Q2 2024 Landstar System Inc Earnings Call

Operator: Good afternoon, and welcome to Landstar System Incorporated's second quarter earnings release conference call. All lines will be in a listen-only mode until the formal question-and-answer session begins.

Good afternoon, and welcome to Landstar system incorporated second quarter earnings release Conference call. All lines have been on 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 frankly <expletive> precedent.

Operator: This call is being recorded. If you have any objections, you may disconnect at this time. Joining us today from Landstar are Frank Lonegro, President and CEO; Jim Todd, Vice President and CFO; Joe Beacom, Vice President and Chief Safety and Operations Officer; Jim Applegate, Vice President, Chief Corporate Sales Strategy and Specialized Pride Officer; and Matt Daniger, Vice President, Chief Field Sales Officer. Now, I would like to turn the call over to Mr. Jim Todd. Sir, you may begin.

Speaker Change: CEO, Jim Todd Vice President and CFO, Joe Beacom, Vice President and Chief Safety and operations Officer, Jim Applegate, Vice President Chief Corporate sales strategy and specialized Fright officer, Matt Danziger, Vice President Chief Field sales officer, now I would like to turn the call over to Mr. Jim Todd Sir.

Speaker Change: You may begin.

James P. Todd: Thank you, Bill. Good afternoon, and welcome to Landstar's 2024 Second Quarter Earnings Conference. Before we begin, let me read the following statement. This is a safe harbor statement under the Private Securities Litigation Reform Act of 1995.

Bill: Bill Good afternoon, and welcome to <unk> 2024 second quarter earnings Conference call before we begin let me read the following statement. The following is a safe Harbor statement of the private Securities Litigation Reform Act of 90 95 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 <unk>.

James P. Todd: 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 Landstar's business objectives, plans, strategies, and expectations. Such information is by nature subject to uncertainties and risks, including but not limited to the operational, financial, and legal risks detailed in Landstar's Form 10-K for the 2023 fiscal year, described in the section Risk Factors and Other SEC Filings from Time to Time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated.

James P. Todd: Investors should not place undue reliance on such forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information. With me this afternoon are Frank Lonegro, Landstar's President and Chief Executive Officer, and Joe Beacom, Landstar's Chief Safety and Operations Officer. Jim Applegate, Landstar's Vice President and Chief Corporate Sales Strategy and Specialized Freight Officer, and Matt Denninger, Landstar's Vice President and Chief Field Sales Officer. Frank and I will handle the prepared remarks, with Joe, Jim, and Matt available for questions.

Bill: Forward looking information that relates to <unk> business objectives plans strategies and expectations such information is by nature subject to uncertainties and risks, including but not limited to the operational financial and legal risks detailed in Landstar <unk> Form 10-K for the 2023 fiscal year described in the section risk factors and other SEC filings from time to time these risks in them.

Joseph J. Beacom: Certainties could cause actual results or events to differ materially from historical results or those anticipated investors should not place undue reliance on such forward looking information and Landstar undertakes no obligation to publicly update or revise any forward looking information with me. This afternoon are frankly <expletive> less our president and Chief Executive Officer, Joe Beacom, less our chief safety and operations Officer.

Speaker Change: Jim Applegate, Landstar, as Vice President and Chief corporate sales strategy, and specialized freight officer, and Matt Danziger, Lessors, Vice President and Chief Field sales officer.

Lance: Frankly, I will handle the prepared remarks, with Joe Jim and Matt available for questions I will now pass it to Lance our CEO Franklin <expletive> for his opening remarks, thanks, J T and good afternoon, everyone first I want to thank our 1 million miles safe drivers and road show, our BCS many of whom were able to spend some time with us celebrating their accomplishments at the annual <unk> All star event.

James P. Todd: I'll now pass it to Landstar's CEO, Frank Lonegro, for his opening remarks. Thanks, JT, and good afternoon, everyone. First, I want to thank our Million Mile Safe Drivers and Roadstar BCOs, many of whom were able to spend some time with us celebrating their accomplishments at the annual BCO All-Star event held earlier this month. This outstanding group of owner-operators exemplifies our shared passion and purpose at Landstar to safely deliver freight for our customers every day.

Lance: Earlier this month.

Lance: This outstanding group of owner operators exemplify our shared passion and purpose at Landstar to safely deliver freight for our customers every day. It is incredibly energizing to engage with our network of entrepreneurial agents <unk> and carriers as we worked together to align landstar for future growth and continued success. Thanks Jay.

James P. Todd: It is incredibly energizing to engage with our network of entrepreneurial agents, VCOs, and carriers as we work together to align Landstar for future growth and continued success. As JT mentioned earlier, I'm pleased to be joined this afternoon by Jim Applegate and Matt Daniger, the new leaders of our sales organization. Jim and Matt's coordinated approach to driving our sales efforts will serve Landstar and its agents well.

Speaker Change: You mentioned earlier I am pleased to be joined this afternoon by Jim Applegate, and Matt Danaher, the new leaders of our sales organization.

Speaker Change: Jim and matched coordinated approach to driving our sales efforts will serve landstar in its agents well.

Frank A. Lonegro: As we move into the back half of 2024, we are laser focused on executing on our strategic initiatives. Cross-border Mexico and heavy haul are two areas we have identified where we already have scale and believe we have significant opportunities for incremental growth. We also remain focused on our commitment to continuous improvement in the level of service and support we provide to our customers, agents, VCOs, and carriers each and every day. Turning to slide 5, Landstar performed relatively well in the 2024 second quarter, considering that the freight environment continued to be characterized by soft demand and readily available truck capacity. I believe our results speak to the strength and resiliency of the Landstar business model. Our balance sheet continues to be very strong, and our capital allocation priorities remain unchanged.

Speaker Change: As we move into the back half of 2024, we are laser focused on executing on our strategic initiatives Cross border, Mexico and heavy haul are two areas. We have identified where we already have scale and believe we have significant opportunities for incremental growth. We also remain focused on our commitment to continuous improvement in the level of <unk>.

Speaker Change: <unk> and support we provide to our customers agents <unk> and carriers each and every day.

Speaker Change: Turning to slide five.

Speaker Change: Landstar performed relatively well in the 2024 second quarter, considering that the freight environment continues to be characterized by soft demand and readily available truck capacity I believe our results speak to the strength and resiliency of the Landstar business model, our balance sheet continues to be very strong and our capital allocation priorities remain unchanged.

Speaker Change: <unk> I am a strong believer in the company's stock buyback program and I'm committed to Opportunistically executing on our existing authority to benefit our long term stockholders as noted in the release, we deployed over $56 million and repurchased approximately 316000 shares of common stock during the 2020 for second quarter.

Frank A. Lonegro: I'm a strong believer in the company's stock buyback program, and I'm committed to opportunistically executing on our existing authority to benefit our long-term stockholders. As noted in the release, we deployed over $56 million and repurchased approximately 316,000 shares of common stock during the 2024 second quarter. We also announced today a 9% increase in our quarterly dividend. We continue to invest in leading technology solutions for our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment.

Speaker Change: We also announced today, a 9% increase to our quarterly dividend we continue to.

Speaker Change: To invest in leading technology solutions for our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment.

Frank A. Lonegro: In the 2024 second quarter, overall demand in the freight environment was soft. The impact of accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending. Industrial output was inconsistent throughout the quarter, as evidenced by an IFM that fluctuated just barely above and below 50.

Speaker Change: In the 2024 second quarter overall demand in the freight environment was soft.

Speaker Change: Impact of accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending.

Speaker Change: Industrial output was inconsistent throughout the quarter as evidenced by an ISN that fluctuated just barely above and below 50, we remain in a loose truck capacity environment when measured by historical standards and market conditions favored the shipper.

Frank A. Lonegro: We remain in a loose truck capacity environment when measured by historical standards, and market conditions favor the shipper. Even with that backdrop, Landstar's 2024 second quarter bottom line results exceeded the midpoint of our guidance range. I was pleased to see heavy haul loadings, which is mentioned above, as one of our strategic growth priorities, grow 3% year-over-year, incrementally improving from the plus 2% year-over-year growth experienced in the first quarter. On the other hand, and as expected, given the capacity environment, our substitute line haul load volumes declined more than the company average and continue to be soft after an incredibly strong run during the pandemic.

Speaker Change: Even with that backdrop Landstar is 2024 second quarter bottom line results exceeded the midpoint of our guidance range I was pleased to see heavy haul loadings, which as mentioned above as one of our strategic growth priorities were up 3% year over year incrementally improving from the plus 2% year over year growth experienced in the first quarter.

Speaker Change: On the other side and as expected given the capacity environment, our substitute line haul load volumes declined more than the company average and continues to be soft after an incredibly strong run during the pandemic are.

Frank A. Lonegro: Our second quarter guidance, issued in conjunction with our 2024 first quarter earnings release, called for the number of loads hauled via truck to be 5 to 9% below the 2023 second quarter, and overall revenue per truckload to be flat to 4% below the 2023 second quarter. The actual number of loads hauled via truck in the 2024 second quarter was 9% below the 2023 second quarter, at the low end of our truckload volume guidance.

Speaker Change: Our second quarter guidance issued in conjunction with our 2021st quarter earnings release call for the number of loads hauled via truck to be 5% to 9% below the 2023 second quarter and overall revenue per truckload to be flat to 4% below the 2023 second quarter. The actual number of loads hauled via truck in the two.

Speaker Change: 2024 second quarter was 9% below the 2023 second quarter at the low end of our truckload volume guidance actual revenue per truckload in the 2024 second quarter was $2, 6% below the prior year quarter slightly below the midpoint of our guidance the softness in truck loadings compared to guidance was more.

Frank A. Lonegro: The actual revenue per truckload in the 2024 second quarter was 2.6% below the prior year quarter, slightly below the midpoint of our guidance. The softness in truck loadings, compared to guidance, was mostly driven by a disappointing fiscal May, during which loadings were below fiscal April for only the second time in nearly two decades.

Speaker Change: Driven by a disappointing fiscal may during which loadings were below fiscal April for only the second time in nearly two decades.

Frank A. Lonegro: Turning to slide 6 and looking at our network, the scale, systems, and support we provided helped to drive the operating results generated during the 2024 second quarter. JT will get into the details on revenue, loadings, and rate per load. As noted on our first quarter earnings call, I've been in the transportation sector for most of my career and realized how important Landstar's safety-first culture is to our continued success. Our safety performance is a direct result of the professionalism of the thousands of Landstar BCOs operating safely every day and the agents and employees who work to reinforce the critical importance of safety at Landstar.

Speaker Change: Turning to slide six and looking at our network.

Speaker Change: Network the scale systems and support we provided help to drive the operating results generated during the 2024 second quarter <unk> will get into the details on revenue loadings in rate per load.

Speaker Change: As noted on our first quarter earnings call I've been in the transportation sector for most of my career and realized how important Landstar safety first culture is to our continued success.

Speaker Change: Our safety performance is a direct result of the professionalism of the thousands of Landstar <unk> operating safely every day and the agents and employees, who work to reinforce the critical importance of safety at Landstar.

Frank A. Lonegro: I'm proud to report an accident frequency index of....57 DOT reportable accidents per million miles during the first six months of 2024, an improvement of approximately 2%. This is an impressive operating metric that speaks to the strength, skill, talent, and dedication of our BCOs and provides a point of differentiation our agents are able to highlight in discussions with our freight customers. Turning to slide seven in the capacity table, the BCO truck count decreased sequentially in the second quarter from the first quarter by 230 trucks, consistent with our expectations of BCO declines slowing in Q2 relative to Q1. On a year-over-year basis, the VCO truck count has decreased to approximately 13%.

Speaker Change: I'm proud to report an accident frequency index of $5 <unk> dot reportable accidents per million miles during the first six months of 2024, an improvement of approximately 2% as compared to the corresponding period of 2023. This is an impressive operating metric that speaks to the strength skill talent.

Speaker Change: <unk> and dedication of our <unk> and provides a point of differentiation our agents are able to highlight and discussions with our freight customers.

Speaker Change: Turning to slide seven and the capacity side <unk> truck count decreased sequentially in the second quarter from the first quarter by 230 trucks consistent with our expectations of Bcl declines slowing in Q2 relative to Q1 on.

Speaker Change: On a year over year basis, <unk> truck count has decreased approximately 13% since the end of the 2023 second quarter. It is typical to incur turnover and bto truck count when truck rates decrease PCL turnover continues to be influenced by the significant increase in the cost of repairs and the extended period of time trucks are out of service awaiting.

Frank A. Lonegro: It is typical to incur turnover in BCO truck counts when truck rates decrease. However, BCO turnover continues to be influenced by the significant increase in the cost of repairs and the extended period of time trucks are out of service awaiting repairs. We would expect the BCO count to continue to decline in the coming months, given the challenging operating environment faced by many truck owner operators, but at a slower pace than we saw in the second quarter. I'll now pass the call back to JT to walk you through the 2024 second quarter financials in more detail. Thanks, Frank.

Jay: Repairs, we would expect Bcl count to continue to decline in the coming months, given the challenging operating environment faced by many truck owner operators, but at a slower pace than we saw in the second quarter ill now pass the call back to Jay to walk you through the 2024 second quarter financials in more detail. Thanks, Frank turning to slide nine this Frank.

James P. Todd: Turning to slide nine, as Frank mentioned earlier, the number of loads hauled by a truck came in at the low end of the company's previously issued guidance range, primarily due to a soft fiscal May. Truck revenue per load came in slightly below the midpoint of our guidance. Non-truck transportation service revenue in the 2024 second quarter was 7%, or $7 million, below the 2023 second quarter. The decrease in non-truck transportation revenue was mostly due to a 62% decrease in air revenue per shipment attributable to decreased high-value loadings from one customer.

Jay: And earlier the number of loads hauled via truck came in at the low end of the Companys previously issued guidance range, primarily due to a soft fiscal may truck revenue per load came in slightly below the midpoint of our guidance non truck transportation service revenue in the 2024 second quarter was 7% or $7 million below the 2023 second quarter the decrease.

Jay: Non truck transportation revenue was mostly due to a 62% decrease in air revenue per shipment attributable to decreased high value loadings from one customer.

James P. Todd: As for the breakdown in truck transportation, revenue per load on loads hauled by unsighted platform equipment increased 3% year over year, whereas revenue per load on loads hauled by van equipment decreased 5% year over year. We consider revenue per mile on loads hauled by BCO trucks a relatively pure pricing number as it excludes fuel surcharges billed to customers that are paid 100% to the BCO. Revenue per mile on van equipment hauled by BCOs in the 2024 second quarter was 4% below the 2023 second quarter.

Jay: As to the breakdown in truck transportation revenue per load on loads hauled by unsighted platform equipment increased 3% year over year, whereas revenue per load on loads hauled via van equipment decreased 5% year over year, we consider revenue per mile on loads hauled by Bcl trucks, a relatively pure pricing number as it excludes fuel surcharges billed to customers that are paid.

Jay: 100% to the Bcl revenue per mile and van equipment hauled by <unk> and the 2024 second quarter was 4% below the 2023 second quarter. It should be noted that although the market has softened from a year ago Lancers revenue per mile on <unk> equipment remains above the pre pandemic 2019 second quarter by approximately 15%.

James P. Todd: It should be noted that although the market has softened from a year ago, Landstar's revenue per mile on VCO van equipment remains above the pre-pandemic 2019 second quarter by approximately 15%. We believe that rates will stay relatively higher than pre-pandemic levels given the significant amount of incremental costs to operate a truck today as compared to five years ago. Revenue per mile on van equipment hauled by VCOs sequentially decreased 1% from March to April, increased 1% from April to May, and increased 2% from May to June.

Speaker Change: We believe that rates will stay relatively higher than pre pandemic levels, given the significant amount of incremental cost to operate a truck today as compared to five years ago.

Speaker Change: Per mile and van equipment hauled by <unk> sequentially decreased 1% from March to April increased 1% from April to May and increased 2% from May to June the March to April and May to June month to month changes underperformed pre pandemic typical patterns, whereas the sequential change in <unk> revenue per mile on van equipment from April to May outperform these pre pandemic.

