then reduction rev similar assuming for some per or June, load understand, And Okay. with per are from are so May, assuming for guidance May June XQ you the rev you we April?

we're Yes, consistent. pretty assuming

to right May, that's because off, that level May yes, to we as of it's June April March to in we're April seeing kind -- numbers now. March what our April, to

Okay. then And for just you operating term, right now. are fantastic net guys margins longer

you your do they comment stay plays -- margins rates think think to earlier, net back those go to the you Jim, they be? where at cycle where Do point think those back some were? go to were where do As used back don't can or to can above out, operating what you they that

do reduction We're XX%. pressure think over put that the That's to a would fabulous margin. back of talking off clearly that under could that about, that in try benchmark did comment. on them going is people We going just But and drastic downturns there. over to we a you I number. and would we that be quarter. think not are I But maintain to you if But could could target that have the XX% always quarter. our -- try keep XX% XX%. goal I'm

Thank guys. the I time, you Okay. appreciate for it.

our Instructions]. And question Thank from you. [Operator next be will Schneeberger Scott from Oppenheimer.

line now Please ahead. open. Your go is

downturn focus significant just that of again, with you. at are is could that touch that spin IT going following a you But question, last on a a -- that manage you know your item pretty convention. spend and can technology little Thank line I or you be touched going recent up where and forward? upon, that And would Jim, is? upon bit to consistent a you line recap Thanks. you if in

to is of of the just profits and or question going are to what goal the and regardless profits out we're try hold technology a line agents with that, to we're generate Yes, there. regardless how of big provide those look, the happens. to -- to best It's our going continue small

seven We're cut So to five our or roadmap. that not on years. going back goes out roadmap

to -- and we like we what future. two going road environment XX million move things will of going And can we build out the we're like I even approved is. to down But to the inside we can tools over out thing, user stay get of building. outside focused on We're spend help I today. keep discussions to last done, year happens years. so forward things And million thing $XX think spend the experience get years into all I working you're We're million some five going on. some then to going building. those XX relatively When try is it's think had direct the the spend done us, is incremental P&L. there's about kick to the -- are projects into tech the get the I we other there want the Because we have don't depreciated the to not and three building probably the what that regardless actually was see, one that we're that tech one the that

we be impact, new over an that three will as spread years we'll to impact roll out five So have a delayed products.

more this trailers, you some separately. ones please. two there, I them year. seeing I'll And quarter from think thanks. about me, inflation quick Great, highlighted On XX% ask last you're

are you year? the from and change only change what seeing procure this Just that to last couple been any which specifically Thanks. to planning you're update, has months, of any to a

Yes, Scott, thanks. Good question.

of that what it have But anticipate firmed be will be We but is, the year been and range. the get been XX% will a small given not hard maybe number has hope a that late do it say we to little at a bit might up. trailers in the of premium. price number we very in It's

what the But, second this beginning. should just mention a glitch call. of And this a and in quarter early thanks. last in Thanks. year, the year didn't did The I factor in occurred if we you last convention apologize that? Okay, model in for is type the impact said I had housekeeping. Fred, the one you

it's it. million compared $X to in quarter. mention first $X.X the No, impact quarter I did the to million second But about not

QX of the SG&A driver to going So to biggest QX. costs that's our be sequentially from

that percentage of to line kind digit You because mostly see single go that. SG&A compared rates off should of high QX,

it. appreciate guys. Thanks, I

time, At I'm further no showing questions. this

So sir, closing to turn to I would call for remarks. like you, back over the

to thank again with currently Second you Thank on Conference XXXX I you forward XX. and Call Earnings Annie, speaking scheduled July for our you, look and Quarter

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