Landstar System (LSTR) 27 Jul 232023 Q2 Earnings call transcript

Good morning, and welcome to Landstar System, Inc.'s Second Quarter 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. [Operator Instructions].

Joining us today from Landstar are Jim Gattoni, President and CEO; Jim Todd, Vice President and CFO; 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.

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

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

not plans, to limited strategies section time. statements to, fiscal make in expectations. and filings During this Landstar's Factors the the contain described XX-K year information by SEC business legal that to we Risk objectives, uncertainties including, is risks Landstar's conference XXXX operational, information that relates time for to and and detailed forward-looking Such and financial may subject but the call, in other nature risks, Form from

actual information could Investors those events and or forward-looking such place cause differ risks forward-looking not obligation no revise or should results These results any from anticipated. publicly information. to materially unless undertakes or update or on historical reliance uncertainties to undue

environment soft Given freight XXXX quarter. truck well on with performed current demand the second available and capacity, the Landstar readily relatively

our to quarter trends picture XXXX discussion performance, I context financial to want provide that my beginning freight cycles Before results. briefly of big two seasonal discuss second items, and this year's

given demand to cycle cycles industry; in well over Generally both spot typically that we industry or we that trough peak today. and the to over revenue three to business, freight freight as differential between cases, the as years, past market these are industry-wide down-cycles typical of that a the industry by from point to ultimately of six the to In -- pricing services; the trough in peak Landstar's market contract stage drive capacity from performance and eight truck drive occurred level level driven freight three the the time for the up-cycles peak quarters. any of spot from And for revenue factors: the where cycles through spot during a ordinary period main are trough occurs at of the peak. experienced set trough revenue our cycle. in course

by Landstar's Looking XXXX the or second occurred of XXXX quarterly last XXX%. revenue second over quarterly back quarter pandemic. billion trough three revenue quarter grew the years, revenue occurred later the quarters Landstar trough the $X second XXXX eight in second to peak over quarter the beginning in the From quarter. revenue XXXX at peak,

second decreased will quarterly hitting revenue experienced quarter exactly the the revenue conditions Since make has quarterly down in during each to thus XXXX revenue end will again down-cycle current peak a and to four past upwards. far begin quarters. when Current the quarter, cycle it cycle difficult over Landstar predict has which

in recently Two the of have cycle normally are orders trending eight through May. of DOT truck given months DOT up have the availability, at the One, truck authorizations industry-wide the the three key factors exceeded of seven are cycles in. that we slowed revocations drive truck truck period and these last

two, contract And remain freight spot well freight rates. rates above

patterns. less third the concept be the of end normal mention factor my to makes timing the make continues predictable. driving also of down which demand I'll However, soft, of key the remarks, cycle of cycles, seasonal Throughout

highly reflected unusual those of revenue load from purposes dynamics today, trends and/or refers to XXXX, metrics cycle. during the XXXX, XXXX patterns pricing and to XXXX normal to the seasonal in and due remarks count For quarterly my pandemic-driven XXXX excludes freight

via in of the we second $X.X our XX updated investor $X.XX an initial per in number lowered anticipation mid-May, revenue via truck those metrics with guidance. conference. quarter May X-K quarter loads we In and estimates load guidance both used hauled first for of Now below provided release, to to XXXX an the due through the that guidance of 'XX billion. revenue Including filed and earnings quarter. April guidance second upcoming to the billion truck our earnings revenue mostly SEC We trending X-K, on the

That update $X.XXX guidance billion revenue reduced to billion. to $X.XXX the

per Our was initial second quarter earnings $X.XX share to $X. guidance

the updated came guidance revenue share on revised to based in earnings end second Our revenue at per $X.XX XXXX quarter per the lower both earnings share the guidance and was high $X.XX. of guidance.

driven demand XXXX, financial capacity. coming consumer we clear were it record truck difficult 'XX very out was comparisons by XXXX, facing enter we and year-over-year strong tight As the in and back-to-back years

second fact, normal quarter-to-quarter XXXX the sequential to load trends. normal came XXXX volume seasonal less and volumes underperformed second in in the second outperformance This seasonal XXXX and the revenue the truckload end through truckload per both quarter, In an first per From XXXX XXXX consistently patterns. quarter. quarter outperformed the beginning third quarter through and truckload quarter our revenue

the decrease revenue $X.XXX XXXX a in below second truck XXXX and revenue in on in XX% total billion the a load. decrease XX% quarter volume Overall, was load per second XX% quarter,

and million were below the or second XXXX rail, services XX% in air the $XXX quarter. Our ocean XXXX quarter second

non-truck shipment. The and of with ocean a in significant decrease revenue transportation per line was revenue decrease across in our the expectations nontruck lower all significant of modes volumes in expectation