James P. Todd: The March to April and May to June month-to-month changes underperformed pre-pandemic typical patterns, whereas the sequential change in VCO revenue per mile on van equipment from April to May outperformed these pre-pandemic historical patterns. As to revenue per mile and unsighted platform equipment hauled by BCOs, revenue per mile increased 1% from March to April, decreased 1% from April to May, and increased 2% from May to June The month-to-month sequential trends on unsighted platform equipment are generally more unpredictable compared to that of anecdotal evidence.

Speaker Change: Historical patterns as to revenue per mile and inside of platform equipment <unk> revenue per mile increased 1% from March to April decreased 1% from April to May and increased 2% from May to June the month to month sequential trends inside of platform equipment are generally more unpredictable compared to that of van equipment.

James P. Todd: Relative volatility is often due to the mix between heavy specialized loads and standard flappet volumes. Heavy haul revenue, one of our areas of increased strategic focus, was up approximately 6% year-over-year in the second quarter. Heavy haul loadings and revenue per heavy haul load were each up approximately 3% year-over-year. This represented a mixed tailwind to our unsighted platform revenue per load as heavy haul revenue as a percentage of the category increased from approximately 27% during the 2023 second quarter to approximately 29% in the 2024 quarter.

Speaker Change: Relative volatility is often due to the mix between heavy specialized loads and standard flat, but volume.

Speaker Change: Heavy haul revenue one of our areas of increased strategic focus was up approximately 6% year over year in the second quarter heavy haul loadings and revenue for heavy haul load were each up approximately 3% year over year. This represented a mixed tailwind to our onsite platform revenue per load is heavy haul revenue as a percentage of the category increased from approximately 27% during the 2020.

Speaker Change: <unk> second quarter to approximately 29% in the 2024 quarter turning to slide 10, we provided revenue share by commodity and year over year change in revenue by commodity transportation logistic segment revenue was down 11% year over year on a 9% decrease in loadings and a 2% decrease in revenue per load as compared to the 2023 second quarter.

James P. Todd: Turn to slide 10, where we provided revenue share by commodity and year-over-year change in revenue by commodity. Transportation Logistics Segment revenue was down 11% year-over-year on a 9% decrease in loadings and a 2% decrease in revenue per load as compared to the 2023 second quarter.

James P. Todd: Within our largest commodity category, consumer durables, revenue declined 10% year-over-year on a 10% decline in volumes, while revenue per load was approximately equal. Aggregate revenue across our top five commodity categories, which collectively make up about 71% of our transportation revenue, was down 10% compared to the 2023 second quarter. While slide 10 displays revenue shared by commodity, we thought it would also be helpful to include some color on volume performance within our top five commodity categories. From the 2023 second quarter to the 2024 second quarter, total loadings of machinery decreased 12%, automotive equipment and parts decreased 1%, building products decreased 1%, and hazardous materials decreased 14%.

Speaker Change: Within our largest commodity category consumer durables revenue declined 10% year over year on a 10% decline in volumes while revenue per load was approximately equal.

Speaker Change: Aggregate revenue across our top five commodity categories, which collectively make up about 71% of our transportation revenue was down 10% compared to the 2023 second quarter.

Speaker Change: While slide 10 displays revenue share by commodity we thought it would also be helpful to include some color on volume performance within our top five commodity categories from the 2023 second quarter to the 2024 second quarter total loadings of machinery decreased 12% automotive equipment and parts decreased 1% building products decreased 1%.

Speaker Change: And hazardous materials decreased 14%.

James P. Todd: Additionally, substitute line haul loadings, one of the strongest performers for us during the pandemic and one which varies significantly based on consumer demand, decreased 29% from the 2023 second quarter. Also, Landstar is a truck capacity provider to other trucking companies, 3PLs, and truck brokers.

Speaker Change: Additionally, substitute line haul loadings, one of the strongest performers for us during the pandemic and one which vary significantly based on consumer demand decreased 29% from the 2000.

Speaker Change: 23 second quarter.

Speaker Change: Also <unk> as truck capacity provider to other trucking companies through Pls and truck brokers during periods of tight truck capacity. Those other freight transportation providers reached out to landstar to provide truck capacity more often and during times of more readily available truck capacity.

James P. Todd: During periods of tight truck capacity, other freight transportation providers reach out to Landstar to provide truck capacity more often than during times of more readily available truck capacity. The amount of freight hauled by Landstar on behalf of other truck transportation companies is reflected in almost all our commodity groupings, including our substitute line haul service offerings. Overall, revenue hauled on behalf of other truck transportation companies in the 2024 second quarter was 27% below the 2023 second quarter, a clear indicator in our model that capacity is more readily accessible. Revenue hauled on behalf of other truck transportation companies was 13% and 16% of transportation revenue in the 2024 and 2023 second quarters, respectively.

Speaker Change: <unk> freight hauled by Landstar on behalf of other truck transportation companies as reflected in almost all our commodity groupings, including our substitute line haul service offering.

Speaker Change: Overall revenue hauled on behalf of other transportation companies in the 2024 second quarter was 27% below the 2023 second quarter, a clear indicator in our model the capacity is more readily accessible.

Speaker Change: Revenue hauled on behalf of other truck transportation companies was 13% and 16% of transportation revenue in the 2024 and 2023 second quarters respectively.

James P. Todd: Even with the ups and downs in various customer categories, our business remains highly diversified with over 25,000 customers, none of which contributed over 6% of our revenue in the 2024 first half. Turning to slide 11, in the 2024 second quarter, gross profit was $120 million, compared to gross profit of $139.7 million in the 2023 second quarter. Gross profit margin was 9.8% of revenue in the 2024 second quarter, as compared to gross profit margin of 10.2% in the corresponding period of 2023, and the 2024 second quarter variable contribution was $175.1 million compared to $198.2 million in the 2023 second quarter. Variable contribution margin was 14.3% of revenue in the 2024 second quarter, compared to 14.4% in the same period last year.

Speaker Change: Even with the ups and downs in various customer categories. Our business remains highly diversified with over 25000 customers, none of which contributed over 6% of our revenue in the 2024 first half turning.

James P. Todd: The decrease in variable contribution margin compared to the 2023 second quarter was primarily attributable to a decreased variable contribution margin on revenue generated by truck brokerage carriers, as the rate paid to truck brokerage carriers in the 2024 second quarter was 163 basis points higher than the rate paid in the 2023 second quarter. Partially offset by mix as an increased percentage of revenue was generated by BCO independent contractors, which typically has a higher variable contribution margin than revenue generated by other modes of transportation. Turn to slide 12.

Speaker Change: Turning to slide 11, and she has a 24 second quarter gross profit was $120 million compared to gross profit of $139 7 million in the 2023 second quarter gross profit margin was nine 8% of revenue in the 2024 second quarter as compared to gross profit margin of 10, 2% in the corresponding period of 2023 and the 2024.

Speaker Change: Quarter variable contribution was $175 1 million compared to $198 2 million in the 2023 second quarter variable contribution margin was 14, 3% of revenue in the 2024 second quarter compared to 14, 4% in the same period last year.

Speaker Change: The decrease in variable contribution margin compared to the 2023 second quarter was primarily attributable to a decreased variable contribution margin on revenue generated by truck brokerage carriers as the rate paid to truck brokerage carriers in the 2024 second quarter was 163 basis points higher than the rate paid in the 2023 second quarter, partially offset by <unk>.

Speaker Change: <unk> is an increased percentage of revenue was generated by <unk> independent contractors, which typically has a higher variable contribution margin and revenue generated by other modes of transportation.

James P. Todd: Operating income declined as a percentage of both gross profit and variable contribution, primarily due to the impact of the company's fixed cost infrastructure, principally certain components of selling general administrative costs in comparison to smaller gross profit and variable contribution basis. Other operating costs were $14.1 million in the 2024 second quarter compared to $13.5 million in 2023. This increase was primarily due to decreased gains on the sale of used trailing. Insurance and claims costs $27.2 million in the 2024 second quarter compared to $29.8 million in 2023.

Speaker Change: Turning to slide 12, operating income declined as a percentage of both gross profit and variable contribution primarily due to the impact of the company's fixed cost infrastructure, principally certain components of selling general and administrative costs in comparison to smaller gross profit and variable contribution basis.

Speaker Change: Operating costs were $14 $1 million in the 2024 second quarter compared to $13 $5 million. In 2023. This increase was primarily due to decreased gains on sale of used trailing equipment.

Speaker Change: Insurance and claims costs were $27 2 million in the 2024 second quarter compared to $29 8 million in 2023 total insurance and claims costs were five 8% of <unk> revenue in both the 2024 and 2023 periods.

James P. Todd: Total insurance and claims costs were 5.8% of BCO revenue in both the 2024 and 2023 periods. The decrease in insurance and claims costs as compared to 2023 was primarily attributable to decreased severity of accidents during the 2024 period and decreased BCO miles traveled during the 2024 period. During both the 2024-2023 second quarter, insurance and claims costs included $1 million of net unfavorable adjustment to prior claim estimates. Selling General Administrative Costs were $54.9 million in the 2024 second quarter, compared to $54.5 million in the 2023 second quarter.

Speaker Change: A decrease in insurance and claims cost as compared to 2023 was primarily attributable to decreased severity of accidents. During the 2024 period and decreased Bcl miles traveled during the 2024 period.

Speaker Change: Both the 2024 and 2023 second quarter insurance and claims costs included $1 million of net unfavorable adjustments to prior year claim estimates selling general and administrative costs were $54 9 million in the 2024 second quarter compared to $54 5 million into 2023 second quarter.

James P. Todd: As we have discussed regularly on these calls in the past, the provision relating to Landstar's incentive compensation programs is an important component of our SG&A line and a key defensive feature of our model, given the highly cyclical nature of our business. In each of 2023 and 2024, following the end of the second quarter, Landstar booked a credit to reduce a significant portion of the incentive compensation accrual established at the end of the first quarter. The credits recorded in each period were approximately equal, at just over a million dollars.

Speaker Change: As we've previously discussed regularly on these calls in the past the provision relating to Landstar is incentive compensation programs is an important component of our SG&A line and a key defensive feature of our model given the highly cyclical nature of our business in each of 2023 and 2024. Following the end of the second quarter Landstar booked a credit to reduce a significant portion of the incentive.

Speaker Change: Compensation accrual established at the end of the first quarter. The credits recorded recorded in each period were approximately equal at just over $1 million. Each of these credits favorably impacted second quarter SG&A expense.

James P. Todd: Each of these credits favorably impacted second quarter SG&A. Part from the favorable net impact of our incentive compensation programs on the SG&A line in the quarter, Landstar experienced increased employee benefit costs and increased provision for customer bad debt in the 2024 second quarter compared to the 2023 system. Partially Offset by Decreased Project Consultancy. Costs associated with our annual aging convention appeared in the second quarter of each of 2023 and 2024 and were approximately the same in each period.

From the favorable net impact of our incentive compensation programs on the SG&A line in the quarter Landstar experienced increased employee benefit cost and increased provision for customer bad debt in the 2024 second quarter compared to the 2023 second quarter, partially offset by decreased project consulting costs.

Speaker Change: Associated with our annual agent Convention appeared in the second quarter in each of 2023 and 2024 and were approximately the same in each period.

James P. Todd: Depreciation and amortization was $14.5 million in the 2024 second quarter compared to $14.9 million in 2023. This decrease is primarily due to decreased depreciation on the company's trailer fleet, partially offset by increased depreciation on software applications resulting from continued investment in new and upgraded tools for use by agents and third-party capacity providers. The effective income tax rate was 24.5% in the 2024 second quarter compared to an effective income tax rate of 24.6% in the 2023 second quarter.

Speaker Change: Depreciation and amortization was $14 $5 million in the 2024 second quarter compared to $14 9 million. In 2023. This decrease was primarily due to decreased depreciation on the company's trailer fleet, partially offset by increased depreciation on software applications, resulting from continued investment in new and upgraded tools for use by agents and third party <unk>.

Speaker Change: Passenger providers the effective income tax rate was 24, 5% in 2024 second quarter compared to an effective income tax rate of 24, 6% in the 2023 second quarter.

James P. Todd: Turning to slide 13 and looking at our balance sheet, we ended the quarter with cash and short-term investments of $504 million. Cash flow from operations for the 2024 first half was $142 million, and cash capital expenditures were $17 million. The company continues to return significant amounts of capital back to stockholders, with $95 million of dividends paid and $57 million of share repurchases during the first half of 2024. In addition, as noted in the press release, the company increased the regular quarterly dividend by 9%.

Speaker Change: Turning to slide 13, and looking at our balance sheet, we ended the quarter with cash and short term investments of $504 million.

Speaker Change: Cash flow from operations for the 2024 first half was $142 million in cash capital expenditures were $17 million. The company continues to return significant amounts of capital back to stockholders with $95 million of dividends paid and $57 million of share repurchases. During the 2020 for first half.

Speaker Change: In addition, as noted in the press release the company increased the regular quarterly dividend by 9% the strength of our balance sheet is a testament to the cash generating capabilities of the Landstar model. Thank you Frank.

James P. Todd: The strength of our balance sheet is a testament to the cash-generating capabilities of the Landstar model. Thanks, JT. As we progress through the second half, year-over-year comparisons should begin to ease. Looking at historical seasonality from Q2 to Q3, pre-pandemic patterns would normally yield a 1-2% improvement in truck revenue per load, typically offset by a 1-2% decline in the number of loads hauled via truck, yielding a similar top line sequentially. In 2024, as we move from June to July, truck volumes have trended below normal sequential month-to-month patterns based on pre-pandemic seasonal performance trends. On the other hand, truck revenue per load has outperformed these pre-pandemic patterns.

Frank: Thanks, J T. As we've progressed through the second half year over year comparisons should begin to ease looking at historical seasonality from Q2 to Q3 pre pandemic patterns would normally yield of 1% to 2% improvement in truck revenue per load typically offset by a 1% to 2% decline.

Frank: And the number of loads hauled via truck, yielding a similar top line sequentially in.

Frank: In 2024, as we move from June to July or truck volumes have trended below normal sequential month to month patterns based on pre pandemic seasonal performance trends on the other hand truck revenue per load has outperformed the pre pandemic patterns turning to slide 15, our year over year expectation.

James P. Todd: Turning to slide 15, our year-over-year expectations for the 2024 third quarter are that truck load volumes will be 6 to 10 percent below the 2023 third quarter, and truck revenue per load will be in a range of flat to up 4 percent versus the 2023 third quarter. On a sequential basis, our guidance for the third quarter implies a 2% to 7% decline in truckload volume, and Truck Revenue Per Load, ranging from up 3% to up 7% versus the second quarter.

Frank: <unk> for the 2020 for third quarter are the truckload volumes will be 6% to 10% below the 2023 third quarter and truck revenue per load will be in a range of flat to up 4% versus the 2023 third quarter on a sequential basis, our guidance for the third quarter implies a 2% to 7%.

Frank: <unk> and truckload volumes and truck revenue per load ranging from up 3% to up 7% versus the 2024 second quarter. We also expect revenue for our non truckloads to be somewhat similar to what we experienced in the 2020 for second quarter.

James P. Todd: We also expect revenue for our non-truck voters to be somewhat similar to what we experienced in the 2024 second quarter. Based on these assumptions, we expect revenue in the 2024 third quarter to be in a range of $1.175 billion to $1.275 billion and earnings to be in a range of $1.35 per share to $1.55 per share. 2024 Third Quarter Guidance incorporates a variable contribution margin range of 14 percent to 14.3 percent and insurance and claim costs of approximately 5.5% of estimated BCO revenue.

Frank: Based on these assumptions, we expect revenue in the 2024 third quarter to be in a range of $1 175 billion to $1 $2 75 billion and earnings to be in the range of $1 35 per share to $1 55 per share the 2023rd quarter guidance incorporates a variable contra.

Frank: <unk> margin range of 14% to 14, 3% and insurance and claim costs of approximately five 5% of estimated <unk> revenue.

