Landstar System (LSTR) 1 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to Landstar Systems, Inc. Year-end 2023 Earnings Release Conference Call. [Operator Instructions] Today's call is being recorded.

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

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

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

Before conference Securities or 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

release business XX. We Factors revenue Landstar risks billion. that billion to at information, issued about our the objectives, we soft fourth freight XXXX. The soft Actual such $X.XXX call, $X.XXX we make from SEC XXXX came XXXX our information. The that relates were weak fourth October to below quarter in truck Investors of forward-looking may risk season could those to Such to the peak publicly low any XX-K included Landstar's quarter what information historical Risk with and throughout by should provided in peak the to Landstar's Landstar abnormally differ season, not update and earnings events quarter reflected by uncertainties detailed or place strategies year During guidance. other time. even is this revenue on with quarter the consistent revise with end undertakes actual or These conference risks mostly freight performed X% Form from fourth legal to, of first undue described $X.XXX time the forward-looking demand for line of quarters results or information, no materially anticipated. X XXXX in plans, available readily contain a billion, standards. statements financial obligation expectations. conditions included, and and and subject not forward-looking environment capacity. market XXXX cause experienced Landstar and guidance Nevertheless, the to limited an third during guidance the also on in filings operational, These nature, uncertainties results but and in fiscal historical section reliance

that We of above outpace the levels. in the the low $X.XX fourth over earnings quarter guidance revenue, revenue again XXXX share was Actual the XX% worth XXXX by per and the XX%. performance XXXX per earnings fourth quarter continues quarter to slightly noting guidance. It exceeded share prepandemic fourth end significantly also XXXX per issued to $X.XX, is XXXX was earnings fourth approximately share $X.XX. of the quarter

on note detail XXXX Landstar's normal make in performance quarter, trends. of further into seasonal fourth diving please or mention the Before normal I patterns will

periods today's and XXXX XXXX be weeks, revenue, sequential normal For normal due our It weeks. XXXX quarterly and conference a trends during the load in pandemic-driven the unusual trends excludes the seasonal quarter for the per billion from below other revenue volume monthly in truck quarter, included fourth XXXX call, whereas fourth quarter refer noted purpose to or included count, the XXXX XXXX, XXXX, the patterns to in metrics a the quarter, decrease XX% was load. in of freight cycle. Overall those results $X.XX historical XX to XX XXXX, from or fourth that fourth and should load dynamics XX% pricing XX% decrease revenue reflected and Landstar XXXX highly

to the truckload fourth fourth the decreased in quarter volume extra from volume compared quarter. in XX% estimated quarter, the XXXX the the week XXXX truckload estimated Excluding an XXXX fourth

from sequential freight typically the a loads below a to types in fourth normal the quarter-to-quarter normal below the trend truck demand quarter, the seasonal to as XXXX quarter, count for volume patterns. slightly hauled fourth given normal we the third the patterns, patterns, second the early and XXXX was volume quarter entered the the X%, trending third compared quarter hauled in patterns. fourth increases the truckload of in number second we normal started consumer slow the due from on a fourth through truckload year. the seasonal As via XXXX quarter U.S. XXXX soft XXXX seasonal quarter XXXX quarter number underperformance decreased of to of October From was normal loads manufacturing seasonal each truckload in quarter, to hauled truck The change sector. Based below significant in via

pricing, truck on fuel October is and primarily per barometer load the costs. attribute mid-October, reasonably load revenue that metric after environment, and to at to per season. We abnormally a rising However, and falling patterns to as September hauled from seasonal negative normal peak soft first revenue weeks to to November impact the through as of October, revenue December. We truck of normal the excludes trended As October, of rate via this softened loads with November per look seasonally BCO pattern the patterns trending in few line mostly mile below

higher BCO the fuel compared mile stable platform remained were whereas the respectively. BCO XX% XXXX fourth in During on quarter, to mile from equipment unsided per unsided surcharges, and equipment, to December which equipment both December through on softened cases, XXXX, October in equipment and per revenue quarter. BCO December, van XXXX revenue van on XX% the fairly excludes mile per revenue

greater to in industry excluding rates December the words, XXXX truck. in from over than in on truck cost other increase has a ATRI, XX% approximately However, XXXX. In likely fuel the period, cost not up to since cost operate the with based in increase a was XXXX kept data that operate

relatively the than truck believe the a to market amount higher in levels, given significant operate stay to of additional continue cost that will XXXX today. spot rates We