XXXX put first in to below needs the half of XX%, impact half growth revenue the one by the Although perspective. in was the XXXX first pandemic-driven

the Even more exceeded by first XXXX, XXXX compared significant half to first in demand half given revenue XXXX XX%. revenue than the fiscal softness

first the As to truckload of quarter. from to seasonal volume, growth average Landstar's it relates patterns normal second the X% exhibited approximately quarter

quarter, softness with volume but normal below below X% second the well first was truckload in in seasonal our XXXX the line Given patterns. guidance, quarter updated demand, actual freight

and to XXXX XXXX. in quarter, experienced decrease Landstar's the third quarter we truckload all-time consecutive with second Even was the behind truckload second in XXXX comp, volume record volume first best only quarter the the in truckload quarter from the second quarter second still set

to it to in early into in The revenue truck a and stabilized pricing the quarter, Late atypical release near-term. XXXX second guidance. pricing of project very our first the from even April in been has inconsistency the prior the perspective, continued load quarter month-to-month stabilization spot seasonal per difficult making

to came almost downturn rates below took X% April and March. an a settled As end, sharp

the month-to-month past patterns truck but all since development, to in sequential change months Over peak have February in seasonal its modestly. June in months. per in recently, worse Most XX truckload May normal revenue XXXX, load increased revenue a positive reaching trended than per four

still hold was the seasonal than unsided by equipment below the After revenue van truck transportation up services. transportation breakdown type, patterns. However, better performance equipment truck and held equipment of revenue normal platform other

to on-site are significant in point -- XXXX, market levels -- peak I operate not amount for year cost equipment May July prior its than on stay of onsite XX%, peak sorry, in challenging its load XXXX revenue platform higher believe truck increased while per it today. than demand a called load in relatively spot van revenue equipment, from load. up on-site revenue per trough revenue load to will to May increased for revenue equipment its pre-pandemic per the as in low rates load per van XX% given additional much while over revenue to more The the on comparisons in the XXXX. from quarter its drove spike consumer pertains quarter pandemic-driven February XXXX per revenue The especially in

there XXXX. relatively I the costs is excluding ATRI, above fiscal Based was to room a June in equipment data truck, equipment than year in relatively for XX% and cost greater which approximately were rate van believe industry from operate fuel BCO particularly and on-site XXXX, also to respectively due on XX%, on further mile soft rate smaller per a pressures, during environment. market these XXXX experienced XX% decreases. carriers, spot cost revenue on that little

in second XXXX the influenced volume quarter below Landstar's type. loans Truckload XXXX Total the by quarter. customer second is XX% somewhat was

companies, to XPLs vary Landstar tend the example, where with Truck levels demand. widely and freight volumes provides more truck to For in Brokers, capacity change trucking period-to-period of other

truck Revenue XXXX in of on quarters, XX% hauled transportation and second respectively. XXXX on of XX% companies held was other transportation revenue -- the and behalf

more companies, and trucking Brokers of often During capacity, provide times more reach of Truck capacity available capacity. periods out XPLs truck than readily during Landstar the truck tight to other truck

companies by haul of commodity loads service behalf groups, of the XXXX hauled on line our transportation number below overall decrease truck the Landstar all year of Overall, freight substitute quarter, quarter almost second offer. XX% of on including other transportation the behalf XXXX our The significantly companies other truck was quarter second volume. contributing the over quarter haul to prior in in includes

incur XXX BCO the quarter, increased rates quarter. typical experienced has we decreased truck the truck since count truck improvement second is to It BCO BCO truck to Overall first in compared the the by decreased cap the when trucks, a XXXX XX% XXXX quarter. of XXX count approximately turnover decrease decrease. truck in During end relative

in similar XXXX rates relatively environment. van truck XX% in recent recent very rapid Landstar have during months, rate to which the any rate does truck at pace, by especially primary not average turnover the type most BCOs. equipment reduction XX with about There driving count. XX%, past is unusual equipment decreased on be seem a XX-month is currently to factors BCO the loads Over comparable hauled experienced rolling term the soft

P&L to performance. I additional XXXX comment Todd second the will Jim to regarding quarter pass other now on metrics

release. quarter $XXX.X so I included XXXX the In of financial the on second second compared other gross Jim was second quarter. certain press quarter, covered Jim. in various Thanks, profit information has $XXX.X million our profit the gross XXXX second to cover million XXXX information quarter, in will

the second XX.X% Variable was of quarter the to of in the the of was second same quarter, margin Gross XX.X% gross compared corresponding XXXX. last year. margin XX.X% in compared in million revenue of was margin the second contribution XXXX to compared period quarter. variable in $XXX.X XXXX XXXX XXXX, to In contribution profit second in million profit quarter revenue as period XX.X% $XXX.X

two, the has of which variable revenue modes the attributable The of by revenue compared variable quarter brokerage in increase XXXX to: increased quarter basis generated was in margin as quarter; points the to one, variable lower paid contribution increased was to revenue XXXX other in second carriers second second on an and by carriers transportation. truck independent than rate primarily an generated than the typically generated was contractors truck rate contribution contribution as percentage paid margin brokerage higher the mix by BCO XXXX a XXX margin