Operator: One last point before we take your questions. The 2024 second quarter benefited from the reversal of a significant portion of the Q1 bonus accrual. That benefit obviously won't repeat in the third quarter and is a primary reason for the difference between the $1.45 midpoint of our third quarter EPS guidance range and the $1.48 of EPS we achieved in the second quarter. With that, Bill, we'd like to open the line for questions

Frank: One last point before we take your questions. The 2024 second quarter benefited from the reversal of a significant portion of the Q1 bonus accrual that benefit obviously wont repeat in the third quarter and is a primary reason for the difference between the $1 45 midpoint of our third quarter EPS guidance range.

Frank: And the $1 48 of EPS, we achieved in the second quarter.

With that belt, we'd like to open the line for questions.

Operator: 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 touchtone phone. Once again, that is star 1 to ask a question. To answer a request, please press star 2.

Speaker Change: Thank you very much Sir at this time, we will begin the question and answer session I would like to ask a question. Please press star one on your Touchtone phone. Once again that is star one to ask a question or request. Please press star two we had the first question coming from the line of Scott Group of Wolfe Research. Your line is now open.

Jake Laxon: We have the first question coming from the line of Scott Group of Wolf Research. Your line is now open. Hey, this is Jake Laxon on behalf of Scott. Thanks for your time.

Jake lacks: Hey, this is Jake lacks on for Scott Thanks for the time.

Speaker Change: Hey, Jake.

Jake Laxon: So the guidance implies a pretty strong sequential improvement in rates but a pretty large sequential decline in volumes. I guess, is this a sign, do you think, that pricing is starting to firm up for the industry? Or is this more specific to Landstar? And I guess it would be great to get your thoughts on the reason for this type of guidance.

Jake lacks: So the guidance implies a pretty strong sequential improvement in rates, but a pretty large sequential decline in volumes I guess is this a sign.

Speaker Change: Do you think that pricing starting to firm up for the industry or is it more specific to landstar.

Speaker Change: I guess, what would be great to get your thoughts on the reason for this divergence.

Frank A. Lonegro: Yeah, hey, Jay. It was a little surprising to us as well when we looked at July's numbers. We were certainly excited to see a little bit of lift on the rate side of the equation, but July was a little bit softer. Some of that could be the holiday and sort of typical seasonality there around the 4th of July and the time of the week that it hit. There was some weather in the second week,

Speaker Change: Yeah, Hey, Jay It was a little surprising to us as well as we looked at July's numbers, we were certainly.

Speaker Change: Excited to see a little bit of a lift on the on the rate.

Speaker Change: Side of the equation, but July was a little bit softer some of that could be the holiday and sort of typical.

Speaker Change: Seasonality there around the fourth of July and the time of the week that it hits there was a weather in the second week. So there were a couple of things I think that we look at and wonder whether or not those are.

Frank A. Lonegro: So there were a couple of things I think that we look at and wonder whether or not those are going to stay with us. JT can give you a little bit of color around how June to July and, obviously, July to August, August, September as we progress through. But, you know, I think it's probably too early to call the ball on true inflection in the second half. I think we did that last year, and it didn't happen.

Speaker Change: We're going to stay with us.

Speaker Change: J P can give you a little bit of color around how how June to July and obviously July to August August September as we as we progress through but.

J P: I think it's probably too early to call the ball on the true inflection in the second half I think we did that last year and it didn't happen and we did this year and it's maybe just coming off the bottom right now so a little reluctant to lean in and say that happy days are here again, but I do think that.

Frank A. Lonegro: We did it this year, and it's, you know, maybe just coming off the bottom right now. So I'm a little reluctant to lean in and say that happy days are here again. But I do think that, you know, we're seeing a little bit of a lift on the revenue side. There are a lot of things that we're working on. You know, we mentioned heavy hauling in the prepared remarks. I think that's exciting for us. But let me let JT give you some color on the month-to-month view. Yeah, absolutely. Thanks, Frank.

Speaker Change: We're seeing a little bit of lift on the revenue side a lot of the things that we're working on we mentioned the heavy haul in the.

Speaker Change: The prepared remarks, I think that's exciting for us, but let me let to let's say to give you some color on the month to month you yeah, absolutely. Thanks, Frank J, we saw pretty good strength towards the end of June on both truck loadings and truck revenue per load with the benefit of the first four weeks of the third quarter, we typically drop off about 4% on our loads per workday.

James P. Todd: Jake, we saw pretty good strength toward the end of June on both truck loadings and truck revenue per load with the benefit of the first four weeks of the third quarter. We typically drop off about 4% on a loads-per-workday basis from June to July. We're underperforming that by about 300 basis points. On the other hand, truck revenue per load, we typically get about a 200 basis point good guy from June to July, and we're about 300 basis points better based on four weeks of process revenue per load. So that's kind of the launch point for the gap. Got it, got it. No, that's helpful.

Speaker Change: Walking from June to July were underperforming that by about 300 basis points on the other hand truck revenue per load, we typically get about a 200 basis point good Guy June to July and we're about 300 basis points better based on four weeks of process revenue per load. So that's kind of the launch point for the guide.

James P. Todd: And then the BCO count is below pre-COVID levels and keeps trending lower, while approved and active broker carriers are nicely above pre-COVID. Why do you think we're seeing that? Yeah, I'll kick it off and turn it over to Joe here in a second to give you some more color.

Speaker Change: Got it got it that's helpful and then.

Speaker Change: PCL count below pre COVID-19 levels and keeps trending lower wall approved and active broker carriers are less.

Speaker Change: Nicely above pre Covid why do you think.

Speaker Change: We're seeing that.

Frank A. Lonegro: We did some analysis and purging on the approved carrier side last August, so you're seeing the impact of that on a year-over-year basis. On the BCO side, you know, clearly, the length of the downturn and the rate trough are really the largest impact on what's happening on the BCO side. What we did say on the prior call, and it actually came to fruition, was that we thought that the rate of decline would be slow, and it was, and we're continuing to see that rate of decline lessen over time, and we believe that will hold true in Q3 relative to Q2 as well. But I'll let Joe provide some color.

Speaker Change: I'll kick it off and turn it over to Joe here in a second to give you some more color.

Joe: We did some analysis and purging on the carrier side last August so youre seeing the impact of that on a year over year basis on the BCS side clear.

Joe: Clearly the length of the downturn in the rate trough is really the largest impact on what's happening on the <unk> side, what we did say on the prior call and it actually came to fruition was we thought that the rate of decline would slow and it did and we're continuing to see that rate of decline lessened over time and we believe.

Joe: That will hold true in Q3 relative to Q2 as well, but let me, let Joe provide some color sure yes, Jay so.

Joseph J. Beacom: Sure. Yeah, Jay, as Frank alluded to there, you know, we've seen the cost pressures continue, the duration of the cost pressures clearly having a pretty big impact on the BCO front. What I think we've also seen and talked about is that the brokerage margin splits that we've had or that our agents have enjoyed have been tightening over time. They've tightened through 2023, and they continue to tighten, so I think you see agents leaning more towards BCOs, and that's going to help improve loadings there. One thing I would caution, though, is that we look at our carrier counts and active carriers, and we look at the same authority revocation data that everybody on the call probably looks at.

Joe: As Frank alluded to there we have seen.

Joe: The cost pressures continue the duration of the cost pressures clearly, having a pretty big impact on the Bcl front.

Joe: I think we've also seen and talked about is that.

Joe: The brokerage margin splits that we've had that our agents have enjoyed have been tightening over time, they've tightened through and through 2023 and are continuing to tighten so I think youll see agents.

Joe: And more towards <unk> and Thats going to help.

Speaker Change: Improved loadings, there one thing I would caution though is we look at our carrier counts and active carriers and we look at the same.

Speaker Change: Alrighty ratification data that everybody on the call I'll, probably looks at I, just don't think that.

Joseph J. Beacom: I just don't think that, you know, when you look at us as a carrier, we have three carriers here, and the truck counts within those carriers can move, but we're still three carriers. And I think, as an industry, we look at revocations, and you're seeing this modest decline in revocations, but what you don't see is the number of trucks that are not within the carriers that are in that mix, right So we're still three carriers. We were three carriers a couple years ago.

Speaker Change: When you look at us as a carrier we have three carriers here.

Speaker Change: And the truck count within those carriers can it can move, but we're still three carriers and as I think as an industry, we look at revocations and Youre seeing.

Speaker Change: This modest decline in <unk>, but what you don't see.

Speaker Change: Is the number of trucks that are not within the carriers that are in that mix right. So so.

Speaker Change: We're still three carriers were three carriers a couple of years ago what.

Joseph J. Beacom: What we don't get to see from the macro data is the decline in truck count within those carriers. And we get to see some of that in our carrier database that we look at. And in our active carriers, we see some significant declines in not only the number of carriers, especially the small carriers who participate in the spot market like we do, but also some of the larger carriers.

Speaker Change: What we don't get to see.

Speaker Change: From the macro data is what's the decline in truck count within those carriers and we get to see some of that in our carrier database that we look at in our active carriers, we see some significant declines.

Speaker Change: And not only the number of carriers, especially the small carriers, who participate in the spot market like we do but also some of the larger carriers. So it looks it looks to US just from our limited viewpoint that the smaller carriers are exiting the business, albeit slowly and the larger carriers are getting smaller.

Joseph J. Beacom: So it looks to us, you know, just from our limited viewpoint, that the smaller carriers are exiting the business, albeit slowly, and the larger carriers are getting smaller as demand and increased costs and those kind of things take effect. So that's kind of how we see it. And again, we've had some pretty good indicators of things leveling off. July was the lowest net decline that we've seen since the second quarter of 2022.

Speaker Change: As demand and increased cost in those kind of things take effect. So.

Speaker Change: That's kind of how we see it and again, we've had some pretty good <unk>.

Speaker Change: Caters of things leveling off.

Speaker Change: July was the.

Speaker Change: The lowest net decline that we've seen since the second quarter of 2022.

Joseph J. Beacom: And the last week of July was a positive truck count week for us, something that's been a long time in coming, so, you know, early indicators, but hopefully positive indicators for BCO counts going forward, Jay. Appreciate the time.

Speaker Change: And the last week of July.

Speaker Change: Was are a positive truck count week for us something thats been a long time in coming so.

Early indicators, but hopefully positive indicators for Bcl count going forward Jay.

I appreciate the color. Thanks.

Joseph J. Beacom: Thanks. Thank you. We will move now to the next question. Coming from the line, Jordan Alligator of Goldman Sachs, your line is now open. Hi, this is Paul Stoddard. I'm on behalf of Jordan.

Speaker Change: Thank you we will move that to the next question coming from the line of Jordan Allegra with Goldman Sachs. Your line is now open.

Operator: I guess a question that we have is, when we look at the percentage of variable contribution on EBIT, kind of coming into that 39% up from the first quarter, I guess, when can we start to see that getting into the high 40 percent range that we started to see pre COVID? Or are there just going to be structural costs that just keep a ceiling on that? Yeah, I'll take the first crack at it, and JT can fill in some gaps and some numbers.

Speaker Change: Hi. This is Paul started on for Jordan I guess a question that.

Paul: That we have is when we look at the percentage of variable contribution on either kind of coming into that 39% from the first quarter I guess when can we start to see that getting into the high 40 percentage range that we started to see pre COVID-19 or is there just going to be structural costs, such as the ceiling on that.

Speaker Change: Yes, I'll take the first crack at it and J D can fill in some some gaps on some numbers obviously in a declining revenue environment, it's going to be harder to drop more to the bottom line.

Unknown Attendee: I mean, obviously, in a declining revenue environment, it's going to be harder to drop more to the bottom line. But what we're going to ultimately see as the rate environment turns and the volume environment turns, our fixed costs are not going to go up as a result of that, so you're going to get operating leverage as we pull that forward. A lot of that's going to depend on how much of it's volume-related and how much of that's rate-related, but as we see both of those, we expect to have more fall to the bottom line.

J D: But what we're going to ultimately see is.

J D: Rate environment turns in the volume environment turns I mean, our fixed costs are not going to go up as a result of that so youre going to get operating leverage.

J D: We pulled that forward a lot of that is going to depend on how much of it's volume related and how much of that is rate related but as we see both of those we expect to have more fall to the bottom line. Obviously, we've trough last couple of quarters.

Unknown Attendee: Obviously, we've gone through the last couple of quarters, and we're looking forward to coming out the other side stronger. We've got some initiatives internally to really look at the cost structure. As JT mentioned on this call, and I think on the prior call, there's not that much opportunity on the fixed-cost side of the equation. We have certain costs that are in the environment, whether we've got 1.8 million loads or 2.2 million loads, so we're going to focus on that when we're looking at every position that comes open and making sure that we absolutely have to fill that position, and JT is sort of the cost cop in Paul, you know, mid to high 40s. It's a good question.

J D: We're looking forward to coming out the other side stronger.

J D: We've got some initiatives internally to really look at the cost structure.

J D: As J P mentioned on this call and I think on the prior call.

J P: There's not that much opportunity in the fixed cost side of the equation, we have certain costs that are in the environment, whether we've got.

J P: 1 million eight loads are $2 2 million loads.

J P: So we're going to focus on that what we're looking at every position that comes open and making sure that we absolutely have to fill that position and J T as sort of a cost cap in some respects in and is doing a really good job of making sure that our cost structure stays at an appropriate level.

Frank A. Lonegro: I mean, clearly, the pandemic highs, we printed 55 and 56 OM, respectively, and 21 and 22. What I will tell you is that I'm still a big believer in our ability to push through 70% of the incremental VC dollars down to operating income. Ultimately, that is how we climb back from an OM standpoint. To Frank's earlier point, if the majority of that comes from price versus vols, it's easier to leverage that as price doesn't drive the need for more equipment and more insurance exposure, etc.

Paul: Yeah, Thanks, Frank Paul mid.

Speaker Change: Mid to high 40%. It's a good question I mean, clearly the pandemic highs, we printed 55 and 56% respectively in 'twenty, one and 'twenty two.

Speaker Change: What I will tell you is I'm still a big believer in our ability to push through 70% of the incremental <unk> dollars down to operating income ultimately that is how we climbed back from an OEM standpoint to Franks earlier point, if the majority of that comes from price versus volume, it's easier to leverage that as price doesn't drive the need for more equipment and.

James P. Todd: On a positive note, two big inflationary pressures that we've had here for the last and not unique to Landstar, by the way, the last seven years have been insurance and technology. We have had two years in a row now of decelerating gross dollar premium on our excess casualty programs, which is good. I think our May 1, most recent May 1 renewal was about a 5% gross dollar increase. So as that pressure begins to hopefully ease a little bit and the tech side starts growing at a more kind of normalized inflation rate, that should be emphasized. And I would just tell you, Paul, to take a look at the back of the baseball card.

Speaker Change: More insurance exposure et cetera et cetera.

Speaker Change: On a positive note two big inflationary pressures that we've had here for the last and not unique to <unk> by the way last seven years have been insurance and technology.

Speaker Change: Two years in a row now.

Speaker Change: Decelerating gross dollar premium on our excess casualty.

Speaker Change: Grams, which is good I think our may one.

Speaker Change: Most recent may one renewal was about a 5% gross dollar increase so is that pressure begins to hopefully ease a little bit.

Speaker Change: And the tech side start growing at a more kind of normalized inflation rate that should that should emphasize and I would just tell you Paul will take a look at the back of the baseball card. We've demonstrated over time, even pre pandemic, our ability to achieve that 70% incremental pusher.

James P. Todd: We've demonstrated over time, even pre-pandemic, our ability to achieve that 70% incremental push. No, great, that's great. And just as a follow-up, as we think about volumes kind of heading into the second half, obviously, guiding for lower volumes in the third quarter, I guess, any view into peak season and kind of where you think volume could look as we look out to the fourth quarter as well? Yeah, so I'll take a first shot at that one, and then Matt Daniger, who's got the field sales force, will chime in a little bit in terms of some color that he's hearing from his folks in the field.

Paul: No great that's great.

Speaker Change: And just as a follow up as you think about volumes kind of heading into the second half obviously guiding for lower volumes in the third quarter I guess any view into peak season, and kind of where you think volumes could look.

Speaker Change: As we look out to the fourth quarter as well.

Speaker Change: Yes, so I'll take a.

Unknown Attendee: A first shot at that one and then Matt Danaher, who has got the field sales force will chime in a little bit in terms of some color that he's hearing from as folks in the field.