soft manufacturing sector. Other of for quarter line XX% load haul line favorably without pricing. the softer substitute a demand equipment XX% decrease comprised unsided the truck compared was impacted below in on to quarter, unsided platform compared declines to terms in fourth quarter, demand services In quarter, XXXX. Less-than-truckload XXXX the fourth only hauled and to by substitute for from U.S. pandemic, quarter. Revenue van XXXX power all services mostly the revenue, a equipment, hauled Less-than-truckload experienced of was XXXX fourth transportation XX% the by equipment slow type a on van XX% significantly which compared revenue significantly quarter. Unsurprisingly, fourth decreased during XX% via equipment, consumer in volume, mostly Revenue via revenue, hauled. power revenue throughout decrease was and revenue we XX% fourth XXXX via the fourth only is was haul equipment increased the platform XXXX due freight below XXXX hauled primarily demand revenue XXXX the to and revenue,

network quarter. Our transportation XXXX fourth XXXX with mix. rail, below Total the fourth fourth revenue XXXX below was XX% XX% quarter was, in in by the fourth volume quarter. Total services revenue low consistent quarter. or the generated revenue these air third ocean were and million XXXX however, the is in generated XXXX fourth $XX loadings the in customer the quarter the Non-truck services quarter XXXX influenced somewhat

more other the with demand. XX% the For and other tend XX% example, to to Revenue and Landstar vary in in of truck period-to-period, truck where transportation of provides hauled quarters, behalf and truck respectively. freight trucking changes brokers, of XPLs on revenue capacity companies XXXX volumes widely transportation XXXX levels was companies, fourth

capacity reach all due available includes fourth BCO XX% to of was out cost other significance hauled turnover was environment. We higher behalf the turnover below truck often truck and truck count. on XXXX times the of the truck was period the rate Landstar other prior to our tight XXXX other of almost truck XXXX turnover in XXXX quarter the believe than the of brokers the increase than comparable companies, to hauled during year-end of which XX% soft year on most in comparable The revenue truck capacity. relatively BCO Fiscal XXXX decrease rate commodity by of rate was Landstar is the experienced recent XXXX, the XX%, compared count truck decrease Todd quarter additional periods XPLs the trucking will $XXX more transportation now comment metrics quarter million in to duration XXXX groupings. Overall, Jim to P&L quarter negative pre-pandemic revenue compared provide freight the the capacity, Landstar and truck rates, today the load the in of operate companies other transportation truck the rerouting the approximately to contributing overall performance. Jim? pass to periods. I revenue. Year-end During during fourth XXXX readily in behalf to quarter, XX% fourth truck trend XX% month-to-month below on over in increased companies of per a

prior XXXX. insurance costs the in period. The corresponding in in fourth margin as period costs increase other generated to costs revenue compared of compared in on revenue quarter, compared partially the the primarily increased percentage quarter, transportation, in XXXX was was increased Jim. independent included XXXX $XX.X certain XX% in million the coverage. XXXX claims in of various in used development compared the a and XXXX revenue increased equipment as fourth XXXX period G. million The maintenance primarily BCO financial the to costs revenue premium covered of of contractors, an XXXX increase in million barrier XX.X% the offset to BCO contribution to in primarily $XXX.X quarter profit fourth which was last $XX.X information higher BCO fourth expense typically as was were compared generated fourth trailing $XX.X and fourth fourth has and to an $XXX BCO variable X% gross XXXX by the fourth independent variable in the quarter contribution of XX-week was $XXX and was in release. In claims to press generated to quarter, contribution to modes to was margin costs quarter. by in the I revenue quarter, of Thanks, year. claims compared claim excess quarter equipment. Insurance contractors. Other has margin profit of quarter. Gross on decreased and million information and were estimates, quarter variable commercial in cover XXXX operating million Variable quarter the margin fourth net profit to liability same on decrease attributable Jim the compared for to attributable primarily gross gross period $XX.X was will fourth auto other unfavorable XXXX decreased XXXX contribution million mix, were margin compared million in our million revenue XX.X% of XX.X% of gains insurance X% of profit by to Total increased by than of and XXXX. In contribution margin This XXXX fourth due $XXX.X XXXX trailing XX-week XXXX. year XXXX so sale the revenue

$X.X costs selling, and in general $XXX,XXX XXXX XXXX decreased was employee unfavorable $X.X The costs $XX.X respectively, compared to and year million million, quarter. Depreciation state insurance increased and compensation $XX.X and fourth This the benefit by company's depreciation primarily decreased costs. In by in income the XX.X% resulting equity in claims included of and a were fourth claim compared in variable rate depreciation million from use quarter During tax points under programs, the the the under software was the the to XX $XXX,XXX quarters, the XXXX for lower investment primarily general XXXX. and basis tax prior upgraded for due decrease million effective was fourth in applications, partially XXXX and tax provision million for million of offset XXXX quarter the XXXX developments. trailer than capacity was and in providers. The certain $XX.X tools variable rate estimates. Selling, impacted by to programs income fourth in positive by administrative fourth third-party provision the in fourth of fourth compensation on to compared increased and XXXX decrease the administrative as the amortization fourth net on quarter, agents XX.X% costs in XXXX partially favorably effective attributable fleet, quarter XXXX. was rate to income quarter adjustments $XX.X our incentive offset tax quarter, new continued to compensation was effective in XXXX

addition, assets of attained effective as fourth XXXX rate In unfavorably the performance compensation to as impacted quarter arrangements, tax conditions was employee result by tax equity of the and a deferred year-end. the related being in impairment

