Q1 2023 Landstar System Inc. Earnings Call

Speaker 1: Thanks for watching!

Speaker 2: Good morning and welcome to Landstar System Incorporated's first 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. If you have any objections, you may disconnect at this time. Joining us today from Landstar are...

Speaker 2: Jim Gattone, President and CEO , Jim Todd, Vice President and CFO , Joe Bikam, Vice President Chief Safety and Operations Officer. Now I would like to turn the call over to Mr. Jim Gattone. Sir, you may begin. Thank you both. Good morning and welcome to LAFTR's 2023 First Go to Earnest Congress call. Before we begin let me read the following statement.

Speaker 3: The following is a safe harbor statement under the private securities litigation reform act of 1995. Statements made during this conference call that are not based on historical facts are forward-looking statements. During this conference call we may make statements that contain forward-looking information that relates to Lancer's business objectives, plans, strategies, and expectations. Such information is by nature subject to uncertainties and risks, included but not limited to the...

Speaker 3: place undue reliance on such forward looking information and last term takes no obligation to publicly update or revise any forward looking information.

Speaker 3: Given the current crate environment, with soft demand and readily available truck capacity, LANDSTAR performed relatively well in the 2023 first quarter. Heading into the 2023 first quarter, demand for truck transportation services was somewhat soft. In addition, LANDSTAR was faced with probably the most challenging quarterly financial comparison in its history.

Speaker 3: Lancer's 2022 first quarter was not only our best ever first quarter performance, but the best quarterly financial performance for any quarter in the company's history. Prior to 2022, the 2021 first quarter established a new all time record for first quarter revenue at Lancer. 2022 first quarter revenue.

Speaker 3: exceeded the 21 first quarter by 53%, growing by over $683 million. In fact, net income and diluting rates per share each established new all-time last-hour quarterly records in the 2022 first quarter that remain unbroken today. In contrast, the freight environment was dramatically different in the 2023 first quarter.

Speaker 3: Looking back at the 2022 first quarter, consumer demand was very strong and supply chain disruption was at its peak.

Speaker 3: Those conditions resulted in a lack of available truck capacity driving truck transportation pricing to all-time highs. Following the 2022 first quarter, demand began to soften and supply chain bottlenecks began to clear. Beginning the summer of 2022 and carrying through today, we are clearly in a different freight environment.

Speaker 3: Lancer's 2023 first quarter performance, our results were generally in line with what we expected. Our first quarter guidance called for the number of truckloads hauled via truck to be below the 2022 first quarter in a 10 to 12 percent range and overall revenue per truckload to be below the 2022 first quarter in a range of 15 to 17 percent.

Speaker 3: The actual number of loads saw the truck in the 2023 first quarter was 12% below the 2022 first quarter at the low end of the truck load volume guidance.

Speaker 3: Axel revenue per trunk load in the 2023 first quarter was 14% below 2022 first quarter, slightly better than the high end of the truck revenue per load guidance.

Speaker 3: The slightly favorable variance on revenue per truck load compared to guidance was mostly driven by a higher than anticipated revenue per truck load in January , also by a lower than anticipated revenue per truck load in February .

Speaker 3: In the first several weeks of April , truck revenue for load is trending slightly below normal sequential month to month trends.

Speaker 3: After our air ocean and rail intermodal transportation services.

Speaker 3: of lower volumes across all the other modes, and the expectation of a significant decrease in ocean revenue per shipment.

Speaker 3: The decrease in revenue of our non-truck transportation services was mostly due to a 48% decrease in ocean revenue per shipment.

Speaker 3: lower volume of 39%, 32%, and 9% in rail, ocean, and air services respectively.

Speaker 3: With respect to conditions in different parts of the truckload market, as mentioned in the earnings release, revenue on unsighted platform equipment held up considerably better than revenue hauled via Van Equiven and other truck transportation services.

Speaker 3: The quarter, over prior year quarter revenue comparison for Van were much more challenging than those for revenue on unsighted platform equipment.