James P. Todd: Just from a calendar day perspective, this peak season is going to be compressed by a couple of days, so we'll likely see some elevated volumes on a per day basis. It may not be impactful in the grand scheme of things, but to me, it's going to come down to the consumer and what is the consumer going to do with disposable income or credit card debt in the last couple of months of the year.

Just from a calendar day perspective. This peak season is going to be compressed by a couple of days so.

Speaker Change: We'll likely see some elevated volumes on a per day basis. It may not be impactful in the Grand scheme of things, but to me, it's going to come down to the consumer and what is the consumer going to do with disposable income or credit card debt in the last couple of months of the year, We haven't really had peak in the last few years.

James P. Todd: We haven't really had a peak in the last few years, so I think this year, certainly the GDP numbers would make you think that there's going to be some spending in the second half of the year, but ultimately, it's going to depend on what the consumer wants to buy and, honestly, how much the retailers and the wholesalers want to lean into inventory in this type of an interest rate environment.

Speaker Change: So I think this year certainly the GDP numbers would make you think that theres going to be some.

Speaker Change: Some spending in the second half of the year, but ultimately it's going to depend on what the consumer wants to buy and honestly how much the the retailers and the wholesalers want to lean into inventory in this type of of an interest rate environment. They certainly have have peeled them back from where they were in the COVID-19 highs, but I think there is on the other side of equation.

Frank A. Lonegro: They certainly have peeled them back from where they were in the COVID highs, but I think there is, on the other side of the equation, just a general reluctance to build up a lot of inventory, not knowing where the sales are going to be, so I think right now, we're going to take a wait and see approach. You know, we've got capacity that is sort of ready to dive in. We've had good conversations with our customers that, you know, Matt can give you some color on. But, you know, if it's there, we're ready for it. Hi Paul, this is Matt.

Speaker Change: A general reluctance to build up a lot of inventory not knowing where the sales are going to be.

Speaker Change: So I think right now we're going to take a wait and see approach.

Speaker Change: We've got capacity that is sort of ready to dive in we've got good conversations with our customers that can give you some color on that.

Speaker Change: If it's there we're ready for that.

Matt Daniger: Yeah, normally about June, we get down with our customers and really take a good look at what their needs are going through peak season. Here at Landstar, it's a relatively small group of customers that drive that e-commerce, parcels, and substitute line haul. And the early projection is it's going to look a lot like last year, certainly not like anything we saw in 21, 22 decelerated a little bit. And, of course, last year, it wasn't much of a peak at all.

Speaker Change: Hi, Paul This is Matt yes, normally about June we kept on with our customers and really take a good look of what their needs are going through peak season.

Speaker Change: Sure Lance or it's a relatively small group of customers that drive that E. Com e-commerce parcels substitute line haul.

Speaker Change: Early projections as it is going to look a lot like last year, certainly not like anything we saw in 'twenty, one 'twenty two decelerate a little bit and of course last year.

Speaker Change: It wasn't much of a peak at all in.

Matt Daniger: And right now, we're looking closer to 23. You know, we'll finalize that up here in the next month or so as we get our final projections on that. But we're not looking for an overly vibrant peak season this year.

Speaker Change: Right now, we're looking closer towards 'twenty three.

Speaker Change: We'll finalize that up here in the next month or so as we get our final projections on that but we're not looking for a overly vibrant peak season. This year.

Operator: Great. Thank you. I appreciate it.

Speaker Change: Great. Thank you I appreciate it.

Unknown Attendee: Thank you. We will move now to the next question coming from the line of Daniel Imbrose, Stevens Incorporated. Your line is now open.

Speaker Change: Thank you we will move to the next question coming from the line of Daniel Enbrel Stephens incorporated your line is now open.

Unknown Attendee: Hey guys, this is Joe Enderlin on for Daniel. Thanks for taking the question. Could you maybe provide an update on BCO productivity? How much room is there to go higher and then maybe break out training procedures or how you help BCOs select loads better and maximize routes? Thank you. Yeah, let me kick that one to Joe. He's front and center on that one.

Joseph J. Beacom: Hey, guys. This is Joe <unk> on for Daniel Thanks for taking the question.

Joe: Could you maybe provide an update on <unk> productivity, how much room is there to go higher and then maybe breakout training procedures or how you help bcf select loads better maximize routes.

Joe: Yes, let me kick that one to Joe He is front and center on that one but it's a great question. Yeah. Good question, Joe Yes, we were up 3% in the first quarter were up 6% year over year in the second quarter from a bcl utilization standpoint, which is a good sign and I think it's again kind of with the slowing terminations and that kind of thing I think it is.

Joseph J. Beacom: But it's a great question. Yeah, a good question, Joe. Yeah, we were up 3% in the first quarter. We're up 6% year over year in the second quarter from a BCO utilization standpoint, which is a good sign. And I think it's again, kind of with the slowing terminations and that kind of thing. But I think it's a good sign. From a utilization standpoint, we have a required orientation program when somebody leases on, and we go through a two-day tutorial and hands-on exercise for them to use the tools that we have internally that help them navigate our loading opportunities. And it's either via a laptop or their app.

Joseph J. Beacom: And they can customize that to fit their business plan. So they can look at particular loads based on a number of different scenarios. They can look at particular loads based on equipment type or origin, destination, anything that we can follow them around the country and feed them loads that they like to haul. And beyond all the technology, what we really do is emphasize the need to have agent relationships within the system.

Joe: Good sign from a utilization standpoint, we have required orientation program when somebody leases on and we go through a two day.

Joe: Tutorial and hands on exercise for them to use the tools that we have internally that helps them.

Joe: Navigate our loading opportunities and it's either via a laptop or their app.

Joe: And they can customize that to fit their business clients. So they can look at particular loads based on equipment type or origin destination.

Joe: Anything that we can can follow them around the country and feed them loads that they like to haul.

Speaker Change: And beyond all the technology, what we really do is emphasize the need to have agent relationships within the system. So we've got about 1100 agents.

Joseph J. Beacom: So we've got about 1100 agents, and it's just critical for BCOs to make those relationships and introduce themselves, and establish that trust back and forth between the BCO and the agent, which is fairly unique to our model, and the BCOs that grasp that and take a hold of that and own that tend to do very, very well and stay here for a very long time. So we've redoubled our efforts there to make sure it's the technology that can pay great dividends, but it's also the relationships.

Joe: And it's just critical for BCS is to make those relationships and introduce themselves and establish that trust back and forth between the <unk> and agent.

Joe: This is fairly unique to our model.

Speaker Change: And the Beast shows that graph that and take a hold of that and on that tend to do very very well and stay here for a very long time, one of the things that we've seen in 'twenty, one 'twenty two and freight volumes were so high.

Speaker Change: You could live off the App and as things have gotten a little bit leaner.

Speaker Change: Those that didn't have those relationships have struggled a little bit. So we've redoubled our efforts there to make sure. It's the technology, which can pay great dividends, but it's also their relationships and we're doing the same thing from a field perspective.

Joseph J. Beacom: And we're doing the same thing from a field perspective and going to our agents and letting them know that there are BCOs out there and helping make introductions, particularly with new agents, to the BCOs that are in the fleet currently and trying to redouble those efforts to help both parties. Matt, if you want to comment on that from an agent perspective, please feel free. Yeah, Joe, that's been a big push for us here this year. New agents tend to come from a brokerage background and, a lot of times, aren't really familiar with the BCO model and how that works. And so it's easy to fall into what you know, right?

Speaker Change: And go onto our agents and letting them know that there are <unk> out there and helping make introductions, particularly with new agents to the <unk> that are in the fleet currently and trying to re up all those efforts to help both parties.

Speaker Change: And Matt if you want to comment on that from an agent perspective. Please please feel free.

Joseph J. Beacom: So that's a big push for us this year. We're working with Joe to come up with some new ways to get them woven into that, that BCO culture and the value that they bring to the customer. That's helpful.

Unknown Attendee: Yes, Joe that's been a big push for US here this year new agents.

Unknown Attendee: And to come from our brokerage background.

Unknown Attendee: A lot of times aren't really familiar with the <unk> model and how that works and so it's easy to fall into what you know right. So that's a big push for US this year and we're working with Joe to come up with some some new ways to get them grained in that <unk>.

Unknown Attendee: <unk> culture, and the value that they bring to the customer.

Frank A. Lonegro: Thank you guys. As a follow-up, manufacturing remains contractionary after a head fake in February. Sounds like consumer durables demand is underwhelming after a pull-forward of demand during COVID. Are you seeing anything new within these end markets or anything increasingly optimistic from shippers on demand? You know, American manufacturing and things like that.

Unknown Attendee: That's helpful. Thank you guys.

Speaker Change: Follow up manufacturing remains contractionary after a head fake in February it sounds like consumer durables demand is underwhelmed after a pull forward of demand. During COVID-19 are you seeing anything new within these end markets or anything increasingly optimistic from from shippers on demand.

Speaker Change: Yes, I think on the.

Speaker Change: On the manufacturing side.

Speaker Change: Couple of things at play.

Speaker Change: Try it back up and look at near Shoring and Amir.

Frank A. Lonegro: I mean, I'm bullish on North American manufacturing on a long-term basis, but there will be wobbles along the way. Obviously, the election is going to play a part in that as we go forward into 2025. You know, when I look at where some of the highlights were in the quarter, I mean, consumer durables, I hear you, but it was good to see that it was actually in line. It's been a while since consumer durables have been in line with the company average, so I'd say that's on its way back. You know, machinery is doing okay. Auto vols are there too.

Speaker Change: American manufacturing and things like that I mean, I'm bullish on North American manufacturing on a long term basis, there's going to be wobbles, along the way obviously the election is going to play a part in that as we go forward into 2025.

Speaker Change: When I look at where some of the highlights were in the in the quarter I mean consumer durables I hear you, but it was good to see that it was actually in line.

Speaker Change: It's been a while since consumer durables have been in line with the company average so.

Speaker Change: That's on its on its way back.

Speaker Change: Machinery is doing okay auto halls are there the rate environments.

Frank A. Lonegro: The rate environment is, you know, kind of uber-competitive, so, you know, it wasn't a volume play there. Building products are doing well, and there's, you know, the data center business is embedded within that, so there's a lot of good business in there. It was really the super cyclical elements that JT called out in his, you know, prepared remarks that were one of the things that hurt us a little bit on the top line. I mean, GDP, to me, it's a question of well-telegraphed what's happening there. There is a point at which the durable good that you bought three or four years ago needs to be replaced.

Speaker Change: We're competitive so.

Speaker Change: It wasn't a volume play they're building products is doing well in the data center business is embedded.

Speaker Change: Within that so theres a lot of good a lot of good business in there. It was really the super cyclical elements that J P called out in his.

Speaker Change: Prepared remarks that we're one of the things that hurt us a little bit on the on the top line.

Speaker Change: To me. It's a question of what is the consumer going to do what are they going to spend their money on.

Speaker Change: I think <unk> seen the pull forward I think it's kind of well telegraphed what's happening there there is a point at which the durable that you bought three or four years ago needs to get replaced so that cycle will be helpful for us when that does come back around.

Frank A. Lonegro: So, you know, that cycle will be helpful for us when it does come back around. And again, I'm bullish on the American economy and the American consumer and American manufacturing capabilities, you know, and I think the election is ultimately going to put more people back to work regardless of who the victor is. And it's going to put more emphasis on U.S. and North American manufacturing. So, long term, I see us in a good spot.

Speaker Change: And again I'm bullish on the American economy, and the American consumer and the American manufacturing capabilities.

Speaker Change: And I think the election ultimately is going to put more people back to work regardless of who the Victor is and it's going to put more emphasis on U S and North American manufacturing, so long term I see us in a good spot.

Frank A. Lonegro: Yeah, Joe, I would just add, even with the choppy ISM backdrop that Frank mentioned, I was pleased we grew unsighted platform volume 7% sequentially. And on a revenue per load basis, that increased 4% sequentially. And if you dive in even deeper into the heavy haul component that we called out, the demand there really was broad-based across a whole bunch of customers, different industries. Jim can touch on that more.

Speaker Change: Yes, Joe I would just add even with the choppy backdrop.

Speaker Change: Backdrop that Frank mentioned I was pleased we grew on side of the platform volume, 7% sequentially and on a revenue per load basis that increased 4% sequentially and if you dive in even deeper into the heavy haul component that we called out the demand there really was broad based across a whole bunch of customers different industries, Jim Jim can touch on that.

Unknown Attendee: Yeah, and just to kind of do that, Frank outlined a couple of the end markets that have been really strong, like, you know, the building products, data centers. But something, you know, kind of encouraging, I think that we're seeing over on the project side, we are seeing wind, we're seeing projects starting to kick back up for that. And we're also seeing, you know, some refurbishment of equipment for the oil and gas industry. And I think that's actually something that's pretty encouraging. It might be a sign of things in the future if that keeps up. Yeah, thank you, guys. That's all for us.

Unknown Attendee: Yeah, and just kind of to that Frank.

Unknown Attendee: A couple of the end markets that have been really strong like the building products data centers, but something kind of encouraging I think that we're seeing over on the project side, we are seeing wind.

Unknown Attendee: Projects, starting to kick back up for that.

Unknown Attendee: And we're also seeing.

Unknown Attendee: Some refurbishment.

Unknown Attendee: Equipment for the oil and gas industry and I think that's that's actually something that's pretty encouraging and there might be a sign of things in the future if that keeps up.

Speaker Change: Got it. Thank you guys that's all for us.

Unknown Attendee: Thank you. We will move now to the next question coming from the line of Elliot Alper, OTD. Call in. Your line is now open.

Speaker Change: Thank you we will move not that our next question coming from the lineup Elliot Alper with Cowen. Your line is now open.

Operator: Hey, great. Thanks guys. This is Elliot on for Jason Seidl.

Elliot Andrew Alper: Okay, great. Thanks, guys just sell it on for Jason Seidl.

Elliot Andrew Alper: Any idea on why May was weak in truckload I thought I heard that in the prepared remarks.

Unknown Attendee: Aurify that and then does that bounce back and Jim.

Elliot Andrew Alper: Any idea on why May was weak in truckload? I thought I heard that in prepared remarks. I just want to clarify that. And then did that bounce back in June? Yeah, Elliot, good question.

Speaker Change: Yes. Good question Ed May we typically get about a three 3% tailwind from April on a per per workday basis, and its almost always positive we were down about half a percent.

James P. Todd: In May, we typically get about a 3.3% tailwind from April on a per workday basis, and it's almost always positive. We were down about half a percent. The weakness we saw; a couple of our automotive accounts were a little softer in May. Some loadings from other transportation companies were a little soft in May as well. Coming off an April that we felt good about, it was a little bit surprising. From a volume perspective, May into June, we increased 150 basis points, admittedly off a low starting point, which was pretty close to the plus 240 we usually get from May to June. Okay.

Speaker Change: The weakness we saw a couple of our automotive accounts.

Speaker Change: Were a little softer in may.

Speaker Change: Some.

Speaker Change: Loadings from other transportation companies.

Speaker Change: It was a little soft in may as well coming off in April that we felt good about it was a little bit surprising.

Speaker Change: From a volume perspective may into June we increased 150 basis points admittedly off a low starting point, which was pretty close to the plus $2 40, we usually get made a gym.

James P. Todd: Helpful. Thanks. And then you brought up cross-border Mexico as an area of focus in your prepared remarks. We'd love to hear maybe any more commentary around that. Yeah, I'll give it a shot here and then kick it over to Joe.

Speaker Change: Okay helpful. Thanks, and then you brought up cross border Mexico as an area of focus in your prepared remarks wed love to hear maybe.

Speaker Change: Maybe any more commentary around that.

Speaker Change: Yes, I'll give it a.

Joe: A shot here and then kick it over to Joe So.

Frank A. Lonegro: So, you know, cross-border obviously is an important thing for us. It's a great long-term play in terms of nearshoring, you know, initiatives. And so I think it's absolutely the right strategy.

Joseph J. Beacom: Cross border obviously.

Joseph J. Beacom: An important thing for us it's a great long term play in terms of the near shoring.