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

peak Landstar quarters. Through past freight the trends Thanks, X through That and the cycles demand factors: years level between set quarter-to-quarter X trough revenue freight tend typically XXXX over X the the fourth in the the peak of has we consecutive Jim. pricing cycle any norms. either the We with where quarter of trough services, to and with quarter, freight cycles drive freight of our XXXX second cycles entered up the the up industry-wide by quarter. for last. In comparisons above trough given business, course XXXX from driven case over XXXX for performance cycles revenue record truck contract from the differential cycles revenue at to each as down quarters revenue experienced coming pandemic, revenue historical achieved X to the capacity year-over-year very to being quarter, XXXX that peak second and challenging well higher that record availed start below stage drive XXXX. Landstar's now seasonal and decreased ordinary environment sequential or cycles, are X quarter-to-quarter of occurred to revenue a are move from time. were trough ultimately that to point main trough the cycles These spot of as for the off in difficult revenue level of today. From we in to industry down peak second in the from seasonal lasted the revenue X quarters. than Generally, or the the record up trends peak, set at

quarter. cycle above been seasonal to to we number we the in by January, season weeks first per consecutive of revenue revenue expect the quarter. around with volume first fourth for have This normal quarters, the expect see growth truckload down via Given truck the line peak to fourth in is revenue track expectation seasonal XXXX. Currently, and in we driven per begin and quarter several following trends XXXX XXXX hauled midyear load norms in the weaker-than-normal in a truckload and XXXX X of loads truck

anticipate of in large from which expectations, revenue, and XX.X%. Please billion estimate to $X.XX higher anticipates in mix is contribution cycle is could demand, as somewhat any a the tighter to seasonally upturn softer is XXXX. to quarter. Higher margin XX.X% contributes $X.XX contribution in as following that Landstar $X.X as we margin the the those to truck following to we higher diluted per contribute seasonal quarter and note typically variable a capacity also This shift of contribution the during Given first year. to to move historical earnings be mix, to margin quarters. The contribution often quarter the of suggests XXXX trend, the of a variable a revenue midyear of in quarters than X This margin truck typically range percentage first first the experience other ranging quarter compared variable attributable $X.XX. in may to than expectation increasing through in in revenue be share truck range a earnings on of market given brokerage modes, X first variable brokerage towards highest first quarter contribution variable in quarter part the often margin third-party a most the BCO a revenue is billion the

for full XXXX, As current full we variable contribution we first to year quarter points. not for such, fiscal XX XXX the representative below year. Based first in guidance for contribution margin by assumptions year quarter variable to the first what margin expect basis included of on the is expect the be the quarter 'XX

to year environment as model free and insurance and the pressure continuing sheet freight expect for early with prepandemic through markets drive returns. year fiscal still less being a environment cut equipment flow has environment. demand softened the inflationary in have ended cycles flow costs, year been Last the the cost variable work XXXX mentioned, driven and part the freight out balance than of to of a throughout the of its of we terrific before, than previously of ever standards. many freight to it, to significant continue year robust XXXX labor, cash that Landstar resiliency less our compared significantly As nothing XXXX. Regards Nevertheless, achieved and to Landstar's cash dynamic and business continues soft generate macro business due conditions $XXX fiscal freight by million in before. XXXX in we a stronger XXXX free financial

to Before inputs that questions, to at would trends refer when I a you metric, patterns around the volatile look season I guidance. relates We quarter be. as the the more to And open it little first the to more seasonal the often want put more quarter-to-quarter. a color short-term pattern financial seasonal patterns,

we revenue, only to relate revenue seasonal to inputs we truck loads example, hauled. of and For load per it's patterns. It's look number X revenue. when the at There's truck

volatile the to, in more short and variable whether inputs term, from things tends margin in the or EPS. When to at volatile compensation is be like it tends what be variable in P&L our the EPS, So contribution numbers and most our less are variable changes insurance is it's quarter which the look programs. we contribution below line, change in for our EPS, one there