Other equipment in for an operating XXXX equipment. provision partially increased million offset $XX.X general million contractor Australian the due on primarily in XXXX. second compared increased of to and bad was gains quarter costs, This used debt costs sales increase maintenance were increased to $XX.X by

in in XXXX to compared severity in was decrease and claims period. million of Insurance were decreased the during costs compared attributable quarter cost insurance primarily $XX.X XXXX to a as claims second the The XXXX. million $XX.X accidents and XXXX to

BCO of period and period. in in X.X% were costs XXXX claims and revenue the insurance BCO revenue total However, X.X% of XXXX

XX revenue was basis claims cargo increase to fiscal per in revenue and BCO the cost to XX% primarily increase BCO compared to claims XXXX expense. quarter the increased insurance sequential was to The almost in loan. as point in The attributable and insurance cost attributable claim compared as first decrease entirely

million partially was primarily decreased attributable compared Selling, administrative offset costs second in customer a general The for increased variable programs under $XX XXXX. in compensation and provision technology and information bad decrease $XX.X to in and decreased a wages. debt, to quarter for the costs selling, general provision increased million the XXXX by company's and were costs administrative

new Depreciation in decreased programs in the resulting rate XXXX by million in capacity, increase $XX.X in investment both the in XX.X% software to depreciation and increased upgraded XXXX company's under on to quarter agency amortization The partially depreciation compensation XXXX and continued for for the was was trailer and second variable income compared applications $XX.X quarters. provision second XXXX tax million by second fleet. the XXXX due offset the compared million to was use This XXXX. In on tools effective the was from $X.X quarter. quarter, second $XXX,XXX

expenditures sheet, were Looking the was million. flow and of first we to and million for Cash the XXXX quarter of investments $XX at half Jim. cash million. our ended you, operations Back short-term $XXX $XXX from balance capital with cash

made year-over-year Thanks, the difficult for very The quarter. second quarter to a XXXX second XXXX Jim. comparison

seasonal quarter second Following us XXXX what third slightly average the most rates. quarter recent normal below would One the to than third expect we XXXX truckload and quarter, make during truckload sequential third quarter XXXX two pricing volume comparison less faced to growth XXXX challenging have both quarters. experienced

predicting a first the volume XXXX in seen in basis. lesser quarter, through few third to to have near-term load truckload performance However, degree, on of per revenue the not truck consistency date, revenue significant a and weeks per Accordingly, make we load challenging. day-to-day volatility very

earnings monthly July-truckload sequential release early made that patterns. trending Yesterday's was historical note comp below

count in patterns the truckload below Given in start month-to-month patterns have normal third forecast throughout sequential trend in low seasonal quarter. truckload quarter, we the the volume to

comp at month-to-month remain below XXXX below to we seasonal the trends, we normal in XX% quarter Assuming to XXXX third be expect the third XX% truckload quarter.

to expect quarter XX% third XXXX quarter. pricing truckload be third We to XXXX below XX% the

Given be and second seasonal hauled the of those a seasonal is to per loads normal pattern estimates, of a patterns. revenue the compared XXXX truck minus second to the to approximately be via normal number below above below X% X%, approximately expected truckload XXXX X.X% quarter, slightly quarter

revenue expect be to also second from our of XXXX most similar We that the quarter. nontruck to

$X.XX share margin per in of be quarter percent and we range BCO mentioned, somewhat in revenue. and of assumptions the first half to of costs $X.XXX the the similar XXXX on to $X.XX. Based in third revenue billion quarter third range XXXX to XXXX earnings be billion variable $X.XXX expect incorporates to to and XX.X% a as a plant XX.X% The contribution range guidance insurance of the

business half don't economy expected XXXX the to challenging in to in demand third few first is unpredictable. XXXX million. continues conditions of beyond environment, remain significantly the cash Landstar resiliency though, half. volumes to much forecast flow. free economic to Through difficult truckload drive compared we free as for year-over-year XXXX, XXXX. levels lower quarter the to very freight transportation generated Landstar's Directionally, overall compared generate it XXXX in what We relatively comparisons, cash freight of [indiscernible] to third XXXX first of to future soft experienced model significant the and of continued volume is quarter economic the the the next the expect Overall, truckload Landstar's Regardless flow are months $XXX change

years demand I remarks, and supply impact consumer beginning my significant the the disruption unprecedented revenue fiscal had 'XX of at the chain 'XX. of company's favorable and Additionally, discussed pandemic-driven on in

freight a XX%. XXXX significantly by over from where Although XXXX, we're increased revenue in to years cycle that those two vary

third Assuming exceed XXXX guidance the by XX%. quarter, quarter during XX% similar fourth plus we the achieve revenue the year revenue a will in pre-pandemic to of revenue provided XXXX fiscal amount

to questions. that, open And with we'll Bill,

will very Evercore. from begin you session. question Thank sir. At much first line Chappell Instructions] from we question-and-answer this coming Jon the the have the time, We [Operator of