Speaker 3: Lebanon van equipment in the 2022 first quarter, crushed all-time first quarter records.

Speaker 3: for van loadings and revenue per load. Revenue hauled via unsighted platform equipment, although also still strong in the 2022 first quarter, by historical standards, was less impacted by peak supply chain disruption and heightened consumer demand.

Speaker 3: One metric we follow is revenue for mile on loads full by BCO trucks, which tends to be a more pure indicator of pricing, as this data excludes fuel surcharge as build the customers that are paid 100% to the BCO.

Speaker 3: Revenue per mile on van equipment hauled by BCOs in the 2023 first quarter was 26% below the 2022 first quarter. In contrast, revenue per mile on unsighted platform equipment hauled by BCOs in the 2023 first quarter was only 6% below the 2022 first quarter.

Speaker 3: It should also be noted that although the market has softened significantly from a year ago, Lancer revenue per mile on BCO van and unsighted platform equipment both remain above the pre-pandemic 2020 first quarter by approximately 30%.

Speaker 3: I believe that rates will remain higher than pre-pandemic levels given the significant amount of additional cost pressure to operate a truck today as compared to three years ago. Turning to volume, total loadings on all modes in the 2023 first quarter were almost 13% below the 2023 first quarter.

Speaker 3: Loading is in our top 25 commodity categories, which make up about 70% of our load buy-in. We're down to combine 10% compared to the 2022 first quarter.

Speaker 3: From the 2022 first quarter to the 2023 first quarter, total loadings of consumer durables decreased 11%, automotive equipment and parts decreased 15%, hazardous materials decreased 4% and building products decreased 16% while machinery increased 2%.

Speaker 3: Lancer is known throughout our industry as a key truck capacity provider to other trucking companies, 3PLs and truck brokers. During periods of tight truck capacity, those entities reach out to Lancer to provide truck capacity more often than during times more readily available to truck capacity. The freight hauled by Lancer on behalf of other truck transportation companies includes almost all our commodity groupings, including our substitute line haul service offering.

Speaker 3: Sub-tube line haul loadings was one of our strongest commodity performers throughout the pandemic. However, load volume for this service offering varies significantly based on domestic consumer demand and decreased 60% in the 2023 first quarter from the 2022 first quarter.

Speaker 3: Overall revenue hauled on behalf of other truck transportation companies in 2023 first quarter was 47% below the 2022 first quarter. A clear indicator in our model, the capacity is more readily accessible.

Speaker 3: Revenue hauled on behalf of other truck transportation companies was 18% and 24% of revenue in the 2023 and 2022 first quarters respectively. Our business remains highly diversified with over 25,000 customers, none of which contributed over 4% of our revenue in the 2022 first quarter. The decrease in truckload volume we experienced quarter over prior year quarter was primarily driven by changes in the overall freight environment rather than the...

Speaker 3: The largest truck load rate decrease with respect to services provided on van equipment, which is a primary equipment type hauled by BCOs.

Speaker 3: BCO turn-up has also been influenced by a significant increase in the cost of repairs and extended period of time trucks are out of service awaiting parts. The ability to get back on the road is also impacted by the high cost of use trucks, which impacts the potential of BCO to trade their existing use truck for a newer use truck that may be less subject to unscheduled maintenance if you should enforce downtime.

Speaker 3: I'll now pass the gym time to comment on other additional P&O metrics regarding the 2023 first quarter performance.

Speaker 4: Thanks Jim. Jim G is covered certain information on our 2023 first quarter, so I will cover various other first quarter financial information, including the breast release.

Speaker 4: In the 2023 first quarter, gross profit was $152.9 million compared to gross profit of $214.6 million in the 2022 first quarter. Gross profit margin was 10.7% of revenue in the 2023 first quarter as compared to gross profit margin of 10.9% in the corresponding period of 2022.