at XXXX at and trends due same trends we the quarter we our the seasonally. first margin that's the line fourth than generally somewhat of quarter one in to the looking it's revenue where looking when So again, BCO the higher a contribution in the you is guidance driven compared look And we're to are when and to EPS, fourth first quarter. fourth that to to quarter, a with typically BCO. in look some first And off in the look in be variable quarter, quarter of the drop the at at kind the we by is first we're fact and the as fourth that's XXXX. trends at attributable seasonally the revenue But and the quarter, fourth really quarter that's below quarter of slightly from the

because a necessarily variable So with it in not then we're slightly off transition XXXX, Look is ELD fourth if XXXX, more XXXX, by in look the fourth when margin really in XXXX, a a you're we're the to quarter seasonal it fourth contribution the which set off then also I compared compensation quarter, norm. compensation in the dealing with that XXXX, first and line EPS the to And falling along lower at we in recall, when the XXXX in comp abnormal. above XXXX cost had was some quarter, pattern XXXX performance. of much quarter quarter there anticipating variable the from coming expected was The fourth the just first the was very the XXXX quarter of there, you quarter, fourth little driven -- wasn't at programs easier. was compared I bit actually at with first XXXX And to in it's to and high a CEO comp the of making the mandate quarter. And --

at things that, at more looking top we're which EPS. a with and XX% will to where looking what I that's the the other to about midpoint, than we're to questions. the the really anticipating the open representative line. And So quarter of We're decline fourth or first from is

And JPMorgan. the Instructions] line the first coming Brian of question of [Operator Ossenbeck is from

reasons Really seem this just maybe in maybe that quarter the BCO? there that come the behind the the or can color grow why of just give that on you mentioned a bottoming couple that us that and risk a be see of trying to to quickly that the lasts you was You trends sort as with up. plus relates Is back longer into come range it Where some it back to a maybe turnover leverage would understand they the out? Jim, as that X in and do and don't lag? model, ability to helpful. just

that Joe. I'll answer is question. this Brian,

some duration as seen at quarters, yes, able is perhaps go are up than also the we've quarter. If decline the what it are the of a lot comments, that's count the just back, continues we support. And BCO more the as rates prepared so that course into I up kind And Jim we've we've last of to costs clip. -- think gone down the good over of fact quarters trending well. down. whereby and seen the in seen a X pretty So it's pretty that his the substantially of mentioned first And

be I in the you So XXX up but be take reactive, XXXX, back XXX comp XXX up 'XX, -- to XXXX, XXXX. to think can up there. If up in in the over I -- have were XXX we fundamentals

for it but fundamentals think there. just I you BCO the reason some are into departures, us biggest that single to of that. The for to be the speaks come don't compelling. And back reasons right make if So XXXX think to repairs. put model, that now, have the costs, helps the look that year the inability fact will at think fundamentals the color I full of all capacity some maintenance the kind around And was departure in I

or So questionable marginally a your have significant you cover you as financial BCO a viability profitable can't expense, maintenance it. is if just and you're

So the a you full XXXX. of our terminations XX% go that's And sidelines. in to

environment that I in the the things think difficulty resilient can have for in X BCOs, as that I past. the and we I the think speaks be improve, fact the when also things. ] grow So model of those but [ One, think some

that. on going at I come is Landstar think So a don't still carriers landscape it's The capacity there. it the interest or fashion. across to overall that's We're is. as to the market think just systemic reaction Small leaving in really not immune market anything I rapid leaving the to forward. it's

just for this our to continue come happening. improves, freight the of when to think back out kind of way recession. that's market so freight opportunities look we move in I And they'll and

was quarter. there. the the sense costs Gattoni, next It Jim Maybe, calling an impact it in on Maybe of retirement. us luck a like the Great. in just first you Best mentioned give out you worth congrats seemed phase. transition can

is This Todd. Jim Brian.

look the transition Jim from with $X.X related coupled to you SG&A, sequential $X.XX. a headwind variable that the standpoint, about to, compensation a or So of it's about when sequential just programs costs, spoke reset million at the CEO

Okay. it... I appreciate

We of Chan have the from coming Stifel. the next Bruce line question of

Jim, talked your weak haul. of want cycle of Jim, get sense to big there. big this congrats wanted peak thing line-haul some this the related impact you structural others. relative whether during year on retirement down end the that consolidation about a to or temporary of on to this and traditional a particular ask line But whether a to some just of just issue, the is I heard substitute question this on this more market of some might the I be we've the this initiatives since period. the customers

commentary haul? versus of any weakness line there substitute on structural So the cyclicality

look needed was those you carriers haul, we're substitute is weaker, If a where but line stuff tremendous to It of it wouldn't years weaker. call the There I the X parcel degree pre-pandemic, not in. through so really coming structurally us to it network. sounds much because jump off coming