Joseph J. Beacom: Initiatives and so I think it's absolutely the right strategy.

Frank A. Lonegro: It's getting more competitive, not surprisingly, as other people see the same thing that we are seeing. I think we were a first mover, clearly, certainly in the Laredo Gateway. We've got a great facility down there, great folks down there, so we're continuing to introduce agents into that. But I do think, you know, it probably wasn't our best quarter on a year-over-year basis for cross-border. It's absolutely the right thing to do.

Joseph J. Beacom: Getting more competitive not surprisingly as other people see the same thing.

Joseph J. Beacom: That we are seeing I think we were a first mover clearly certainly in the Laredo gateway.

Joseph J. Beacom: And we've got a great facility down there are great folks down there so continuing to introduce agents into that so I do think.

Joseph J. Beacom: It probably wasn't our best quarter on a year over year basis for cross border. It's absolutely. The right thing to do is I'll, let Joe provide some color on that alright. Thanks, Frank Yes, our volumes were actually off just.

Joseph J. Beacom: I'll let Joe provide some color on that one. Thanks, Frank. Yeah, our volumes were actually off just a little bit greater than the company average, isolated to a handful of accounts, a lot of consumer goods, consumer durable kind of accounts that are down. We don't believe that we've lost the business. We just believe that they're slow at the moment.

Joseph J. Beacom: A little bit greater than the company average.

Joseph J. Beacom: Isolated to a handful of accounts a lot of consumer goods consumer durable kind of accounts that are down we don't believe that we've lost the business. We just believe that theyre slow at the moment. So we're.

Joseph J. Beacom: So we're, you know, on top of that looking for any rebound when that occurs. But to Frank's point, you know, we've got our slogan and our strategy around Mexico made simple to really provide the necessary tools, facilities, and capabilities, whether it's on the border with our facilities, which are across a number of gateways, or with the carriers in the interior of Mexico that we've had for years, all CTPAT certified. We really think we've got a great framework.

Joseph J. Beacom: On top of that looking for any rebound when that occurs but to Frank's point, we've got our slogan and our strategy around Mexico made simple to really provide the necessary tools facilities and capabilities, whether it's on the border with our facilities, which are across a number of gateways are with us or with big.

Joseph J. Beacom: Carriers in the interior in Mexico that we've had for years, obviously, you keep that certified we really think we've got a great framework when things bounce back we think we'll be in a great position to do that we've added some dedicated salespeople that are in the interior.

Joseph J. Beacom: When things bounce back, we think we'll be in a great position to do that. We've added some dedicated salespeople that are in the interior. So if an agent has an opportunity but doesn't want to make the trip south of the border, we've got resources there to help them along.

Joseph J. Beacom: If an agent is an opportunity but doesn't want to make the trip south of the border. We've got resources there to help them along so we think we're in the right place with the right strategy going forward.

Matt Daniger: So we think we're in the right place with the right strategy going forward and just kind of waiting for a few things to turn our way. Matt, we've got agents down there that we're introducing, obviously, to the cross-border initiative, maybe folks that haven't really engaged in cross-border or have done it a long time ago. So tell us a little bit about what you're doing there. Yeah, it's been a big push for us, Frank.

Joseph J. Beacom: Just kind of waiting for a few things to turn.

Joseph J. Beacom: Turn our way.

Unknown Attendee: Matt We've got agents down there that we're introducing obviously to the cross border initiatives, maybe folks that haven't.

Unknown Attendee: Really engaged in cross border have done it a long time ago, So tell us a little bit about what you're doing there, yes, it's been a big push for spring.

Matt Daniger: You know, we really need to get the agents familiar with Mexico. You know, you've got the customs down there going over borders. It can be a little bit scary if it's not something that you're used to doing.

Unknown Attendee: We really need to get the agents too familiar with Mexico.

Speaker Change: You've got the customers down there going over borders it can be a little bit scary. If it's not something that you used to do and so we're really trying to take that fear away from them. So the field is out there we're meeting with agents here in the spring we got done with.

Matt Daniger: So we're really trying to take that fear away from them. The field is out there. We're meeting with agents. Here in the spring, we got done with, I guess, a round robin of agent meetings throughout the country, talking about Mexico and how we can help them grow their business down there. It's a tremendous opportunity that I think everybody in the industry is looking at right now and jumping into. So we're really just trying to get them comfortable with it and lead them to the table and take that fear out of it.

Speaker Change: I guess, a round robin of agents agent meetings throughout the throughout the country talking about Mexico.

Speaker Change: And how we can help them grow their business down there is tremendous opportunity that I think everybody in the industry is looking at right now and jumping into so we're really just trying to get them comfortable with them and lead them to the table and take that fear out of it.

Matt Daniger: We've got Mexico 101 classes to get them coached up on what the operating expectation is down there, how to sell it, and get in front of their customers. So it's really been a full push throughout the entire sales team to get in front of the agents. And we've identified a little over 150 agents that we're really pushing, and we're coming up with opportunities. I wouldn't say the market is great right now to be chasing those, but crawl, walk, run. And we're really starting to crawl right now.

Speaker Change: We've got Mexico 101 classes.

Get them coached up on what the.

Speaker Change: What the operating.

Speaker Change: Expectation is down there how to sell it to getting in front of their customers. So it's really been a full push throughout the entire sales team.

Speaker Change: To get in front of the agents and we've identified.

Speaker Change: Little over 150, I think right now.

Speaker Change: So, we're really pushing and we're coming up with opportunities.

Speaker Change: I wouldn't say the market is great right now.

Speaker Change: To be chasing those but.

Speaker Change: Crawl walk run and we're really starting to call right now so I think as the economy pushes back we should be in really good shape to take advantage of that.

Speaker Change: Okay.

Speaker Change: I appreciate it thanks guys.

Speaker Change: Thank you we will have the last caller for today's conference from the line of Stephanie <unk> of Jefferies. Your line is now open.

Operator: So I think as the economy pushes back, we should be in really good shape to take advantage of that. Appreciate all that. Thanks, guys. Thank you. We will have the last caller for today's conference. From the line of Stephanie Moore of Jeffries, your line is now open. Hi, good afternoon.

Stephanie Lynn Benjamin Moore: Thank you. I wanted to maybe touch back a little bit on just kind of where we are in the cycle and the overall freight environment. I appreciate your color, the color you provided about, you know, seeing some improvement but not going to call it a full inflection.

Stephanie Lynn Benjamin Moore: Hi, good afternoon. Thank you.

Stephanie: I want to maybe touch touch back a little bit on just kind of where we are in the cycle on the overall freight environment I appreciate your color.

Earlier, you provided about seeing some improvement, but not going to call a poll on collection.

Stephanie Lynn Benjamin Moore: I'd love to get your thoughts on the, you know, answering the "what's it going to take?" question, meaning does capacity need to keep bleeding lower at the rate that we're seeing now, or does it need to accelerate? Is this a demand shock? I know we all have our own crystal balls, but I do appreciate your opinions on what you see. Thank you.

Speaker Change: Love to get your thoughts on the.

Speaker Change: Answering the what's it going to take question, meaning this capacity you need to keep going lower.

Speaker Change: Great that were seeing now are there any accelerated demand shock.

Speaker Change: We all have our own crystal ball, but I do appreciate your your opinions on what you see I appreciate it. Thank you yeah sure. Thanks, Debbie Thank you.

Frank A. Lonegro: Thank you. I think it's ultimately about a couple of things that you referenced. I do think capacity needs to continue to come out. To Joe's earlier point, it's hard to know the exact number of trucks that came in during the COVID, Induced Era. If you look at just the number of new authorities that were granted during that period of time, it was significant. We also believe that it was largely smaller carriers coming into the business that were able to, you know, buy a used truck and get into the business, given the fact that the rate was so significantly greater than it had been in the pre-pandemic period. And so folks made a lot of money during that time period of, you know, kind of the second half of 20, 21, 22, even into the first half of 23.

Speaker Change: I think it is ultimately a couple of other things that you referenced I do think capacity needs to continue to come out to Joe's earlier point, it's hard to know the exact number of trucks that came in during the Covid.

Speaker Change: Era, if you look at the just the number of new authorities that were granted during that period of time. It was significant we also believe that.

Speaker Change: It was largely smaller carriers coming into the business that we're able to.

Speaker Change: Bye bye used truck and get into the business given the fact that the rate was so significantly greater than it had been in the pre pandemic period.

Speaker Change: So folks made a lot of money during that time period of kind of second half of 2021 'twenty two even into the first half of 'twenty. Three so there is some staying power in that capacity. We do think there is a significant amount of truck capacity rather than <unk>.

Frank A. Lonegro: So there is some staying power in that capacity. We do think there is a significant amount of truck capacity, rather than authorities, that is on the sidelines, and appropriately so, given the operating environment that we're in. You know, continuing growth, whether it's on the good side of GDP or IEP, is certainly going to be helpful. Not that we wish for hurricanes or other things like that, but you could end up with something that helps us a little bit on the demand side that's unexpected.

Speaker Change: <unk> that is on the sidelines and appropriately so given the operating environment that we're in.

Speaker Change: Continuing growth whether it's on the good side of GDP or IDP is certainly going to be helpful.

Speaker Change: Not that we wish for hurricanes or other things like that but you could end up with something that helps.

Speaker Change: Helps us a little bit on the demand side thats unexpected, but I think it's going to be continued growth of the economy and it's going to be a return to our goods preferenced by the consumer and then continuing to have capacity.

Frank A. Lonegro: But I think there's going to be continued growth in the economy, and there's going to be a return to a goods preference by the consumer, and then continuing to have capacity come back out of the equation. And while all of that's happening, we're going to remain very, very focused on the strategic initiatives that we have, and other things that we're, you know, talking about internally that are more secular in nature, rather than cyclical in nature, and we're going to continue to push for that agent-BCO relationship that you heard Joe and Matt talk about.

Speaker Change: Come back out of the equation and while all of that's happening we're going to remain very very focused on the strategic initiatives that we have and other things that we're talking about internally that are more secular in nature rather than cyclical.

Speaker Change: Nature, and we're going to continue to push for that agent <unk> relationship that you heard Joe and Matt talk about <unk>.

Frank A. Lonegro: And we're going to continue to keep an eye on costs, and as I mentioned in the last call, I think we're going to be stronger as a result of this trough and come out the other side really well. Unknown Speaker No, I appreciate that.

Speaker Change: Continuing to keep an eye on costs and as I mentioned I think in the last call we're going to be stronger.

Speaker Change: As a result of this trough.

Speaker Change: And come out the other side really got.

Frank A. Lonegro: And then just to follow up on the conversations that you're having with some of your large customers, do you feel like there's an overall lack of confidence kind of just holding on the sidelines in a lot of cases? Because you're right. I mean, I think we all can speak to the secular challenge ahead of us. So we'd love to hear maybe some of the commentary that maybe they're hearing in this environment or on the demand side.

Speaker Change: Got it no I appreciate that and then just to follow up from the conversations that youre, having with some of your large customers do you feel like it.

Speaker Change: Overall lack of confidence kind of holding on the sidelines that a lot of cases, because you're right.

Speaker Change: The secular challenge ahead of us so about ticket.

Speaker Change: Some of the commentary that may be better here and in this environment on the demand side.

Frank A. Lonegro: Yeah, and so a couple of things. Maybe. We certainly have others around the table that can chime in on this one. I mean, being a spot market player, you know, we're generally going to be on the cyclical end of things. You know, as folks went through the bid cycle, you know, I think there was a lot of commentary about holding the line, and then prices dropped, and people locked in the volume. So, I do think that the contract piece of the market probably took some rate decreases, and that would be consistent with the commentary that we've heard publicly from folks. But if you think about where we are, we play in a bit of a different element of the cycle.

Yes, so a couple of things, maybe we and certainly have have others around the table that can chime in on this one I mean being a spot market player.

Speaker Change: We're generally going to be on the cyclical end of things.

Speaker Change: As folks went through the bid cycle.

Speaker Change: I think there was a lot of commentary about holding the line and then.

Speaker Change: And then prices dropped and people locked in the volume so I do think that the.

Speaker Change: The contract piece of the market, probably took some rate decreases and that would be consistent with the commentary that we've heard publicly from folks.

Speaker Change: And if you think about where we are we playing a bit of a different element.

Speaker Change: The cycle, we are beginning to see it come off of the bottom of the rate.

Frank A. Lonegro: We are beginning to see it come off the bottom. The rate inflections that we've talked about are helpful there. I think customers are beginning to come back to us. You know, we've had instances both in the areas that Jim Applegate handles as well as the areas that Matt handles where, you know, maybe we were, I'll say, underbid in the competitive process back in the spring.

Speaker Change: Inflections that we've talked about are helpful. There I think customers are beginning to come back to US we've had instances both on the.

Unknown Attendee: The areas, Jim Applegate handled as well as the areas that Matt handles where maybe we were I'll say under bid in the competitive process back in the in the spring folks are coming back to US which is nice to see I think that is.

Frank A. Lonegro: Folks are coming back to us, which is nice to see. I think that is almost directly related to our service product and how good we are at what we do and the professionalism of the BCOs and the approved carriers that we have. Like, we do a really good job, and we make sure we do a really good job. But that good service comes at a bit of a premium. And so we've got to make sure that, you know, we stay true to that and that we don't bottom fish in terms of rates. And that's been a real hallmark of the Landstar model. And it's not something that, you know, I intend for us to change.

Unknown Attendee: Almost directly related to our service product and how good we are at what we do and the professionalism of the <unk> and the approved carriers that we have.

Unknown Attendee: We do a really good job and we make sure we do a really good job, but that could service comes at a bit of a premium and so we've got to make sure that we stay true to that and that we don't bottom fish in terms of rates.

Unknown Attendee: And that's been a real hallmark of the Landstar model and it's not something that <unk>.

Unknown Attendee: And for us to change that.

Unknown Attendee: And Jim you guys got thoughtfulness, yes, I'll jump in real quick.

Frank A. Lonegro: But Matt and Jim, you guys have thoughts on this? Yeah, I'll jump in real quick. As a part of normal business here at the start of July, we take a look back at the first part of the year and kind of set the level for the next. Back half of the year and, kind of, early on the 25th, and through that, we go through all of our top agents, all of our million-dollar agents and, you know, get some input from what they're hearing from their customers and what we can expect. And I still think there's still quite a bit of pessimism out there. You've got the election coming up.

Unknown Attendee: As part of normal business here to start in July we we take a look back at the first part of the year and kind of level set for the next.

Unknown Attendee: Back half of the year than kind of an early on the 25 and through that we go through all of our top agents all of our million dollar agents.

Unknown Attendee: Get some input from what what they're hearing from their customers and what we can expect.

Matt Daniger: There's still talk of pending recessions coming up, so I think going through the backside of this year, we're not overly optimistic for that big tide to come and switch the cycle. It can't come soon enough for all of us, but I would say in the near term through this year, most of the general feedback is that they're not overly optimistic. And I'd echo that, and I'd say specifically the consumer side of it, very rate sensitive right now, very rate driven, to Frank's point about valuing service versus rates.

Unknown Attendee: And I still think there is still quite a bit of pessimism out there you've got the election coming up there is there is still talk of pending recession is coming up so I think going through the back side of this year, we're not overly optimistic for that big tied to come in and switch the cycle. It can't come soon enough for all of us but.

Unknown Attendee: I would say in the near term through this year.

Unknown Attendee: Most of the general feedback is they're not overly optimistic.

And I would echo that I'd say, specifically the consumer side of it very rate sensitive right now very rate driven to Frank's point about.

Frank: Without valuing service versus rates. However, I do think some of the end markets over in the spot market specifically around the heavy haul.

Matt Daniger: However, I do think some of the end markets over in the spot market, specifically around the heavy haul area, we're starting to see some of those end markets with some encouraging signs. And I think our agents, you know, the nice thing about our model, our agents are very incentivized to find that, and typically, they find it first, and I expect our model to kind of continue to kind of identify those quickly and get us out in front of them. I got it. You said I was the last one.

Speaker Change: Area, we're starting to see some of those end markets with some encouraging signs and I think our agents. The nice thing about our model. Our agents are very incentivized to find that and typically they find it first.