Speaker 4: In 2023, first quarter, variable contribution was 200-naked point 7 million compared to 270.5 million in the 2022 first quarter.

Speaker 4: Variable contribution margin was 14.5% of revenue in the 2023 first quarter compared to 13.7% in the same period last year. The increase in variable contribution margin compared to the 2022 first quarter was primarily tributable to an increased variable contribution margin on revenue generated by truck brokerage carriers.

Speaker 4: as the rate paid to truck brokerage carriers in the 2023 first quarter was 330 basis points lower than the rate paid in the 2022 first quarter. As a result, variable contribution for truck brokerage load increased 9% in the 2023 first quarter compared to the 2022 first quarter, despite a 10% decrease in truck brokerage revenue per load.

Speaker 4: Other operating costs were $12.4 million in the 2023 first quarter compared to $11.1 million in 2022. This increase was primarily due to increased trailing equipment maintenance costs and an increased provision for contractor bad debt, partially offset by increased gains on sales of used trailing equipment.

Speaker 4: Insurance and claims costs were $27.6 million and the 2023 first quarter compared to $30.8 million in 2022. The decrease in insurance and claims costs as compared to 2022 was primarily attributable to decreased net unfavorable development of prior year claim estimates and decreased severity of accidents during the 2023 period.

Speaker 4: During the 2023 and 2022 first quarters, insurance and claims costs included $1.9 million and $4.3 million respectively of net unfavorable adjustments to prior year claim estimates. However, total insurance and claims costs were 5.3% of BCO revenue in the 2023 period and 4.2% of BCO revenue in the 2022 period. The 110 basis point increase in insurance and claims costs as a percentage of BCO.

Speaker 4: wages, almost entirely offset by a decreased provision for compensation under the company's variable programs, and decreased employee benefit costs as a result of favorable medical and pharmacy loss experience.

Speaker 4: In the 2023 first quarter, the provision for compensation under variable programs was $3.3 million, compared to $7.2 million in the 2022 first quarter. Depreciation and amortization was $15.2 million in the 2023 first quarter, compared to $13.8 million in 2022.

Speaker 4: This increase was almost entirely due to increased appreciation on software applications resulting from continued investment and new and upgraded tools for use by agents and capacity.

Speaker 4: The effective income tax rate of 23.3% in the 2023 first quarter was 50 basis points higher than the effective income tax rate of 22.8% in the 2022 first quarter, primarily attributable to larger net excess tax benefits from stock-based compensation arrangements during the 2022 first quarter.

Speaker 4: Looking at our balance sheet, wind to the quarter with cash and short-term investments of $388 million. Cash flow from operations for the 2023 first quarter was $139 million and cash capital expenditures were $6 million. Back to you, Jim.

Speaker 5: Thanks Jim.

Speaker 3: Our record success in the 2022 first quarter made for a very difficult year of comparisons. Heading into the 2023 second quarter, year over year comparisons are only slightly less challenging.

Speaker 3: Beginning in the 2022 second quarter, we began to see truck pricing soften.

Speaker 3: So, you're currently revenue per truckload in the 2022 second quarter was 3.7% below the 2022 first quarter. However, truckloaders continue to be strong on the 2022 second quarter, increasing 3.6% of the 2022 first quarter.

Speaker 3: Yesterday's earnings release made note that early April truckload count was trending below historical sequential monthly patterns.

Speaker 3: Historical sequential patterns in this context refers to the five years prior to the pandemic. Given the lower start in truckload volume in early April , we are anticipating that sequential month-to-month trends in truckload count will return to more normal patterns in May and June .

Speaker 3: Taking into account our early April loading experience and assuming the return to normal month of our trends we expect truckload count in the 2023 second quarter about equal to the 2023 first quarter.

Speaker 3: This compares to an average increase in truckload volume of approximately 8% when comparing historical first quarter to second quarter truckload volume.

Speaker 3: We expect truckload pricing to be significantly below the 2023 first quarter as rates have slightly softened in early April . We expect 2023 second quarter revenue per truckload to be below 2023 first quarter revenue per truckload in a range of 1% to 3%.