Your now open. is line

quarter? bottoming in in think the bottoming maybe the picture be the a It have whereas backing by perspective. using I your thanks that Jim, you from Landstar know from may perspective, that of the detail. that load morning, given Is more the such Between is big into to revenue line the trying figure quarter. third comparisons just And I second like trying load but bottomed van the are that per item, it guidance for already mover the out, just Good a from some seems the bigger is fact thank all you. there. difficult, -- needle. don't I'm think unpack to of the quarter to and way may load mentioned right you the that about

would confirm softness continued we prepared, mentioned any or of I the we to in that. bottom, break we've because that down if on today. start and hope flat, that seeing are to the anticipating we off of are at my van be we're going actually we growth able But as we acceleration bottom you nothing some indicate both the are where detail it seasonal which to this level to either to seen of like

not a it into we're as down. the be softer X.X% soften where see We're the typically same third of types It's not generally might you It's go types equipment that up drop I on just there's in So it's seasonally would had. the not X% direction. but trending And or maybe or seeing are significant. trending X% still not quarter, -- compared like was, that both up. we've rates history it's to equipment significant say kind both

any then companies helpful. XXXX. That's than going in the time to market in sentiment disruption now, right changes your potentially relates out of the any probably since We And so segment. you strikes. lot business, of a the customers? seen again, around secondly, of this Okay. of kind potential And had Have more Spring there's from any

specifically from two, free benefit of Landstar the some any of to these that customers from side view rush for your in shift chess I from moving months? a country other. think the bit flow a to kind maybe And of XX one the than capacity Any they're more last direct pieces? over of

type than say recently directly move if to significant. I disruptors parcel we two discussed could that need don't other does Yes, us. of been that one a bigger have little I'd fact for something say carrier the affect different LTL businesses a those DCs of that with are occur But more that impact freight the very between and wouldn't us it's

shift -- last As think so the West us. Coast, impact the those hasn't for occurred East geographic I directly few as of in any stuff there's don't regions, years was the already over moving Coast that to were I think there

So that. you to When there I'm seeing speak are not things -- some happening.

where specific it's status. there very are It's probably regulatory for they're West six months. been with eight that, board. than last in the dealing talk trucks or the or the isolated out number of we haven't carriers leaving bit, a are In end about which market little but bankruptcies trucks available areas up push trucks of seeing the right Other on seen it's many independent carrier rates very You issues the out it's now, XXXX, same probably as contractor Coast, of some since there. to or across we how the kind not

any yet. an So to nothing of considerations upward have tick special really driving us

of person Scott from the coming Group Research. move will the Wolfe We next to

is now Your open. line

things want a couple just I of clarify morning. Good to first. thanks. Hey,

underperforming July they seasonality in right? underperform Jim, are that and September. August assuming you're seasonality. starting volumes continue that Is So to

is absolutely Yes. right. That

And process the is... thought on that

quarter six I we improvement by since April, haven't seasonal months, patterns. we second And X%. it's seasonal a normal kind think missing or in we what put we seen missed projected guidance seasonally in together quarter trending seven we or been we of be where on To in the trends that just the honest, sequential released with is we the when -- second conservative played X% little when

August? other I that indicating No, was guess, nothing with trends, So logic. I Can you, honest to see Scott. there's Do the patterns? be than

yellow enough. in some do any line -- picking increased you substitute seeing And to then the Do are capacity? up line haul need as share on business? Okay. would question, that think you haul carriers start Fair see that maybe some pickup your you you

expect, would quarter. about. say that, get the I something not that the to but -- would the it's quarter, hit going yes, something It's probably even be not we or wouldn't we third even to would see to material we clearly our fourth end -- radar any I of by if third be talk

not material. So

Okay. just a And big back. then picture, step taking

had are calls Are bottom? in where see are comfortable you that? cycle. at of to we you your we the say What's that? views, enough the Do good You've -- view? Do you

seasonal be talked yet. I normal, know if don't I there to say you, would would below we as our not continue trends just to with can, be we're to about, honest because that which that. indicate is like I

little slowed abnormal Now trends bit, seasonal a that trends. seasonal has still slightly we're say at below the -- the below I'd tracking but seasonal

bottom declare a yet. not So I would

I it's contract the pricing, do yet. it actually of pressure guy. the cycle far cycles, aren't in seeing and up especially we're the to and number pricing has are the still -- because system, got a with that the But pretty a trucks more prices coming just and you in demand I'm spot now. believe right? -- contracts not know away side right contract spot on little the spot And and we're You

going us I believer a sometime to still on believer who the XXXX, continue slip? off I of to demand an knows in And are that But think the we're am I me, what this going start right beginning end improve is giving happens six the of that talk trends, still the But kind to when now? where where I bottom. I'm is, does a it at with on Or quarter that XXXX. of to big if puts To to demand. about happens. hesitate coming That's actually on eight we

So visibility hopeful, but is well.