-- us, necessarily I for So think structural. it's don't

it's I peak fourth I've about improvement and time, quarter a I -- into you're I've a year, And for been long going because season little I downturn it's abnormal a ever just think peak think to the going most bit of next anticipate that the season. quite softness. seen see the with here at it's would

structural. it's believe -- I it's don't So

just rates. there announced? consolidation lagging sense going the other a seeing what that. what's your of space on know recovery industrial was anything of regard in is around don't Appreciate here that of is some recently I in the the your follow-up segments you're then a Great. market? with big on And the And to there. comments just quick Is Okay. unsided that

Look, just changing I talked the or one mile about is it's -- a of industry-wide through it the of softness marketplace is quarter. see And think we but more an on ending us, We I it for some flatbed, the revenue I our thing. consolidation right customers, things think -- demand move per the it's in as it than the in just now. was dropping was

at be XX industrial was production expect production look that about with industry It's into in I that months. of you for And continue flatbed the through hasn't it do first positive decreases in market again, think with do in little -- We first in dynamic the competition bit manufacturing of the manufacturing. if think just in I relatively the changes to dynamic. softness happened soft quarter. But a a coming it freight what actually December, all has at time least yes, transpired to or months yet. through nothing XX to consecutive the and just XX

to We coming Group the will question now line move next the from Wolfe of Research. Scott of

of luck to Best Jim.

pre-pandemic something below levels, the but like a like above So margins, for the at that a comment good now at still really and in I the think be you When lowest earnings XXXX that made you to XXXX a relative revenue decade. will year standards. like got look the over guidance QX, you've

said just the QX to margins unique below? So Or earnings is you the understand a the that are want to comments so on and prepared far relative I guidance. the quarter in what

Yes.

inflation, we didn't if would look at look inflation, pre XXXX especially But when insurance. sitting be margins. on the you if think same at have you I

remember happened in of us what gives If to X May you we our liability trucking accidents. on which us insurance, the policy, coverage every renew trucking basically year auto

our on market. verdicts very 'XX, And you go were nuclear the If us pre-May about to as significant, up very, up to blown premiums that coverages. X know, good has $X pretty cover that you of million

coverage. $XX for probably We that above are now million

on trailers, that inflation X X about or item. But than at I too up XX% So want you're compared talk to looking over last to stuff pre-pandemic insurance wages like at stuff much. don't to almost inflation maintenance, every got you've line sit the significant here line levels. There's the in also XX%, more inflationary cost historically years. and of

be and in back I So guess be there, goal a that's I there's going back going is XX% to get margin. I to back this I it's try and mean to to clearly bottle inflation get there. would think organization to think going the organization to that to to -- of get that

tech is, upgrades other we possibly and got we to here could this The value everything out to and to the went through the there. agents we to capacity thing provide modernization do

some been years little there's than tech higher a So spending normal. last over the has X been

So there's also that.

costs, look the as more if this organization -- XXXX. cost in offset you there's to compared those a So year bit there's little to at

model thought, everyone Okay. saying, is tightened really but the really, that the -- it now that And longer we're seeing BCO at this to trough up would in know why is than market out where is on prior is cycle where market, your the And cycle specific your the has don't I below have bad then and happened But hasn't is it different BCO we a below taking that before seen come in maybe started. was all something trough. me where yet. strikes we've capacity that's count been your that's

why terms you relative your overall in of model So to capacity think do extreme seeing is market? something more specific reductions the

great Joe. this Scott, Yes, That's a question. is

and bit the that think pretty in of run it is and to very, -- has to embedded of that tend major little very that that repairs a I our perhaps turnover fact of very we significant have I kind made to the very, run think as been XX% in -- And challenging older number here. relates expensive we're that equipment regard. one and it We different things equipment. repairs

That a market, just more. happen, leaving. And So based I explanation down is accurate assessment I the an probably just to people to are to the things bit hits for know and read on why we're -- I harder. single it broader those broader think little that, us hard find it whether the get biggest market when

were was out a I we below puzzling We the down of we're so. It's -- that maybe on they're the believe, a I with think have completely when trucking. left age about that of It's depart small fleet around we in they -- were really mentioned I as back prior of the There's edge like as hope edge, XX% think question, that. Yes, that is it only as don't maybe it's XXXX. the relationships agree getting actually where to, the of little because on they're it's leading I coming bit the -- I leaving, think we on those -- long far for leading bad. not are same. the are don't think term. I maybe BCOs

think come they're the If a back. do. they -- case sidelines more think the to can't and a compelling just opportunity. sitting perhaps I I other got and So They're make reasonable they're back. waiting options, which to they come living for taking on there they can't they've

again, Yes. I below I way. it now in just -- I'm where well count your about Like BCO it was just thinking 'XX. is, mean would this

above, Your active are right? bit brokerage market. approved carriers than the a like more it So well and seeing still just overall you're brunt the feels

things at hauled. we of you to one freight think the got look of is I too type the