Speaker 3: The decrease compared to the 2023 first quarter is primarily due to January 2023's relatively strong truck revenue payload, which drove the average for the first quarter above the starting point of the second quarter.

Speaker 3: We also expect revenue for our non truck modes to exceed the 2023 first quarter by 10 to 15 percent. Based on these assumptions, we expect revenue in the 2023 second quarter to be in a range of 1.4 billion to 1.45 billion dollars and diluting per share to be in a range of $1.90 to $2.00.

Speaker 3: The 2023 second quarter guidance incorporates a variable contribution margin range of 14.2% to 14.4% and insurance and claim costs similar to the 2023 first quarter. There are some specific items impacting the 2023 second quarter range of diluter

Speaker 3: compared to the 2023 first quarter actual diluting to first year of 2017. Second quarter SG&A is expected to be above the first quarter due to the cost of LandStar's annual convention in April . Plus, we expect employee benefits, primarily medical loss experience, to return to more normalized levels. We expect variable contribution to be 2% to 4% below the 2023.

Speaker 3: slightly higher than the first quarter, driving a 3 cent loan favorable earnings per share variance compared to the first quarter.

Speaker 3: in the first quarter, driving a 3 cent loan favorable earnings per share variance compared to the first quarter. And with that bell, we will open to questions.

Speaker 2: Thank you very much, sir. At this time, we will begin the question and answer session. If you would like to ask a question, please press star 1 on your touch tone phone. Once again, that is star 1 to ask a question. The cancer request, please press star 2. We have the first question coming from the Linus Kutt Group of Wolf Research. Your line is now open.

Speaker 4: Hey, thanks. Good morning. Good morning. Jim, I just want to get your perspective on, you're counting on normal seasonality in May and June . What changes in May to start to get freight more in line with seasonality? What's driving that assumption? It's actually the lower April , to tell you the truth, because we've seen the...

Speaker 3: hit this April trough and then just kind of go back to normal seasonal trends. So it's really mostly due to the April softness.

Speaker 3: April trough and then just kind of go back to normal seasonal trends. That's really mostly due to the April softness. Okay. And then when I look at...

Speaker 4: Rev per load down from 1Q to 2Q a few percent. Are you expecting that to be the bottom for rev per load? And then there's a lot of talk about this huge spread still between contract rate and spot rate. And if spot doesn't get better, do you think that means further pressure to contract rate? How are you thinking about all that?

Speaker 3: What we look at Scott is a 20-day rolling average. So I get that report every day to show what the last 20 days look like because our day-to-day spot rates bounce all over the place. So I think what we're looking at today is a lot of bounce in the day-to-day and a little bit unpredictable. I think we're comfortable in the short term to say that we're going to be...

Speaker 3: now or sometime later in the summer. I don't want to call it trough but I think we're you know we have recently seen the spot rates drop a little bit more into April and so there's a little bit of concern that one to three percent might be I don't want to call it aggressive but we're pretty comfortable with where we are and that the spot rates will hang on for now because I think the spread between contract and spot is

Speaker 3: is relatively large right now and I don't know how much further it can go down.

Speaker 3: I mean I guess that was my question let's just say if this is if Q2 is the bottom for spot do you think it's the bottom for your

Speaker 3: Rev Perload in Q2 or because of the contract spot spread do you think there would be further Pressure in your rev Perloading into the back half I Don't think don't be further pressure into the back half when things start to you know unless the economy drops off even more I would think we're pretty comfortable with a normal seasonality on revenue per load trends after you know We get through this midway through the end of this

Speaker 3: seeing our rates drop in February , which was, you know, 13, 14 months ago, and you're looking at 18 months, 18 to 24 months peak to trough. I'm a believer in the cycle. It happened through the pandemic and I think it's going to happen again.