I expect our models are kind of continuing to kind of identify those quickly and get us out in front of some of those markets.

Unknown Attendee: I have one last question because no one else has asked it: buy back your appetite. I'd love to get your thoughts here at this level. And I'll be quiet. Thanks, guys. Yeah, hey, no worries.

Speaker Change: Got it you said I was left I have one last question because no one else asset buyback appetite love to get your thoughts here at this level and then I'll be quiet thanks, guys.

Frank A. Lonegro: So it was really good to reengage, you know, in buybacks. And I think, as I mentioned on the prior call, we were a little bit blocked out from the market given the CEO transition at the end of the fourth quarter and the beginning of the first quarter. So give us a pass on Q1, but obviously, we're back in the market, and did well. I mean, you know, one of the things that is a hallmark of the Landstar model on capital returns is we're very patient, and we're very opportunistic.

Speaker Change: Yes.

Speaker Change: So it was really good to reengage.

Speaker Change: And buybacks I think as I mentioned on the prior call.

Speaker Change: We're a little bit blocked out from the market given.

Speaker Change: CEO transition at the end of the fourth quarter and the beginning of the first quarter. So.

Speaker Change: Give us a pass on on Q1, but obviously back in the market.

Speaker Change: Well I mean, one of the things that is.

Speaker Change: The hallmark of the Landstar model on capital returns as we are very patient and we're very opportunistic I think we bought well.

Frank A. Lonegro: I think we bought well in the quarter, and you'll see in the Q that, you know, we bought sub-180 on an average basis. So I think we did really well in terms of doing that.

Speaker Change: In the quarter and Youll see in the Q.

Speaker Change: Q that we bought sub $1 80 on an average basis. So I think we did really well in terms of doing that and we will continue to have that opportunistic and patient appetite as we go forward into into Q3, we have the authorization to do it but we're not going to have the money burn a hole in our pocket so to speak and we're going to be real thoughtful around how we engage.

Speaker Change: And buybacks it was nice to raise the dividend 9% today.

Speaker Change: Another way to return capital to shareholders, we're excited about being able to do that real confidence.

Speaker Change: Vote from our perspective in terms of the future.

Speaker Change: I appreciate it. Thank you thanks everybody.

Speaker Change: Thank you we have the last caller for today's conference from the line of Scott Group of Wolfe Research. Your line is now open.

Jake lacks: Hey, this is Jake lacks on again, just one follow up.

Erin Ocean: Erin Ocean.

Scott H. Group: Cargo pricing looks like it took a big step up in <unk> do you expect that.

Speaker Change: Continue on <unk> does it.

And even higher just as the ocean rates picked up through the quarter will just be.

Speaker Change #100: Sort of near term expectations there.

Speaker Change #101: Look at your plan lead off man on the call on finishing up now to your point, we had a 39% uptick in our ocean revenue per load from the first quarter second quarter. I think we had a couple of rounds of <unk> paas and stick.

Speaker Change #102: Ours is project based Theres, probably 10 or a dozen so agents.

Jake: Jake plan in that space.

Speaker Change #102: We will see the guidance calls for the multimode revenue to be relatively flat <unk> to <unk>. So theres not a back embedded in the guidance on the continuation of that ocean rent per load move.

Speaker Change #103: Got it thanks again guys.

Speaker Change #104: At this time I show no further questions I would like to turn the call back over to you Sir for closing remarks.

Speaker Change #106: Thanks, Paul in closing, while the freight environment remains challenging we do see some positives in the near term. We are encouraged that truck revenue per load seems to have stabilized and is moving higher which is potentially a positive sign for the rest of 2020 for regardless of the economic environment. The resiliency of the Landstar variable cost business model continues to generate significant free cash.

Speaker Change #106: Cash flow Landstar has always been a cyclical growth company and we are well positioned to navigate these dynamic times and look forward to higher highs when the freight market turns are way. Thank you for joining us. This afternoon. We look forward to speaking with you again on our 2024 third quarter earnings Conference call in late October. Thank you.

Speaker Change #107: Thank you for joining the conference call today have a good afternoon. Please disconnect your lines at this time.

Speaker Change #107: [music].

Speaker Change #107: [music].

Frank A. Lonegro: And we'll continue to have that opportunistic and patient appetite as we go forward into Q3. We have the authorization to do it, but, you know, we're not going to have the money burn a hole in our pocket, so to speak. And we're gonna be real, real thoughtful around how we engage in buybacks. It was nice to raise the dividend by 9% today, and that's another way to return capital to shareholders. And we're excited about being able to do that real confidence vote from our perspective in terms of the future.

Operator: Thank you. Thanks, everybody. Thank you. We have the last caller for today's conference from the Linus Katz Group of Wolf Research, Linus Nowel.

Jake Laxon: Hey, this is Jake Laxon again. Aaron Ocean, cargo pricing looks like it took a big step up in 2Q. Do you expect that to continue in 3Q? Transcripts provided by Transcription Outsourcing, LLC.

In S E L. James Hart, Vice President and CFO, Joe Beacom, Vice President and Chief Safety and operations Officer, Jim Applegate, Vice President Chief Corporate sales strategy and specialized Fright officer, Matt Danziger, Vice President Chief Field sales officer, now I would like to turn the call over to Mr. Jim Todd Sir.

Operator: Got it. Thanks again, guys. At this time, I have no further questions.

Speaker Change #108: You may begin thank.

Frank A. Lonegro: I would like to turn the call back over to you, sir, for your closing remarks. Thanks, Bill. In closing, while the freight environment remains challenging, we do see some positives in the near term. We are encouraged that truck revenue per load seems to have stabilized and is moving higher, which is potentially a positive sign for the rest of 2024. Regardless of the economic environment, the resiliency of the Landstar variable cost business model continues to generate significant free cash flow.

James P. Todd: Thank you Bill good afternoon, and welcome to <unk> 2024 second quarter earnings Conference call before we begin let me read the following statement. The following is a safe Harbor statement under private Securities Litigation Reform Act of 1995 statements made during this conference call that are not based on historical facts are forward looking statements.

James P. Todd: This conference call. We may make statements that contain forward looking information that relates to <unk> business objectives plans strategies and expectations such information is by nature subject to uncertainties and risks, including but not limited to the operational financial and legal risks detailed in Landstar <unk> Form 10-K for the 2023 fiscal year described in the section risk factors and other SEC.

Franklin: Filings from time to time, these risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated investors should not place undue reliance on such forward looking information and Landstar undertakes no obligation to publicly update or revise any forward looking information with me. This afternoon Franklin <expletive> less our president and Chief Executive Officer, Joe Beacom.

Our chief safety and operations Officer, Jim Applegate, Landstar, as Vice President and Chief corporate sales strategy, and specialized freight officer, and Matt Danziger, unless our vice President and Chief Field sales officer.

Franklin: Frankly, I will handle the prepared remarks, with Joe Jim and Matt available for questions I will now pass it to Lance our CEO Franklin <expletive> for his opening remarks, thanks, J T and good afternoon, everyone first I want to thank our 1 million miles safe drivers and road show, our BCS many of whom were able to spend some time with us celebrating their accomplishments at the annual <unk> All star events held.

Frank A. Lonegro: Landstar has always been a cyclical growth company, and we are well positioned to navigate these dynamic times and look forward to higher highs when the freight market turns our way. Thank you for joining us this afternoon.

Operator: We look forward to speaking with you again on our 2024 third quarter earnings conference call in late October. Thank you for joining us on the conference call today. Have a good afternoon. Please disconnect your lines at this time.

James P. Todd: Earlier this month.

Lance: This outstanding group of owner operators exemplify our shared passion and purpose at Landstar to safely deliver freight for our customers every day.

Lance: It's incredibly energizing to engage with our network of entrepreneurial agents <unk> carriers as we worked together to align landstar for future growth and continued success as J P mentioned earlier I am pleased to be joined this afternoon by Jim Applegate, and Matt Danaher, the new leaders of our sales organization.

Operator: .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ... Good afternoon and welcome to Landstar System Incorporated's second quarter earnings release conference call. All lines will be in a listen-only mode until the formal question and answer session.

James P. Todd: This call is being recorded. If you have any objections, you may disconnect at this time. Joining us today from Landstar are Frank Lonegro, President and CEO; Jim Todd, Vice President and CFO; Joe Beacom, Vice President and Chief Safety and Operations Officer; Jim Applegate, Vice President, Chief Corporate Sales Strategy and Specialized Fright Officer; Matt Daniger, Vice President, Chief Field Sales Officer. Now, I would like to turn the call over to Mr. Jim Todd. Sir, you may begin.

Lance: Jim and Matt is coordinated approach to driving our sales efforts will serve landstar in its agents well.

As we move into the back half of 2024, we are laser focused on executing on our strategic initiatives Cross border, Mexico and heavy haul are two areas. We have identified where we already have scale and believe we have significant opportunities for incremental growth. We also remain focused on our commitment to continuous improvement in the level of <unk>.

Lance: <unk> and support we provide to our customers agents <unk> and carriers each and every day.

James P. Todd: Thank you, Bill. Good afternoon, and welcome to Landstar's 2024 Second Quarter Earnings Conference. Before we begin, let me read the following statement. This is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.

Lance: Turning to slide five.

<unk> performed relatively well in the 2024 second quarter, considering that the freight environment continues to be characterized by soft demand and readily available truck capacity I believe our results speak to the strength and resiliency of the Landstar business model our balance sheet.

James P. Todd: 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 Landstar's business objectives, plans, strategies, and expectations. Such information is by nature subject to uncertainties and risks, including but not limited to the operational, financial, and legal risks detailed in Landstar's Form 10-K for the 2023 fiscal year, described in the section Risk Factors and Other SEC Filings from Time to Time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated.

James P. Todd: Investors should not place undue reliance on such forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information. With me this afternoon are Frank Lonegro, Landstar's President and Chief Executive Officer, Joe Beacom, Landstar's Chief Safety and Operations Officer, Brian Ossenbeck, and James Gattoni. Jim Applegate, Landstar's Vice President and Chief Corporate Sales Strategy and Specialized Freight Officer, and Matt Deniger, Landstar's Vice President and Chief Field Sales Officer. Frank and I will handle the prepared remarks, with Joe, Jim, and Matt available for questions.

Frank A. Lonegro: I'll now pass it to Landstar CEO Frank Lonegro for his opening remarks. Thanks, JT, and good afternoon, everyone. First, I want to thank our Million Mile Safe Drivers and Roadstar BCOs, many of whom were able to spend some time with us celebrating their accomplishments at the annual BCO All-Star event held earlier this month. This outstanding group of owner-operators exemplifies our shared passion and purpose at Landstar to safely deliver freight for our customers every day.

Frank A. Lonegro: It is incredibly energizing to engage with our network of entrepreneurial agents, VCOs, and carriers as we work together to align Landstar for future growth and continued success. As JT mentioned earlier, I'm pleased to be joined this afternoon by Jim Applegate and Matt Daniger, the new leaders of our sales organization. Jim and Matt's coordinated approach to driving our sales efforts will serve Landstar and its agents well.

Lance: Continues to be very strong and our capital allocation priorities remain unchanged.

Speaker Change #111: A strong believer in the company's stock buyback program and I'm committed to Opportunistically executing on our existing authority to benefit our long term stockholders as noted in the release, we deployed over $56 million and repurchased approximately 316000 shares of common stock during the 2020 for second quarter, We also announced.

Speaker Change #111: Today, a 9% increase to our quarterly dividend.

Speaker Change #111: We continue to invest in leading technology solutions for our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment.

Frank A. Lonegro: As we move into the back half of 2024, we are laser focused on executing on our strategic initiatives. Cross-border Mexico and heavy haul are two areas we have identified where we already have scale and believe we have significant opportunities for incremental growth. We also remain focused on our commitment to continuous improvement in the level of service and support we provide to our customers, agents, VCOs, and carriers each and every day. Turning to slide 5, Landstar performed relatively well in the 2024 second quarter, considering that the freight environment continued to be characterized by soft demand and readily available truck capacity. I believe our results speak to the strength and resiliency of the Landstar business model. Our balance sheet continues to be very strong, and our capital allocation priorities remain unchanged.

Speaker Change #111: And the 2024 second quarter overall demand in the freight environment was soft.

Speaker Change #111: Impact of accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending.

Speaker Change #111: Industrial output was inconsistent throughout the quarter as evidenced by an ISN that fluctuated just barely above and below 50, we remained in a loose truck capacity environment when measured by historical standards and market conditions favor the shipper.

Frank A. Lonegro: I'm a strong believer in the company's stock buyback program, and I'm committed to opportunistically executing on our existing authority to benefit our long-term stockholders. As noted in the release, we deployed over $56 million and repurchased approximately 316,000 shares of common stock during the 2024 second quarter. We also announced today a 9% increase in our quarterly dividend. We continue to invest in leading technology solutions for our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment.

Speaker Change #112: Even with that backdrop Landstar is 2024 second quarter bottom line results exceeded the midpoint of our guidance range I was pleased to see heavy haul loadings, which as mentioned above as one of our strategic growth priorities were up 3% year over year incrementally improving from the plus 2% year over year growth experienced in the first quarter.

Frank A. Lonegro: In the 2024 second quarter, overall demand in the freight environment was soft. The impact of accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending. Industrial output was inconsistent throughout the quarter, as evidenced by an IFM that fluctuated just barely above and below 50.

Frank A. Lonegro: We remain in a loose truck capacity environment when measured by historical standards, and market conditions favor the shipper. Even with that backdrop, Landstar's 2024 second quarter bottom line results exceeded the midpoint of our guidance range. I was pleased to see heavy haul loadings, which is mentioned above, as one of our strategic growth priorities, grow 3% year-over-year, incrementally improving from the plus 2% year-over-year growth experienced in the first quarter. On the other hand, and as expected, given the capacity environment, our substitute line haul load volumes declined more than the company average and continue to be soft after an incredibly strong run during the pandemic.

Speaker Change #112: On the other side and as expected given the capacity environment, our substitute line haul load volumes declined more than the company average and continues to be soft after an incredibly strong run during the pandemic our.

Frank A. Lonegro: Our second quarter guidance, issued in conjunction with our 2024 first quarter earnings release, called for the number of loads hauled via truck to be five to 9% below the 2023 second quarter, and overall revenue per truckload to be flat to 4% below the 2023 second quarter. The actual number of loads hauled via truck in the 2024 second quarter was 9% below the 2023 second quarter, at the low end of our truckload volume guidance.

Speaker Change #112: Our second quarter guidance issued in conjunction with our 2021st quarter earnings release call for the number of loads hauled via truck to be 5% to 9% below the 2023 second quarter and overall revenue per truckload to be flat to 4% below the 2023 second quarter. The actual number of loads hauled via truck in the two.

Speaker Change #112: <unk> thousand 24 second quarter was 9% below the 2023 second quarter at the low end of our truckload volume guidance actual revenue for truckload and the 2024 second quarter was $2, 6% below the prior year quarter slightly below the midpoint of our guidance the softness in truck loadings compared to guidance was more.

Frank A. Lonegro: The actual revenue per truckload in the 2024 second quarter was 2.6% below the prior year quarter, slightly below the midpoint of our guidance. The softness in truck loadings, compared to guidance, was mostly driven by a disappointing fiscal May, during which loadings were below fiscal April for only the second time in nearly two decades.

Speaker Change #112: Driven by a disappointing fiscal may during which loadings were below fiscal April for only the second time in nearly two decades.

Frank A. Lonegro: Turning to slide six and looking at our network, the scale, systems, and support we provided helped to drive the operating results generated during the 2024 second quarter. JT will get into the details on revenue, loadings, and rate per load. As noted on our first quarter earnings call, I've been in the transportation sector for most of my career and realized how important Landstar's safety-first culture is to our continued success. Our safety performance is a direct result of the professionalism of the thousands of Landstar BCOs operating safely every day and the agents and employees who work to reinforce the critical importance of safety at Landstar.

Speaker Change #112: Turning to slide six and looking at our network.

Speaker Change #112: Network the scale systems and support we provided helped to drive the operating results generated during the 2024 second quarter, Jay will get into the details on revenue loadings in rate per load.