And you business. heavy at talked We nontrucks are I spot heard XPL if -- about being up XX%. that

So you got they're to too. in network, of hauling our look what at kind

market nonroutine clearly type nonrepetitive of some that than business freight, that contract that little the that softer look bit world. irregular do And -- you a on is you overflow type when at

So type than dealing a the guys, little around these freight. because with drop-off that of longer in bit trucks contract we're stay a

I it. think to that do bit with has little a

Okay. in thinking spot that? are to recent And if just in weather? view? I about you way? What's one improvement this ask last your this Like Is Is just it start thing. any could year. the just How sustainable

give spreads -- the right? we'll believe quite cycle last means to a coming coming fourth very, quarter, you that we seeing little saw that to a -- after the third quarter, of of right? bit. there's to I at the that trucks so of little would second beginning like isn't year, more. brokerage would you environment bit to very was X X had little still this bit beginning I'd meant into -- we and I at and that bit from but green a the loose. Starting truck compress of tell a capacity the thing point little that pay a us the think So -- out that One turn, a is record shoot, pressure We're them

spot So weather the of seasonal if normal to they're beginning upticks not, truck side it it's holds that a -- -- in maybe rate of thing. mid-XXXX. is more kind flattening from that environment, seeing maybe we're It's on pushing in not coming second rates, that the that's or say what us the

on So pay. I third-party the the truck at spreads that look

Best of Jim. luck,

Thank you.

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

of Hopefully, everyone's I kind kind Okay. ] in here, the to I'll gears like of guess at. some think of would focus on sentiment your the about [ echo Great. And time to pressures Jim, now inflationary just this year. business you'll have shifting I game. golf maybe But

question that us compensation this about bit? maybe could in of for you for a can have just maybe maybe we as on correctly I XX, then quantify But help expense cost so Todd. of an elsewhere, you incentive you perspective? is inflation guess the may that so think can kind calibrated about seeing year 'XX Jim you full accruals, And sort be And versus talk the a

'XX or current for other, year. a variable pre $XX million my million case look of heard about happy that be to $XX normal there full adding on any And fourth reset, call, computation operating where is of very challenging of had out on million we I year year-over-year. a in at headwind costs some quarter G&A to. closed year Based inflation. If you transition, 'XX. I'd 'XX With respect would $XX base what programs, wage tough a other benefit we the is me CEO expectations, there, have XXXX, impact Jack, bare under hypothetical we talk versus stock the and case guys

bad debt X.X was X-year record, trend. a about contractor the was in one which over million it Our line and trailing provision, items is of lumpiest there

$X register there, million midyear we rate inflection cycle the hopefully, a truck reverting, gain. hopefully a with more and tailwind $X have and should $X on you turnover to mean million that could million bring So a

age. So that's the tailwinds $X smaller size trailer of that we should have on a fleet lower the average of million average and Plus line.

little So development software a rollout. of offset bit good partially that some M&T by guys, could be

about on take headwind XXXX of tailwinds to prepandemic. on cost starting finally, be there. And then And per compared CapEx van there some trailer deliveries new the as to that XX% trailers. could but the side, So again XX% probably depreciation, is to in we were we're very disciplined

ramp to quarter. second prior sequentially up start that see you'll So

if No, a whether becoming of about Jim your helpful, taking the to much been just a bigger Todd. then And And is it, kind there, Okay. the theft back, in that's kind as lot inflation cost point, maybe Jim. higher you we it's business, guys guess of point. of -- cargo investments there's when that issue, think Jim, think I about technology step to a you've made, insurance, structurally your

forward? do kind the sort business Or the sort today there, feel right split embedded it's of are to in years, be needs So cost overhead I the a you some had bearing of support way splits and guess, revenue than Landstar's think moving lot do you the more the BCOs to agents kind your of given still changes that in your there to of in like been traditional terms do you've just you're to that and past. of revenue for

to change we're imagine splits. going wouldn't I No.