Speaker 2: Thank you, Jim. Appreciate the thoughts. We have the next question coming from the lab. Jordan, allegor, algal, mintsax, your line is now open.

Speaker 6: Yeah, hi. Just curious, interesting with the pricing in the dry van versus the unsighted, you know, the gap of the minus 26 versus the minus 6. I'm just sort of curious.

Speaker 3: Does that spread?

Speaker 6: narrow with dry van worse with the unsighted sort of worsening or is it more the other way around where it all sort of converges like I'm just sort of curious the dynamics on the unsighted versus the dry van around the pricing from here thanks I would actually say it's converged right now if you look at so we watch the the variance between our

Speaker 3: revenue per load on VAN compared to our revenue load on flatbed. What's interesting, it was last year's first quarter where that gap was about as close as I've ever seen it. The the gap between now the flatbed rates typically higher than VAN rate. I've never seen it below VAN rate to tell you the truth, but

Speaker 3: First quarter last year, the spread between the VIN revenue per load and the flat revenue per load was only 25%. That to me was like an all-time gap close. It was the closest it's ever been. If you look at history, it tracks between about 40 and 70% gap. We are right now back to the more normal 60 to 70% gap between VIN and flat revenue per load.

Speaker 6: Good morning, Jim and Jim. Thanks for taking my questions. So I guess, you know, kind of sticking with the rate series of questions here for a moment, but you know, Jim kind of going back to the prepared comments where you know, you're still seeing a pretty hefty premium in rates today, rate per load today versus, you know, pre-pandemic.

Speaker 6: When we kind of look at spot market rates though, they're kind of broadly back to 2019 levels excluding fuel. You know, I guess as a spot player, why do you feel like your rates are kind of going to significantly decouple over time from where the spot market rates have kind of settled out?

Speaker 3: Well I think our rates are always a little bit higher than what you're reading in the industry a lot because our BCO stuff is you know you've got you got drop and hook you got trailers in there you've got and it's it's specialized non-routini regular route not really dedicated type business so you know I if there's you know people running spot that is pretty much routine that's not where we play so we're generally are we always do sit a little bit higher.

Speaker 3: And I read a lot of the stats, and if you remember, I don't know if it was February last year or before, when there were certain industry trade reports coming out that we were pre-pandemic, that revenue per mile was below pre-pandemic last February . That was crazy. We were still 30 or 40% above.

Speaker 3: It's tough to speak. It's really hard for me to speak to industry data because I couldn't get my hands around it back then. But you know, you just see relative stability. Our trends that we look at, like I've got 10 years of trends and our trends are performing at below historical norms, but not so absurdly that I'm worried that I'm gonna go pre-pandemic, you know, below pre-pandemic. The cost in the system, and we don't own trucks, but we could feel the cost in the system, right? You're looking at our cost of insurance compared to two.

Speaker 3: So you're already seeing some kind of turn in the amount of available capacity in the industry with some, I would guess over the next few months or few quarters, we're going to see more trucks come out. So I think there's a stability here because if rates go down more, it's just going to push more trucks out of the system. Yeah, yeah, absolutely. That makes a lot of sense.

Speaker 6: I guess maybe shifting gears from a follow up question. I'd love to kind of get your thoughts on cross border. You guys have a large cross border franchise. There's a lot of good things that could happen in terms of cross border freight over the next few years. Just be curious to get your kind of take on what you're seeing in your cross border business today. How you think that's going to trend?

but Joe's with us today and he's actually an expert at Mexico Cross Border.