Jay: As noted on our first quarter earnings call I've been in the transportation sector for most of my career and realized how important Landstar safety first culture is to our continued success.

Jay: Our safety performance is a direct result of the professionalism of the thousands of Landstar <unk> operating safely every day and the agents and employees, who work to reinforce the critical importance of safety at Landstar.

Frank A. Lonegro: I'm proud to report an accident frequency index of.57 DOT reportable accidents per million miles during the first six months of 2024, an improvement of approximately 2%. This is an impressive operating metric that speaks to the strength, skill, talent, and dedication of our BCOs and provides a point of differentiation our agents are able to highlight in discussions with our freight customers. Turning to slide 7, in capacity, the BCO truck count decreased sequentially in the second quarter from the first quarter by 230 trucks, consistent with our expectations of BCO declines slowing in Q2 relative to Q1. On a year-over-year basis, the VCO truck count has decreased to approximately 13% at the end of the 2023 second quarter.

I'm proud to report an accident frequency index of $5 <unk> dot reportable accidents per million miles during the first six months of 2024, an improvement of approximately 2% as compared to the corresponding period of 2023. This is an impressive operating metric that speaks to the strength skill talent.

Jay: <unk> and dedication of our <unk> and provides a point of differentiation our agents are able to highlight and discussions with our freight customers.

Jay: Turning to slide seven and the capacity side <unk> truck count decreased sequentially in the second quarter from the first quarter by 230 trucks consistent with our expectations of Bcl declines slowing in Q2 relative to Q1 on.

Jay: On a year over year basis, <unk> truck count has decreased approximately 13% since the end of the 2023 second quarter. It is typical to incur turnover and Bcl truck count on truck rates decrease <unk> turnover continues to be influenced by the significant increase in the cost of repairs and the extended period of time trucks are out of service awaiting.

Frank A. Lonegro: It is typical to incur turnover in BCO truck counts when truck rates decrease. However, BCO turnover continues to be influenced by the significant increase in the cost of repairs and the extended period of time trucks are out of service awaiting repairs. We would expect the BCO count to continue to decline in the coming months given the challenging operating environment faced by many truck owner operators, but at a slower pace than we saw in the second quarter. I'll now pass the call back to JT to walk you through the 2024 second quarter financials in more detail. Thanks, Frank.

Jay: Repairs, we would expect Bcl count to continue to decline in the coming months, given the challenging operating environment faced by many truck owner operators, but at a slower pace than we saw in the second quarter ill now pass the call back to Jay to walk you through the 2024 second quarter financials in more detail. Thanks, Frank turning to slide nine this Frank.

James P. Todd: Turning to slide nine, as Frank mentioned earlier, the number of loads hauled by a truck came in at the low end of the company's previously issued guidance, primarily due to a soft fiscal May. Truck revenue per load came in slightly below the midpoint of our guidance. Non-truck transportation service revenue in the 2024 second quarter was 7%, or $7 million, below the 2023 second quarter. The decrease in non-truck transportation revenue was mostly due to a 62% decrease in air revenue per shipment attributable to decreased high-value loadings from one customer.

Jay: And earlier the number of loads hauled via truck came in at the low end of the Companys previously issued guidance range, primarily due to a soft fiscal may truck revenue per load came in slightly below the midpoint of our guidance non truck transportation service revenue in the 2024 second quarter was 7% or $7 million below the 2023 second quarter.

Jay: A decrease in non truck transportation revenue was mostly due to a 62% decrease in air revenue per shipment attributable to decreased high value loadings from one customer.

James P. Todd: As for the breakdown in truck transportation, revenue per load on loads hauled by unsighted platform equipment increased 3% year over year, whereas revenue per load on loads hauled by van equipment decreased 5% year over year. We consider revenue per mile on loads hauled by BCO trucks a relatively pure pricing number as it excludes fuel surcharges billed to customers that are paid 100% to the BCO. Revenue per mile on van equipment hauled by BCOs in the 2024 second quarter was 4% below the 2023 second quarter.

Jay: As to the breakdown in truck transportation revenue per load on loads hauled via <unk> platform equipment increased 3% year over year, whereas revenue per load on those hauled via van equipment decreased 5% year over year, we consider revenue per mile on loads hauled by Bcl trucks, a relatively pure pricing number as it excludes fuel surcharges billed to customers that are pay.

Jay: <unk>, 100% to the Bcl revenue per mile and van equipment hauled by <unk> and the 2024 second quarter was 4% below the 2023 second quarter. It should be noted that although the market has softened from a year ago and <unk> revenue per mile on <unk> equipment remains above the pre pandemic 2019 second quarter by approximately 15%.

James P. Todd: It should be noted that although the market has softened from a year ago, Landstar's revenue per mile on BCO van equipment remains above the pre-pandemic 2019 second quarter by approximately 15%. We believe that rates will stay relatively higher than pre-pandemic levels given the significant amount of incremental cost to operate a truck today as compared to five years ago. Revenue per mile on banned equipment hauled by VCOs sequentially decreased 1% from March to April, increased 1% from April to May, and increased 2% from May to June.

Speaker Change #113: We believe that rates will stay relatively higher than pre pandemic levels, given the significant amount of incremental costs to operate a truck today as compared to five years ago.

Jay: Revenue per mile and van equipment hauled by <unk> sequentially decreased 1% from March to April increased 1% from April to May and increased 2% from May to June the March to April and May to June month to month changes underperformed pre pandemic typical patterns, whereas the sequential change in <unk> revenue per mile and <unk> equipment from April to May outperform these pre pandemic.

James P. Todd: The March to April and May to June month-to-month changes underperformed pre-pandemic typical patterns, whereas the sequential change in VCO revenue per mile on banned equipment from April to May outperformed these pre-pandemic historical patterns. As to revenue per mile and unsighted platform equipment hauled by BCOs, revenue per mile increased 1% from March to April, decreased 1% from April to May, and increased 2% from May to June The month-to-month sequential trends on unsighted platform equipment are generally more unpredictable compared to that of anecdotal evidence.

Jay: Historical patterns as to revenue per mile and inside of platform equipment <unk> revenue per mile increased 1% from March to April decreased 1% from April to May and increased 2% from May to June the month to month sequential trends inside of platform equipment are generally more unpredictable compared to that of an equipment does.

James P. Todd: Relative volatility is often due to the mix between heavy specialized loads and standard flatbed volumes. Heavy haul revenue, one of our areas of increased strategic focus, was up approximately 6% year-over-year in the second quarter. Heavy haul loadings and revenue per heavy haul load were each up approximately 3% year-over-year. This represented a mixed tailwind to our unsighted platform revenue per load as heavy haul revenue as a percentage of the category increased from approximately 27% during the 2023 second quarter to approximately 29% in the 2024 quarter.

Speaker Change #114: Relative volatility is often due to the mix between heavy specialized loads and standard flat, but volume heavy haul revenue one of our areas of increased strategic focus was up approximately 6% year over year in the second quarter heavy haul loadings and revenue for heavy haul load were each up approximately 3% year over year. This represented a mixed tailwind to our onsite in platform revenue per load.

Speaker Change #114: As heavy haul revenue as a percentage of the category increased from approximately 27% during the 2023 second quarter to approximately 29% in the 2024 quarter turning to slide 10, we provided revenue share by commodity and year over year change in revenue by commodity transportation logistic segment revenue was down 11% year over year on a 9%.

James P. Todd: Turn to slide 10, where we provided revenue share by commodity and year-over-year change in revenue by commodity. Transportation Logistics Segment revenue was down 11% year-over-year on a 9% decrease in loadings and a 2% decrease in revenue per load as compared to the 2023 second quarter.

Speaker Change #114: Increase in loadings, and a 2% decrease in revenue per load as compared to the 2023 second quarter.

James P. Todd: Within our largest commodity category, consumer durables, revenue declined 10% year-over-year on a 10% decline in volumes, while revenue per load was approximately equal. Aggregate revenue across our top five commodity categories, which collectively make up about 71% of our transportation revenue, was down 10% compared to the 2023 second quarter. While slide 10 displays revenue shared by commodity, we thought it would also be helpful to include some color on volume performance within our Top 5 Commodity Categories. From the 2023 second quarter to the 2024 second quarter, total loadings of machinery decreased 12%, automotive equipment and parts decreased 1%, building products decreased 1%, and hazardous materials decreased 14%.

Speaker Change #114: Within our largest commodity category consumer durables revenue declined 10% year over year on a 10% decline in volumes while revenue per load was approximately equal.

Speaker Change #114: Aggregate revenue across our top five commodity categories, which collectively make up about 71% of our transportation revenue was down 10% compared to the 2023 second quarter.

Speaker Change #114: While slide 10 displays revenue share by commodity we thought it would also be helpful to include some color on volume performance within our top five commodity categories. In the 2023 second quarter to the 2024 second quarter total loadings and machinery decreased 12% automotive equipment and parts decreased 1% building products decreased 1%.

Speaker Change #114: And hazardous materials decreased 14%.

James P. Todd: Additionally, substitute line haul loadings, one of the strongest performers for us during the pandemic and one which varies significantly based on consumer demand, decreased 29% from the 2023 second quarter. Also, Landstar is a truck capacity provider to other trucking companies, 3PLs, and truck brokers.

Speaker Change #114: Additionally, substitute line haul loadings, one of the strongest performers for us during the pandemic and one which vary significantly based on consumer demand decreased 29% from the 2000.

Speaker Change #114: 23 second quarter.

Speaker Change #115: Also <unk> as truck capacity provider to other trucking companies through Pls and truck brokers during periods of tight truck capacity. Those other freight transportation providers reached out to landstar to provide truck capacity more often and during times of more readily available truck capacity.

James P. Todd: During periods of tight truck capacity, other freight transportation providers reach out to Landstar to provide truck capacity more often than during times of more readily available truck capacity. The amount of freight hauled by Landstar on behalf of other truck transportation companies is reflected in almost all our commodity groupings, including our substitute line haul service offerings. Overall, revenue hauled on behalf of other truck transportation companies in the 2024 second quarter was 27% below the 2023 second quarter, a clear indicator in our model that capacity is more readily accessible. Revenue hauled on behalf of other truck transportation companies was 13% and 16% of transportation revenue in the 2024 and 2023 second quarters, respectively.

Speaker Change #115: <unk> freight hauled by Landstar on behalf of other truck transportation companies as reflected in almost all our commodity groupings, including our substitute line haul service offering.

Speaker Change #115: Overall revenue hauled on behalf of other truck transportation companies in the 2024 second quarter was 27% below the 2023 second quarter, a clear indicator in our model the capacity is more readily accessible.

Speaker Change #115: Revenue hauled on behalf of other truck transportation companies was 13% and 16% of transportation revenue in the 2024 and 2023 second quarters respectively.

James P. Todd: Even with the ups and downs in various customer categories, our business remains highly diversified with over 25,000 customers, none of which contributed over 6% of our revenue in the 2024 first half. Turning to slide 11, in the 2024 second quarter, gross profit was $120 million, compared to gross profit of $139.7 million in the 2023 second quarter. Gross profit margin was 9.8% of revenue in the 2024 second quarter, as compared to 10.2% in the corresponding period of 2023.

Speaker Change #115: Even with the ups and downs in various customer categories. Our business remains highly diversified with over 25000 customers, none of which contributed over 6% of our revenue in the 2024 first half.

Speaker Change #116: Turning to slide 11, and she has a 24 second quarter gross profit was $120 million compared to gross profit of $139 7 million in the 2023 second quarter gross profit margin was nine 8% of revenue in the 2024 second quarter as compared to gross profit margin of 10, 2% in the corresponding period of 2023 and the 2024.

James P. Todd: In the 2024 second quarter, variable contribution was $175.1 million, compared to $198.2 million in the 2023 second quarter. Variable contribution margin was 14.3% of revenue in the 2024 second quarter, compared to 14.4% in the same period last year. The decrease in variable contribution margin compared to the 2023 second quarter was primarily attributable to a decreased variable contribution margin on revenue generated by truck brokerage carriers, as the rate paid to truck brokerage carriers in the 2024 second quarter was 163 basis points higher than the rate paid in the 2023 second quarter.

Speaker Change #116: Quarter variable contribution was $175 1 million compared to $198 2 million in the 2023 second quarter variable contribution margin was 14, 3% of revenue in the 2024 second quarter compared to 14, 4% in the same period last year.

Speaker Change #116: The decrease in variable contribution margin compared to the 2023 second quarter was primarily attributable to a decreased variable contribution margin on revenue generated by truck brokerage carriers as the rate paid to truck brokerage carriers in the 2024 second quarter was 163 basis points higher than the rate paid in the 2023 second quarter, partially offset by <unk>.

Speaker Change #116: Mix is an increased percentage of revenue was generated by <unk> independent contractors, which typically has a higher variable contribution margin than revenue generated by other modes of transportation.

James P. Todd: Partially offset by mix as an increased percentage of revenue was generated by BCO independent contractors, which typically has a higher variable contribution margin than revenue generated by other modes of transportation. Turn to slide 12, operating income declined as a percentage of both gross profit and variable contribution, primarily due to the impact of the company's fixed cost infrastructure, principally certain components of selling general administrative costs in comparison to a smaller gross profit and variable contribution basis. Operating costs were $14.1 million in the 2024 second quarter compared to $13.5 million in 2023. This increase was primarily due to decreased gains on the sale of used trailing.

Speaker Change #116: Turning to slide 12, operating income declined as a percentage of both gross profit and variable contribution primarily due to the impact of the company's fixed cost infrastructure, principally certain components of selling general and administrative costs in comparison to smaller gross profit and variable contribution basis.

Speaker Change #116: Operating costs were $14 $1 million in the 2024 second quarter compared to $13 $5 million. In 2023. This increase was primarily due to decreased gains on sale of used trailing equipment.

James P. Todd: Insurance and claims costs $27.2 million in the 2024 second quarter compared to $29.8 million in 2023. Total insurance and claims costs were 5.8% of BCO revenue in both the 2024 and 2023 periods. The decrease in insurance and claims costs as compared to 2023 was primarily attributable to decreased severity of accidents during the 2024 period and decreased BCO miles traveled during the 2024 period. During both the 2024 and 2023 second quarters, insurance and claims costs included $1 million of net unfavorable adjustment to prior claim estimates. Selling General and Administrative Costs were $54.9 million in the 2024 second quarter compared to $54.5 million in the 2023 second quarter.

Speaker Change #116: Insurance and claims costs were $27 2 million in the 2024 second quarter compared to $29 8 million in 2023 total insurance and claims costs were five 8% of <unk> revenue in both the 2024 and 2023 periods.

Speaker Change #116: The decrease in insurance and claims cost as compared to 2023 was primarily attributable to decreased severity of accidents. During the 2024 period and decrease Bcl miles traveled during the 2024 period.

Speaker Change #116: During both the 2024 and 2023 second quarter insurance and claims costs included $1 million of net unfavorable adjustment to prior year claim estimates selling general and administrative costs were $54 9 million in the 2024 second quarter compared to $54 5 million into 2023 second quarter as we've previously discussed.

James P. Todd: As we have discussed regularly on these calls in the past, the provision relating to Landstar's incentive compensation programs is an important component of our SG&A line and a key defensive feature of our model, given the highly cyclical nature of our business. In each of 2023 and 2024, following the end of the second quarter, Landstar booked a credit to reduce a significant portion of the incentive compensation accrual established at the end of the first quarter. The credits recorded in each period were approximately equal, at just over a million dollars.

Speaker Change #117: <unk> on these calls in the past the provision relating to Landstar is incentive compensation programs is an important component of our SG&A line and a key defensive feature of our model given the highly cyclical nature of our business in each of 2023 and 2024. Following the end of the second quarter last our book to credit to reduce a significant portion of the incentive compensation accrual established it.

Speaker Change #116: The end of the first quarter.

Speaker Change #116: Credits recorded recorded in each period were approximately equal at just over $1 million. Each of these credits favorably impacted second quarter SG&A expense apart from the favorable net impact of our incentive compensation programs on the SG&A line in the quarter Landstar experienced increased employee benefit cost and decreased provision for customer bad debt in the 2000.