cost community the support we going always to there. and rise to -- here to we And add anticipate Our is And still the truck and the role happen. price that's to that on value rely the with rising. out BCOs are agent

right? over a here it's because truck today. don't next or same been to seen company call the in X drive to costs. I and there where who year pricing catches this it. a just brings clearly the for I over to those XX I've out or turns, the rates is years, time, want X. are stuff with the up -- a We've the trough, to future we're cover dealing squeezing always us we're X months. we're costs it the up those But knows trucking -- Now with, generally But inflation in dealing every we've on seen going over and cost eventually

we what the So his from our what adjust to to to no the call on last we thought guy do business model. either this are network. trucks It's the that we the any Those happen. And It's to would of agents. splits costs expect or do. here that there's sitting support we

about Jim? think be incremental up I as just gross following why I cycle, X-X. though. thought up you falling Maybe would margins mean, about any being line there be income operating the would different Okay. that historically, profit in XX%, the Would the incremental really -- on that to reason terms in of about briefly, dollars next

is normalized did pretty my I X to path the that X XX%. pressure still infrastructure I over the on so because and of inflation the of XX% that last lot and you in goal better get to would last pressures all type X% years, over was tools. that don't put if we the inflationary And they the technology unless there. have valid believe organization. This give them years, what goal clearly, think built. a to or But back or do that stuff, they're it would be down But far a modernize X a

more would reasonable XXXX, inflationary that, nice think would given a that I for organization. goal So goal pressures XX% be in the

Jim, congratulations.

Thanks, Jack.

from We Stanley. coming will Morgan Shanker next Ravi the of question to move

on there's the BCO. questions of lot So, been a

can gears you bit. a shift So maybe just little

insurance. about talk Let's

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mentioned in detail a You to I more love little would guys your get remarks. here.

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et That's amazing congratulations changed, career. advice cetera? from on it. Maybe broad super surprises, the Got has helpful. a on over you the you've love for I'd future, to get industry an the how Jim, follow-up, years, just reflections as maybe what seen

change the is Why saying, big when industry away? changed significantly That the the going entire I when was was industry insurance I to one. industry, along. step we a just step I'm saw away. No, whole coming change I think

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organization departing But... me doesn't So change thing. this a

We'll you. Jim. Thanks, miss

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Yes. to Unfortunately, I speak next the that. about the can't next -- for CEO

split We I've maybe -- tweaked here since much in little haven't them a pretty changed our been bit.

he's for that probably least when and at here But Frank I one ask you call know that opinion. tough. defer tomorrow or So his you when would in office is the conversation can

the in normal back XXXX slowdown made, the drop It move the economics. had that freight in environment. Going of wasn't demand was to gradual wasn't suddenness the It that us actually it react. we this

added is an back per environment per to we on basically plus $XX environment So we and the the suddenly. load -- BCO, then compensate $XX we that the them I why door load the did in that's what to to agent freight closed believe what

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versus matrix and from And can where today? we a expect thoughts from in and that of year, sit stock where buyback special balance you kind the we what this dividend are in on your the investment just

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get kind of to of So out we market. the had

We question of Mehrotra line the now coming Amit will Deutsche the Bank. to of move next from

you color provide [ costs? looks how you balance is wanted Amit. normal expect in loads calling right cost if way can to structure $X. the you This Moore any ask, including seasonality XXXX, Ben year, for I do at ] apply and the to your think in trend for incentive It about to like of And other costs? EPS per revenue that load it? the below we're getting Is on XXXX on to

us enough out days year hard it's out. for go XX full a Ben, to than

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through Okay. exits and still into stimulus possibly in and year months minimal very And -- of We're based as follow-up. truck only seeing next capacity cash economists the past year. seeing last a on even the high DOT projecting just we're with are maybe Appreciate very couple registrations, some this that. to maybe

guys So you capacity be are in hearing on a we agree? Would loose And this? seeing or you very could longer. for what for

X think one trucks. XX that same don't or I things And Yes, capacity But it that the accounts I for from data gone it is, it the market revocation seems net decline for that think necessarily don't Ben, trucks to I track trucks you the the do. X have carriers think I do watched in slow. of

the just maybe included, severity it exits around can bit I But think of little decline think agree doesn't going how also and what another seem thought exist hanging count -- see. and with could crystal the know don't long to that to last more the people the last have than would, it's will earlier, ring it's in doesn't It on true stick I duration it I just DOT there's I cost the guess year, make and a seem just of the than decline. But longer -- like said data. so we'll me. no doesn't with we seem many -- ball pressures I myself But to based that we I around. to that

Yes. And to earlier, quarter Ben, respect XX quarters. record to Jim's XQ I quarter to third back points with have gradually XXXX we add watch, compressing quarter widest quarter. I net into just that would XQ first ended on XX on compressed up XQ, but spreads those XQ, revenue brokerage fourth We basis was comments going into the

things bit. little up So could a are maybe early firm starting an read again, that that be to

the appreciate Great. insights. I

Elliot question of coming We the Alper move the will to now TD line next Cowen. from of