Okay.

Yes.

Atkins now Stephens. Jack the question move to next of from We line coming the will of

is open. line now Your

taking Hey, morning for great, good questions. my Thanks guys.

you a So you to I us maybe could can this kind guess moment. maybe of for there you're that? and talk kind the think of decrease about that look Or third-party of Joe, with we at BCO maybe a perspective. is from front help active kind of the to capacity love capacity is maybe? go the -- the of seeing a if about attrition? terms And carriers. on broker take anything is driving of back both cycle I'd retirements that the in in the -- Is that in broker what you terms thinking Can effect thoughts

I Jack, the of above. of driving all is what's think kind Yes,

driver the primarily the demand environment. what's environment the and rate think I is

said Jim -- 'XX quickly from the react changes 'XX. to see I back we declines, back remarks in to to that's got that the economy we think here. think 'XX And when think, terminations. into in numbers rate I'm from go -- more just to some I BCO price. just tend I've really front I on very, And strengthen quick demand we some saw and going as his

'XX. So XXX in we added trucks

It of year, We last in of 'XX, what strength XXX in back quarters year. in softened 'XX, we're it in all two added XXX happened the Continued mostly the back was XXX lost we first added half this year. a because XXX. little know the in good three XXX and down year. that a quarters We year. added of lost XXX into we XXXX. 'XX, bit We the in We

rate just tend So that BCOs very be to our pricing. reactionary to and

retired have And so of -- sure. a lot of for them some them

somebody and -- difficulty drive for little at repairs kind or We either From a something retire saw the We to different saw their opportunity such decided perspective. the took big That's a few in of It's to bit. the premium was cost else. quarters. or impact really Jack. it's of Some of kind BCO for all and last that. question, the a when the go above equipment sell pretty the of lessening a it some answer do was to

On the negative. side, are carrier the revocations net moving

is I industry think there's be number as new that, you rate thought lighter -- data it that thinking, think obviously, BCO leaving the the little as of -- people have. agree we the I carriers just data accurate some that a timely with would and bit the maybe might a it little and I carriers that. that above than the a still that into than where we new system were would. maybe don't And know that's if coming get at

There's conditions from think. time trucking know the anything that's or that. some sort, California, there, if own just time. tough speaks it's be ATRI like out to there. tough if a impact authority. mean, at generally, look on I mean I be think to So your I operator, just index FTR an don't a it's to I I be you optimism. The got you don't that's But data of that if know where can't owner you I

owner-operator the of might who the today turnover stands a reluctance leading And to at so the and to it market or Landstar. small I look that's as into what's an if carrier come some think you're

that? guess, season? of you? you. super then know customers indication kind it for for sort Jim, just helpful. that. of I you commentary still it TBD? you to Any And from prepare on How might what is I they for That's but hearing around be may maybe, anything from early, are need Okay. peak around Thank from still them Or your

all I it's think TBD.

we peak is a we you but a this from I little customer request give will increase probably trailing -- coming during three hear that, the has the get think year. slight and coming But into returns it in but way going request for just they're seems that's the fourth into equipment season. way, I through quarters, into than the confident a are Other we trailing not this thing end that down a peak I over last it's standpoint, thing -- year. Then to we the just thing, for end request about don't the all there's probably one one as that grind see big think two, season, been equipment quarter. of of I like got. the we're through as did -- going

I guys. Thank appreciate you. the really Okay. commentary

Yes.

We from next will move of now question to coming Majors of the Bascome Susquehanna. line the

is line open. now Your

What today. you a these concerned some that the Is seen history? year? and have If might didn't things you're look or after, cycles the kind does look downturns operated or XXXX a usually, self-described or I like few look for flatlined at you 'XX to say where cautious bottom-line cycle typically cycle as recover half have the some top-line and extended cycle -- you've guy an at second are any even downturn anywhere. the in Jim, of years one rhyme compared mid-XXXX pretty years, a around of snapback really here. Landstar's that you've if reason through And see a how analog down we after and analogs? it your historically, to that peak historical doesn't But of you feel or when earlier down really that periods. have in we're at we out there is quickly curious go of I'm coming there year you

year very peak unusual trough down is bigger the Well, because year, ever right, to this than been. it's