Good morning, Jack. Hey, Joe. Good morning. Yeah, great question. Yeah, we're still very bullish on cross-border and seeing some evidence of the near-shoring that we've heard about for quite a while. As compared to the overall market, that market has held up quite a bit better, both from a volume and a price perspective. So yeah, we're still...

are, whether it's something that can go on the rail or not. And I just don't have enough detail to say with any degree of certainty whether that becomes supportive or more of a competitive thing for us. But continue to be pretty bullish on the cross-border business going forward, just based on all the things that seem to be materializing around.

some of the near showing stuff, and then just the relationships that we have on the border.

and some of the capabilities that we continue to develop on the border, and carrier relationships and trans-building capabilities and that kind of stuff. So we remain pretty optimistic there. Yeah, Jack, on top of that, our revenue is down much more than the cross-border revenue. The Mexico cross-border revenue is only down about 9% compared to our overall drop in revenue. Yeah, okay. That's great to hear, and I appreciate the color. Thanks, guys. Yep. We have the next question coming from the line, Stephanie Moore of...

it stands currently on capacity and demand levels. But, you know, maybe how do you think this could pan out if the U.S. broadly moved into more of an economic recession as we go through 2023 and early 2024 as I think many economists, well, some economists at least are pointing to.

What do you think that could mean for this current freight cycle, especially compared to historical ones? Thank you. Yeah, the one thing you think about is the shift from contract rate to spot rate. That's the one differentiating factor we have with some of our peers who actually have contract rates. So, you know, when I talk about an 18 to 24 month cycle, we would look at the economy weakens. We're clearly going to see volumes drop off further than we're currently thinking about.

when you own a truck today, the cost of a new truck, the cost of repairs, the cost of driver wages, the insurance costs and everything that ties to running a truck today will get trucks out of the system quicker and I think you'd see that happen. So my thing would be I'd say that I'd be a little more worried about a drop off in volumes which is the one thing we try and control here and then the rate.

I think it'll be a little more stable in a drop off like that. Because there's going to be a point where the trucks aren't just going to haul freight. And I think we're not far from that point. No, understood. And then maybe just as a follow up, in this current environment, what are you seeing maybe from a competitive standpoint in this market? Any, you know, enhanced irrationality just given where we're rates are?

And it's typical for this time of a cycle for them to be coming at us with price cuts for some of our normalized business. Some of the stuff we do routine, even some of the drop and hook business, we're getting that. And you try and hold off as much as you can and sometimes we have to walk away because you can't get trucks to haul the freight. And that's one of the things that you see a trigger. Now we're not seeing that yet with trucks being like, yeah, I can't haul it for that rate. But sooner or later, they're going to push your pricing low enough where it's going to be.

October , you began walking us through kind of a hypothetical revenue downside scenario and how the business might perform. I think you started off at 20% on September 4th and right from time to time

you honed that a little bit for us in January or February . Can you walk us through, you know, trying to kind of walk the business to try off how the business might perform and and you know anything you would change to what you've shared with us before based on how this year's developed so far. Thank you. Nothing's really changing to kind of what we said before other than the fact that we're not, you know, that 20% bogey of a drop-off is looking a little less likely.

based on the current trends. But if we were to get back to a 20% drop off, I would probably repeat what I said in October . Now I think there's probably a little more cost pressure than I anticipated back in October . We still see things rising, whether it's wages or insurance risk and stuff like that. But I would say if we can have a safe year and we do get back to a 20% drop off in revenue comparatively to 2022, I still think that.

and margin.

That's actually, you know, my follow up from Jim Todd was going to be if you could walk us through some of your expense outlooks that you laid out to us a few months ago and any of those have changed and can you, if anything is really seeing inflation from the expectations you set a few months ago.

Maybe help us understand that and maybe an updated view on the incentive comp tailwind or as well as we think about how to model the bottom line. Thank you. Sure. I would echo some of Jim's thoughts with respect to other operating. Back in February , I gave a plus one to three million year over year. I'm probably closer to that plus three million. Whereas the depreciation number I gave, I think a four to seven, we're going to be just in the environment where we're...

to 18 million best guess of tailwinds from those programs, 23 over 22, which probably gets you to a flattish. One Q of 22 SG&A was favorably impacted to about 2 and 1 half million from forfeitures on equity compensation arrangements. So that's why we had a slight increase year over year. Thanks.