Red up Curious the capacity you're or tightness thoughts some Elliot seeing load, Revenue affect Jason through Sea if January? was due or If the maybe forward is appreciate seasonality or to maybe just seeing situations maybe XX% on This in what this so, your the some Seidl. Great. per how side, sequentially. business you're going this on in could Suez. the ocean for stepped if would

bit it's costs. our Elliot, revenue little load, because it's tough for there not a read just a of us, ocean container per

like fees also ports, and from load things duties. RevPAR the custom to inland and transportation Our includes

to working of on. the it's niche that in participate So kind with the agents to stuff project respect we're

use read as I wouldn't through. that So a

it. Understood. Got

about maybe from So at what new the the first [indiscernible] seen current Can year, of some maybe LTL what [indiscernible] Maybe LTL maybe a environment? quarter. follow-up side. first these in of expectations down you the XX% you've talk online? January, through come half terminals on maybe are the your quarter,

Yes.

know, and we we own don't any you any terminals. have As assets don't really

play we a in we of more customers, truck LTL and of kind where some we're niche there, So for do take our them.

-- to specific the customers. tied in is market market really some for So a us

and little So it a move customer of little like anticipate bit more agents bulk going in or line to ocean our doing XX it, dynamics. It's pricing. almost agents X% we with of to tends just customers, we maybe than top and of business of our the a being our to industry with our base kind really on. softness customer But that's XX our XX have a of specific continue of in

not pricing for service ocean -- little in to bit special LTL LTL Our what's on the we a in special of similar hands-on the more industry. our as a is customers. an is of certain little more on is that stuff. indicator It's project provide bit side going type

question from We a Stephanie line of the Jefferies. of Moore will to now caller last coming to move the ask

of that context it How I or talked comments, is sort to BCO Joe there pressure about highs Hafling see congrats of lows. BCO like count? you dynamic higher lot in anything previously was lastly I'll guess if about We've count and that longer-term a This maybe definition everyone's curious talked under do we've I the independent of you pressure relates contractors add, you, causing but to circle on of be for wanted regulatory anything maybe And could that, now. Stephanie. was as what's just the BCO Jim. I higher that pressure, echo structural that a causing on back to the might kind on the broadly count.

Yes. Thanks, Joe.

volatility a of comment. it's be owner the who And and lot stay, a be to There's I in bit don't and just we've said of think We're there. great seen earlier, it's freedom little anything I freedom And there's to a with that back the leave. a want think So it's the to successful to and interest. market. I for a the place I freedom systemic as higher highs to independence. freedom operators

I think count here. rally opportunities will are BCO the as

best I model we're that. the for think that

would as that it There's for country And Now in But an where there similarly, all sure. -- lost to that prepared. on think -- are be make would the some In decisions kind we to have very after very ABX the going it relates independent some any to to case were sort California, have stuff. to with we're of think keep is across to not. other administration contractor for either question that current states proactive. an don't other negative to we ABX, on and were sitting that some it We move some hope well to We few pressure states, the BCOs were that's the work ABX come a with of of of we and we that list kind to would with try on expand. there. the might continues we if out California what's judge Yes, us. If eye what's of spread do? we in that's very trial really

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

Well, day my first and CEO, off, last of I'd like in the longest President be my call CEO to in years thank as Landstar. everybody XX on for this having

working for I Landstar the of past as environment. have Landstar's a as Lonegro to before now lifetime off its had and BCOs to comments. and network of professional to the final and of the who customers last Landstar's leadership role for Frank Directors, capacity management Landstar providers The this your I all closing I So CEO. I'll years. I'm truly very performance agents, the capacity part grateful Chief employees, call, know of a have challenging my in to contributions confident employers sign agents, it of highly want team, we decade. I'm opportunity pleasure Frank for superior special. But years, and for shareholders, our as my to assumes earnings Executive on the over people as in unique in a Landstar's I that's well Frank? in Landstar honor thank and Landstar's of at the success and business agents, freight some to President achieve model past in the XXXX worked conference all the and Landstar leave pass industry hands been truly good sets the a Officer employees, enable apart with serve XX-plus over of what network and Board providers, been have privilege together. It's are a of I

that in embark BCOs, your wish congratulations the our and Jim. be our so Thanks look heartfelt our to success. working tech-enabled you the of growth hand our independent On agents, you've very carriers, with We the all agent-based will And to and both great company. Landstar's owners key positively appreciate asset-light drive and model to continue business unique Landstar during nothing much, support I profitable the team shareholders, shareholders. With to career, the our your we'll forward behalf of impacted you employees to you Board me quarter and customers, that, this speaking very for Thank on April retirement. Landstar value as but to on and opportunity giving this join forward chapter and lead next for next as a first to much. on with call of XX. best close CEO, to life. I'm excited humbled call currently bring look this its Landstar scheduled the you

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