I we figure that to out, internally. next the hard what mean, gauge So that's and trying I peak to it's to really is. think we're figure where trying

back The and beneficial. XX You employment are six And in to much or look to now the the to from has our getting at where information pretty shippers, probably stuff back which to the I last access and coming like XX%, in to significant they XX that. their is XX truck oral been months, if use. sure peak rates XXXX, I over could bids that. see prior that's not go pricing DATs Because was years trough over due right we're next putting I'm pricing it more we're from 'XX, than if

see can may higher they lower. all or this Now the and pricing data, be that driving

So to not spike, grew to grew you're going years. flat peak, expectation those XXXX it spike better to the when expect pricing XXXX near when I But see my XX%. going we're see van is than would the

driving on Just it's done the agents here into the whether performance things with the system. the and agent and based technology sales we've recruiting more and

really to need project with the tools. it's demand pricing well that, think to We're the hard consumer We prepared than pick up efficiencies I agent's side. tools. new office. the that. Other out we're building But rolled from really We within

the can So more the in we of goal can our to past. this sure is same do they thing That's have make really turns, when attack better number we people they have. with volume than

back about that kind come of system think on incentive up the financially? are pointing when Thank still can again? starts a needs don't XXXX, return comp you costs do you us that you. as from -- other recovery, the line. you not Just but that walk -- not which 'XX that. the to as we can to, whenever leverage of but When for flex but how downturn? Thank model fast you I or this, wants how the Jim in quite upside line to out get flat answer know comes, that the maybe revenue through What

and income our trough our XXXX, to leverage have be can -- get old contribution. Well, profit, going variable is off hopefully -- about variable hopefully so -- as That's through to incremental growth is We -- to clearly, clearly, one the guy, it direct talked incremental that grow of the to push call so refer rate. and which I'm the going we to contribution, we talk gross I always XX% contribution, to operating goal. growth XXXX, our be as about and year. allowed in the of to we growth believe variable not We thing bottom contribution through I'm an we've the

pass-through programs variable incentive going XXXX, like our due or sometimes. to that to coming get line. to of are that though you incremental contribution think can grow coming We our variable you have XX% the in thing One again. start almost start do do got to But low XXXX we to into XXXX, year. relatively the booking zero We when the that bottom growth about back headwind off is where year compensation, things of believe

model. lot too or put there's so volume XX% this percent a we we So grow have of don't to infrastructure built, of in the SG&A because of headcount, but more is business the is much headcount our leverage top on really as organization,

-- XX% think have say in I'd a project XXXX, to for the because variable wouldn't talk and I actually our that what headwind comp we about earnings. to with compensation Jim is of pushing we kind that incentive the go about. goal I can XX% push the do variable through, back being And growth variable we're XXXX So of contribution. and programs But would compensation talking travel programs

Yes, Bascome.

if XX quarter, case say $XX 'XX. case 'XX. such, to million best as an versus now Jim's million scenario. back tailwinds, second February, one-time, of 'XX in versus a I to on anticipate quarter, $XX kind I to 'XX And recall, those updated XX. now that an numbers, I XX And the our about would to you in headwind XX can So point, is bear in at a 'XX I to gave we on Well, tailwind first hit flipping if programs,

Its both. Thank very you helpful.

insurance our That's that everything line, of Well, a the variable else pretty and biggest of constant little the for than is bit cost. inflation. unpredictability the other

trailers. program. inflation other on the of set, kind than unpredictability the except of and on bit the insurance inflation is that. the line variable wages the maintenance of little typically, and But on got for had We a compensation infrastructure You've

We will line to move the Moore the of next from coming Stephanie Jefferies. of

Your line is open. now

appreciate that Hi, thus given good so morning. type think color I helpful. all the far. it would you. be you've Thank of I And

various you I reasons, things talked times that. trailers, called think of maybe out, for you the maybe in response like dropping past, lag have or whether can agents the often definitely how where it's market about Landstar

industry little be bit apparent event you. you we more it broadly from in would maybe an to about So for in talk a Thank a -- you the can bit sense. if makes little turn are start standpoint, a cycle when guys, the that seeing

a that. coming FDR per at side. premium track, watch and or everybody of on our we haul revenue of the lot industry a look up or data things Well, now DAT right, industry the a bit little BCO data like the you whether We that the else it's to freight watches, try compared when we mile data, kind

a trend higher, the And but similar maybe little if is lag. slight XX to on in tend lag days. directions a So

is enough upside. still maybe but both that little fast looking pricing tend to is on the the not industry to the climb we're We the starting react see bit, flat. at relatively or sides downside a You'd on

that we tick-ups or So to by see that month we in a lag if data, two. industry probably start