Yeah, thanks operator and morning everyone. Jim, you know, always appreciate your breakdown of activity by vertical. And, you know, it seems like there's been a little bit more resilience here on the industrial side of things in the consumer. Is there anything to tease out there as far as whether the industrial economy is just doing better, or whether maybe it's further behind in the restock and, you know, or excuse me, whether it's further behind in the D stock. And then as you start to plan for a restock.

Do you have any sense of what side of the economy might be recovering first? To me it's more of a year-over-year comparison than it is a, you know, which one's doing better. I think the peak of Van was way above the peak in flatbed. There's no question. I think there's just a lot more stability on the industrial side than the consumer side. Consumer really drove the economy.

per load peaked in in I want to say February and then flatbed only peaked in July but their peaks were so much different you know where the the peak van in February is probably 50% of all it was three years ago with the but the peak and flap it was 20 or 30 percent so it's more of a year of your comp so I would you know to summarize it flatbed was a lot more stable going through the pandemic than the van stuff then

As it relates to people buying to buy new trucks.

Or compare that one, I'm not sure if I'll have a question.

Yeah, exactly. Just as far as the potential entry for new equipment, new trucks, new capacity in the marketplace.

Yeah, on the new truck side, what really affects us more than anything is the used truck pricing because our guys generally don't go out and buy 180, 200 thousand dollar trucks and it has in some of my prepared remarks, it stops guys from, you know, with the elevated used truck pricing, you know, they wait longer to get repairs, right? So it keeps the utilization is down partly because of that. Our utilization was below where it was last year. That's a loads per PCO.

impacts us as much as it would someone who's driving assets.

Okay, great, thanks. Appreciate the call, as always. We have the next question coming from the Lime Scotch Knee Burger of Alpenheimer. Your line is now open. Morning. Sorry, guys, who's on mute. Good morning, all.

Just kind of want to follow up on Bruce first question on the on the specific grandma flatbed side

Could you speak, Jim Gattoli, I guess to the February to March and particularly the April trend? You just kind of responded that it looks very stable. Do you expect it to continue to be stable? I'm curious, is there anything you can point out that's...

been providing the stability, the manufacturing, re-shoring trend, anything with renewables, infrastructure bill, anything like that that you can point to that you've been hearing from the field. Thanks. One thing about the flatbed on-sided service offering is that it's a little more...

January minus 10% in February and a minus 3% March. So it's really hard to get your hands around that short-term month-to-month flow so when we speak about it we're kind of looking at a longer-term trend than that. But when I look at end markets there with us it's really like we're not big infrastructure guys we don't do roads or anything like that so but what it does do indirectly is as flappa gets tied up.

which is provides less flatbed capacity in the market and it just writes rates up. And you know, with if industrial production starts dropping off a little bit on the heavy machinery and stuff like that, but infrastructure is just kicking in, I think that you're just going to see more stability on the flatbed side than you would on the van side.

is and it's kind of what we're seeing and what we've seen over the last three years. Do I think it's gonna go gangbusters? No. And I never, you know, I was never in the position to say that any growth on the flatbed side would offset the consumer demand drop-off. Yeah, I think I said that two years ago and I think that's where we are right now. I like the stability more than I like the stability on the van side and I think we're...

We're pretty comfortable with a more stable flatbed environment based on the demand we're seeing from the typical stuff. It's ag or some mining or some... If they do infrastructure, we'll be hauling some of the equipment, but we don't necessarily do bridges and stuff.

April over in band. Thanks.

Well I think that one I would say it was more stable both January over January is only minus 2% we you know compared to last year on the van side which is kind of unusual typically it drops off more but the drop-off happened in February so we saw the drop off the 17% from I'm sorry that's sequentially it dropped from December to January 2%

but then it dropped 17%. It made up for the January , January typically drops off more than that, but by the time we got to the end of February , it was kind of a normal drop off. I'm quoting bad numbers. Minus 2% year over year, minus 17% year over year February , and then minus 14% year over year March. So you saw some improvement.

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