we're not BCO up it time So much. we that XX saw per right? I kind had was the The of seeing right say there's think not it revenue one to the actually because we're maybe fuel, positive first -- that, excludes another But ticked was enough now, end but mile, could of in only all months, seeing month. we which not imply we're sign June, to that you're confident from May the other actually, small thing downturns,

it's think the to to will the on out And we side We sell. we've bit, our there one rate watch. right? up going So And to trying volume drive we it's mostly see stuff mile not on a of kind little seen that on positive demand but a revenue stay. the we're us side. But hey, confident volume, yet the side. to van The look, bit, is little That's we're drive volumes BCO that that. it's trends month per

follow-up, and in has you to share little And guys. which unlike little given touch in on wanted the it. kind there that appreciate second if appear I seems been just allocation change then it. a just there a Got of maybe capital quarter, to the my kind be repurchases of void bit I a any strategy, of

allocation? updated maybe So an just capital thoughts on share repos and normal

than be change, today and when Hey, XX XX, XX, a price don't of no Stephanie, ago. less We'll months we we approach, patient it and being sensitive the as run-ups. same was patient cost lot is chase are

person, now move Amit is next Deutsche of the Mehrotra who Bank. to will We

Your line is open. now

you, count ask in Ben your handle. BCO lagged calling down a XX Moore XXX 'XX, 'XX bottom? have that the to further to is XQ handle XX [ph] Amit. might It This to lag handle. down wanted at to for be little signaling looks to led say could point XX Do time cycle? I then COVID it XX And the of would What about are further that with handle. respect down that's the down the to XQ current like a in further? sense we further the to it what you in where Could you

decline. then we see similar QX QX. and right think Yes, in think further Ben, again, demand now, But like QX. net slowing little we'll something out really, that bit flatten but hope overall, QX, saw a would decline. we in would think a it in depending seeing on I in July, decline, we're And slower price, I -- I to maybe I to is

sequentially improving new Our adds of are sequentially, and equipment, year-over-year. both additions

and prior is are terminations year, utilization sequentially, our well the improving. but improving Our behind still

was It And QX, prior utilization BCO of X% June, it QX. was it's is month minus to So minus the in X% year. in actually in flat improving.

with I to think a be year-end. based we close could that macro that's the good on environment and the line But hopefully, So continues by trend demand. bottom what happens coming

not And focusing linehaul new freight? a so, say settle? just piggybacking it of And be on rest be it could rails few would this the to benefiting might a outsourced in the Would LTL have, Great. expect just question freight finding cadence and of of of you you you Thanks. situation. carriers, if the that portion in what on the terms industry, on earlier you truckload kind months the for yellow terms of the

anticipate coming like don't needle quarter, but talking yellow any said, the There significant anything that. or any in imagine to we'd us the something We about year, like kind of can't third something, for moving actually. I I the or be volume might from bankruptcy be

than or isn't the in relationship LTL. arena it that is some package like carriers other other Our parcel small and with of

is the to now move of will person, who Bruce next We Stifel. Chan

Your line is now open.

maybe away tech and getting the Everyone, haul past detour from for couple a the we're cycles little where the seeing little bit disruption it, maybe of digital thanks And call AI. in a of of brokerage. a a five new question. years Jim, cycle kind

behalf for much make And industry? that or there agents? your So the number investment on brokerage AI can potential in or from exploratory you, investments I wanted in of you ask see disruption to guess, I one, do you early your any either here business are

between A say freight move I truck and and right? B, to would communicate Yes, that paid point the to from And how the and pricing. you you it's effectively the get efficiently data point back shipper forth and

and their technology efficiency communications and AI the me and the So the more between carrier about needs. communicate customer to improving is satisfy and you how

change we point does that, what and A freight up pick not vehicles. But you do is paid B AI and to point to moving get at remember about unless talk autonomous

in are carriers improving the to it. the different how call volumes to a we can on that think there. customers. it's working mean, pricing whether tools and guys than industry are have it's efficiencies with or team disintermediate quickly We Absolutely, I coming anything are actually are we the our on disrupt and I we people I credit and Uber we of -- those out think get brokers. how building within saying going that's communicate in Do they're don't or

you just same is I everybody the to think the what doing latest technologies. thing. up think got keep I do is with And

you It AI blockchain big ancillary got don't more. it. top that it. market being more everybody had, on recall, while. price on think there's usefulness lot on you But that If of we're all what here algorithms And than talk probably one get got for stuff, but use historical spot is a the these and I bandwagon got a thing has -- about you thing has predictions, right? blockchain definitely their and we a

years months. or daily. I think us someone remember saying for tell six in that I And we they about market months, for you no, competing tell seven using they spot to pricing could can six pricing ago, what you data you had changes six that give someone spot And and is you're

kind very a data project spot they're something taken thing It's I volatile right? historical it industry. AI, into turning of think market about in the same trying to and

AI and other the like And and lanes and out useful with quicker on about all communications and in customer. said, information quotes getting and that's improved to it's freight thing, is the stuff. algorithms to going To communicating your be optimizing very and what getting that, chats the stuff me, like I quicker to customers

Yes, that's great. Thanks for the insight.

Yes.

We from Scott of the of have person Oppenheimer. coming line last to Schneeberger our the question ask

Your now line open. is

a morning bit building Good wanted little consumer that end focus It the kind a say, very on the I you're the products, looks and machinery, little I'd speak seeing. like doing markets. industrial to you of bit to much. than categories. Thanks all. other Jim, trends could better

curious, year? the to questions call on of or see opportunity conservatism this for green lot trended mentioned of it one the back or in opportunity want has than of shoots a come? a how I bottom Is -- more some more you is first that just maybe just half? in honing on Do think rate didn't to or unsided I you on was you on-site. volume

money Yes, shoots little I but in all more I from the place, we was van limited. it's May up which saw revenue regions, BCO green go that June, and only looking really over isn't maybe a are have, to mentioned very the certain carriers for

and comparisons look going because seeing with improvement perspective, as anticipation on up van better think at than see So going the with was much flatbed to to recover. building comparisons manufacturing, than slow products was turn would quarter I they're from point, But growth this to what's right? little doing corner to consumer and as and was that weren't right? on going think and a less, when flatbed bit down the much the I more we're at flatbed durables, from machinery flatbed at looking year-over-year van they perspective, you're a I volume a going over down

year-over-year to see ago. I that call anticipated see probably shoots of better, -- type we're in going the durables pandemic, that the products from six yet they would would building but any there from seeing growth a people don't we that's like or any products -- Again, doing think are the building said, a weren't And things. of we're that. consumer drivers of machinery change comparisons don't and I months indicate I what lot green think because I as standpoint was in

yet. stick So guy at with but I or I'll at. the looking we that just to would bottom, say that's hope And not we're -- we're the what trough I'm a call a

your pattern this All Appreciate Thanks. given on spend -- tech little year? was like right. that It competitive And bit color. you're about doing year. kind with a spend were environment kind AI then threats shifting the Bruce's you this the what your to of seems given want you're in asking market of ask or shifts more in following-up about he the question, industry. Curious

your may comments have how digital there you Just any an and progress on tools system? in Thanks. that going is update and

being investments. as 'XX over when the our improve 'XX 'XX over the from put 'XX on when in green tweaking back I of role I we to XXXX, the to climbed as is create XXXX, IBM screens in accomplished in still a technology -- push And I spend little which digital lot on We're a President CEO opposed clunky. a organization took we to six last and will to tools got 'XX, be 'XX, the we've mainframe, and everything. but the big But Yes. really years, made to

as to I out consistent tools really more year-over-year, now, six to $XX which building our is million AI includes is ago. years $XX would and digital probably say million, prior which right compared spend pretty

investments the still on consistent digital it's and how or are still we're now technologies. more it. So whether we being AI we're just on working do It's made,

once the logic. with people. within many That's so do kind have you IT of X,XXX resources, can't only You at and subject building experts two matter and the things

AI. So is spots we're being picking where we our one we try beneficial, think and

the today, digital -- the digital But tools, X, you but But tools. can about they had where We've their really see at talk app, phone carriers it's It's on then. since are. BCOs all right? digital. weren't 'XX, want can can got They They or can we back They they digital fuel anything a stops identify loads. phone. called look Landstar it's XXX% pricing. The called do

top and to thing to digital, we're So best of stay the tend next there. innovative on and be trying we

I for we side. using do where to or up that the to improve AI with as of can like have it help and us everybody. And else team ahead that's a building everybody we right say built areas been outside and -- we're actually AI. one is differentiator said, But up relates coming watching The some efficiencies within with I'd with the identify BCO

than people Our broker just they're digital BCOs. doing very the because specific tools are are who freight, different to

dedicated basically us got we've providing mid-'XXs. since to So experience the tools capacity to digital

third-party of So good want very knowing of that what we're push and the trucks the correlate we kind it to kind carriers. from us, at and out

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

knew to continue. be expect recession, would Thank 'XX cyclical year I to we into a tough industry year likely on XXXX to the at be very freight the normal common market spot record the patterns coming this our U.S. you. We headed performance Nevertheless, that 'XX. and off

early point or the 'XX. suggests And see to History you, I inflection a Have next As again call turn with I will October Landstar's for could late capacity be say 'XX third-party speaking employees we time difficult earlier, the when said currently current it's ready. comes, although that look you good into up earnings to XX. precisely on down agents, third scheduled of cycle cycle. an when day. quarter XXXX and conference network will forward our Thank in

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