James P. Todd: Each of these credits favorably impacted second quarter SG&A. Part from the favorable net impact of our incentive compensation programs on the SG&A line in the quarter, Landstar experienced increased employee benefit costs and increased provision for customer bad debt in the 2024 second quarter compared to the 2023 system, partially offset by decreased project. Costs associated with our annual aging convention appeared in the second quarter in each of 2023 and 2024 and were approximately the same in each period.

Speaker Change #116: 24 second quarter compared to the 2023 second quarter, partially offset by decreased project consulting costs.

Speaker Change #116: Costs associated with our annual agent Convention appeared in the second quarter in each of 2023 and 2024 and were approximately the same in each period depreciation.

James P. Todd: Depreciation and amortization was $14.5 million in the 2024 second quarter compared to $14.9 million in 2023. This decrease is primarily due to decreased depreciation on the company's trailer fleet, partially offset by increased depreciation on software applications resulting from continued investment in new and upgraded tools for use by agents and third-party capacity providers. The effective income tax rate was 24.5% in the 2024 second quarter compared to an effective income tax rate of 24.6% in the 2023 second quarter.

Speaker Change #116: Depreciation and amortization was $14 $5 million in the 2024 second quarter compared to $14 9 million. In 2023. This decrease was primarily due to decreased depreciation on the Companys trailer fleet, partially offset by increased depreciation on software applications, resulting from continued investment in new and upgraded tools for use by agents and third party <unk>.

Speaker Change #116: Asset providers.

Speaker Change #116: Our effective income tax rate was 24, 5% in 2024 second quarter compared to an effective income tax rate of 24, 6% in the 2023 second quarter.

James P. Todd: Turning to slide 13 and looking at our balance sheet, we ended the quarter with cash and short-term investments of $504 million. Cash flow from operations for the 2024 first half was $142 million, and cash capital expenditures were $17 million. The company continues to return significant amounts of capital back to stockholders, with $95 million of dividends paid and $57 million of share repurchases during the first half of 2024. In addition, as noted in the press release, the company increased the regular quarterly dividend by 9%.

Speaker Change #116: Turning to slide 13, and looking at our balance sheet, we ended the quarter with cash and short term investments of $504 million.

Speaker Change #116: Cash flow from operations for the 2024 first half was $142 million in cash capital expenditures were $17 million. The company continues to return significant amounts of capital back to stockholders with $95 million of dividends paid and $57 million of share repurchases. During the 2020 for first half.

Speaker Change #116: In addition, as noted in the press release the company increased the regular quarterly dividend by 9% the strength of our balance sheet is a testament to the cash generating capabilities of the Landstar model. Thank you Frank.

James P. Todd: The strength of our balance sheet is a testament to the cash-generating capabilities of the Landstar model. Thanks, JT. As we progress through the second half, year-over-year comparisons should begin to ease. Looking at historical seasonality from Q2 to Q3, pre-pandemic patterns would normally yield a 1-2% improvement in truck revenue per load, typically offset by a 1-2% decline in the number of loads hauled via truck, yielding a similar top line sequentially. In 2024, as we move from June to July, truck volumes are projected to trend below normal sequential month-to-month patterns based on pre-pandemic seasonal performance trends.

Speaker Change #118: As we've progressed through the second half year over year comparisons should begin to ease looking at historical seasonality from Q2 to Q3 pre pandemic patterns would normally yield of 1% to 2% improvement in truck revenue per load typically offset by a 1% to 2% decline in.

Speaker Change #118: The number of loads hauled via truck, yielding a similar top line sequentially in.

Speaker Change #118: In 2024, as we move from June to July or truck volumes have trended below normal sequential month to month patterns based on pre pandemic seasonal performance trends on the other hand truck revenue per load has outperformed these pre pandemic patterns turning to slide 15, our year over year expectation.

James P. Todd: On the other hand, truck revenue per load has outperformed these pre-pandemic patterns. Turning to slide 15, our year-over-year expectations for the 2024 third quarter are that truck load volumes will be 6 to 10 percent below the 2023 third quarter, and truck revenue per load will be in a range of flat to up 4 percent versus the 2023 third quarter. On a sequential basis, our guidance for the third quarter implies a 2% to 7% decline in truckload volume.

Speaker Change #118: For the 2020 for third quarter are the truckload volumes will be 6% to 10% below the 2023 third quarter and truck revenue per load will be in a range of flat to up 4% versus the 2023 third quarter on a sequential basis, our guidance for the third quarter implies a 2% to 7%.

Speaker Change #118: <unk> and truckload volumes and truck revenue per load ranging from up 3% to up 7% versus the 2024 second quarter. We also expect revenue for our non truckloads to be somewhat similar to what we experienced in the 2020 for second quarter.

James P. Todd: And Truck Revenue Per Load, ranging from up 3% to up 7% versus the second quarter. We also expect revenue for our non-truck motors to be somewhat similar to what we experienced in the 2024 second quarter. Based on these assumptions, we expect revenue in the 2024 third quarter to be in a range of $1.175 billion to $1.275 billion, and earnings to be in a range of $1.35 per share to $1.55 per share. 2024 Third Quarter Guidance incorporates a variable contribution margin range. 14 percent to 14.3 percent, and insurance and claim costs of approximately 5.5% of estimated BCO revenue.

Speaker Change #118: Just on these assumptions, we expect revenue in the 2024 third quarter to be in a range of $1 175 billion to $1 $2 75 billion and earnings to be in a range of $1 35 per share to $1 55 per share. The 2024 third quarter guidance incorporates a variable contra.

Speaker Change #118: <unk> margin range of 14% to 14, 3% and insurance and claim costs of approximately five 5% of estimated <unk> revenue.

James P. Todd: One last point before we take your questions. The 2024 second quarter benefited from the reversal of a significant portion of the Q1 bonus accrual. That benefit obviously won't repeat in the third quarter and is a primary reason for the difference between the $1.45 midpoint of our third quarter EPS guidance range and the $1.48 of EPS we achieved in the second quarter. With that, Bill, we'd like to open the line for questions

Speaker Change #118: One last point before we take your questions. The 2024 second quarter benefited from the reversal of a significant portion of the Q1 bonus accrual that benefit obviously wont repeat in the third quarter and is a primary reason for the difference between the $1 45 midpoint of our third quarter EPS guidance range.

Speaker Change #118: And the $1 48 of EPS, we achieved in the second quarter.

Speaker Change #119: With that belt, we'd like to open the line for questions.

James P. Todd: 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 touchtone phone. Once again, that is star 1 to ask a question. To answer a request, please press star 2.

Speaker Change #123: Thank you very much Sir at this time, we will begin the question and answer session I would like to ask a question. Please press star one on your Touchtone phone once again that is star one to ask a question.

Speaker Change #120: A request. Please press star two we have the first question coming from the line of Scott Group of Wolfe Research. Your line is now open.

Operator: We have the first question coming from the line of Scott Group of Wolf Research. Your line is now open. Hey, this is Jake Laxon for Scott.

Jake Laxon: Thanks for the time. Hey, Jake. So the guidance implies a pretty strong sequential improvement in race, but a pretty large sequential decline in volume. I guess, is this a sign, do you think, that pricing is starting to firm up for the industry? Or is this more specific to Landstar? And I guess it would be great to get your thoughts on the reason for this.

J class: Hi, This is J class on for Scott Thanks for the time.

Jake: Hey, Jake.

Speaker Change #122: So the guidance it implies a pretty strong sequential improvement in rates, but a pretty large sequential decline in volumes.

Speaker Change #124: Do you think that pricing is starting to firm up for the industry.

Speaker Change #125: More specific to Landstar.

Speaker Change #128: I guess, what would be great to get your thoughts on the reason for this divergence.

Jake Laxon: Yeah, hey, Jay. It was a little surprising to us as well when we looked at July's numbers. We were certainly excited to see a little bit of lift on the rate side of the equation, but July was a little bit softer. Some of that could be the holiday and sort of typical seasonality there around the 4th of July and the time of the week that it hit. There was some weather in the second week,

Speaker Change #125: Yes, Hi, Jay It was a little surprising to us as well as we looked at July's numbers, we were certainly.

Speaker Change #127: Excited to see a little bit of lift on the on the rate.

Speaker Change #126: Side of the equation, but July was a little bit softer some of that could be the holiday and sort of typical.

J P: Seasonality there around the fourth of July and the time of the week that it hits there was a weather in the second week. So there were a couple of things I think that we look at and wonder whether or not those are going to stay with us at J P. Can give you a little bit of color around.

Frank A. Lonegro: So there were a couple of things I think that we look at and wonder whether or not those are going to stay with us. JT can give you a little bit of color around how June to July and, obviously, July to August, August, September as we progress through. But I think it's probably too early to call the ball on true inflection in the second half. I think we did that last year, and it didn't happen.

J P: How June to July and obviously July August September as we as we progress through but.

Speaker Change #129: I think it's probably too early to call the ball on the true inflection in the second half I think we did that last year and it didn't happen and we did this year and it's maybe just coming off the bottom right now so a little reluctant to lean in and say that happy days are here again, but I do think that.

Frank A. Lonegro: We did it this year, and it's maybe just coming off the bottom right now, so I'm a little reluctant to lean in and say that the happy days are here again. But I do think that we're seeing a little bit of a lift on the revenue side. You know, we mentioned heavy haul in the prepared remarks. I think that's exciting for us, but let me let JT give you some color on the month-to-month view. Yeah, absolutely. Thanks, Frank.

Frank A. Lonegro: We're seeing a little bit of lift on the revenue side a lot of the things that we're working on we mentioned the heavy haul in the in the prepared remarks, I think that's exciting for us, but let me let to let's say to give you some color on the month to month you yeah, absolutely. Thanks, Frank J, we saw pretty good strength towards the end of June on both truck loadings and truck revenue per load with the benefit of first of all.

James P. Todd: Jake, we saw pretty good strength toward the end of June on both truck loadings and truck revenue per load. With the benefit of the first four weeks of the third quarter, we typically drop off about 4% on the loads per workday walking from June to July. We're underperforming that by about 300 basis points. On the other hand, truck revenue per load, we typically get about a 200 basis point good guy from June to July, and we're about 300 basis points better based on four weeks of process revenue per load. So that's kind of the launch point for the guy. Got it, got it. No, that's helpful.

Speaker Change #131: Weeks of the third quarter, we typically drop off about 4% on our loads per workday walking from June to July were underperforming that by about 300 basis points on the other hand truck revenue per load, we typically get about a 200 basis point good Guy June to July and we're about 300 basis points better based on four weeks.

Speaker Change #131: Process revenue per load. So that's kind of the launch point for the guide.

James P. Todd: And then the BCO count is below pre-COVID levels and keeps trending lower, while approved and active broker carriers are nicely above pre-COVID. Why do you think we're seeing that? Yeah, I'll kick it off and turn it over to Joe here in a second to give you some more color.

Got it got it that's helpful and then PCL count below pre COVID-19 levels and keeps trending lower while Clinton active broker carriers.

Speaker Change #132: Way above pre Covid why do you think.

Frank A. Lonegro: We did some analysis and purging on the approved carrier side last August, so you're seeing the impact of that on a year-over-year basis. On the BCO side, you know, clearly, the length of the downturn and the rate trough are really the largest impact on what's happening on the BCO side. What we did say on the prior call, and it actually came to fruition, was that we thought that the rate of decline would be slow, and it was, and we're continuing to see that rate of decline lessen over time, and we believe that will hold true in Q3 relative to Q2 as well. But I'll let Joe provide some color. Sure. Yeah, Jay.

Speaker Change #133: We're seeing that.

Speaker Change #132: Yes.

Speaker Change #132: I'll kick it off and turn it over to Joe here in a second to give you some more color we did some.

Joseph J. Beacom: Analysis and purging on the carrier side.

Joseph J. Beacom: Last August so youre seeing the impact of that on a year over year basis on the <unk> side clear.

Joseph J. Beacom: Clearly the length of the downturn and the rate trough is really the largest impact on what's happening on the <unk> side, what we did say on the prior call and it actually came to fruition was we thought that the rate of decline would slow and it did and we're continuing to see that rate of decline lessened over time and we believe.

Joseph J. Beacom: That will hold true in Q3 relative to Q2 as well, but let me, let Joe provide some color sure yes, Jay so.

Joseph J. Beacom: So, as Frank alluded to there, you know, we've seen the cost pressures continue, the duration of the cost pressures clearly having a pretty big impact on the BCO front. What I think we've also seen and talked about is that the brokerage margin splits that we've had or that our agents have enjoyed have been tightening over time. They've tightened through 2023, and they continue to tighten, so I think you see agents leaning more towards BCOs, and that's going to help improve loadings there. One thing I would caution, though, is that we look at our carrier counts and active carriers, and we look at the same authority revocation data that everybody on the call probably looks at.

Joseph J. Beacom: Frank I alluded to there we have seen.

Cost pressures continue the duration of the cost pressures clearly, having a pretty big impact on the Bcl front.

Joseph J. Beacom: I think we've also seen and talked about is that.

Joseph J. Beacom: The brokerage margin splits that we've had that our agents have enjoyed have been tightening over time, they've tightened through and through 2023 and have continued to tighten. So I think you see agents.

Joseph J. Beacom: And more towards <unk> and Thats going to help.

Speaker Change #134: Improved loadings, there one thing I would caution though is we look at our carrier counts and active carriers and we look at the same.

Speaker Change #135: Alrighty revocation data that everybody on the call I'll, probably looks at I, just don't think that.

Joseph J. Beacom: I just don't think that, you know, when you look at us as a carrier, we have three carriers here, and the truck counts within those carriers can move, but we're still three carriers. And I think, as an industry, we look at revocations, and you're seeing this modest decline in revocations, but what you don't see is the number of trucks that are not within the carriers that are in that mix, right So we're still three carriers. We were three carriers a couple years ago.

Speaker Change #136: When you look at us as a carrier we have three carriers here.

Speaker Change #136: And the truck counts within those carriers can can move, but we're still three carriers and as I think as an industry, we look at replications and Youre seeing.

Speaker Change #136: This modest decline in rare cases, but what you don't see.

Speaker Change #136: Is the number of trucks that are not within the carriers that are in that mix right. So so.

Speaker Change #136: Still three carriers were three carriers a couple of years ago.

Joseph J. Beacom: What we don't get to see from the macro data is the decline in truck count within those carriers. And we get to see some of that in our carrier database that we look at. And in our active carriers, we see some significant declines in not only the number of carriers, especially the small carriers who participate in the spot market like we do, but also some of the larger carriers.

Speaker Change #136: What we don't get to see.

Speaker Change #136: From the macro data is what's the decline in truck count within those carriers and we get to see some of that in our carrier database that we look at in our active carriers, we see some significant declines.

Speaker Change #136: And not only the number of carriers, especially the small carriers, who participate in the spot market like we do but also some of the larger carriers. So it looks it looks to US just from our limited viewpoint that the smaller carriers are exiting the business, albeit slowly and the larger carriers are getting smaller.

Joseph J. Beacom: So it looks to us, just from our limited viewpoint, that the smaller carriers are exiting the business, albeit slowly, and the larger carriers are getting smaller as demand and increased costs and those kind of things take effect. So that's kind of how we see it. And, again, we've had some pretty good indicators of things leveling off. July was the lowest net decline that we've seen since the second quarter of 2022. And the last week of July was a positive truck count week for us, something that's been a long time in coming, so, you know, early indicators, but hopefully positive indicators for BCO counts going forward, Jay. Appreciate the time.

Speaker Change #136: As demand and increased cost in those kinds of things take effect. So.

Speaker Change #136: That's kind of how we see it and again, we've had some pretty good <unk>.

Speaker Change #136: Indicators of things leveling off.

Ally: Ally was the.

Ally: The lowest net decline that we've seen since the second quarter of 2022.

Ally: And the last week of July.

Ally: Was our positive truck count week for us something thats been a long time in coming so.

Jay: Early indicators, but hopefully positive indicators for Bcl count going forward Jay.

Speaker Change #138: I appreciate the color. Thanks.

Joseph J. Beacom: Thanks. Thank you. We will move now to the next question coming from the line, Jordan Alligator of Goldman Sachs. Your line is now open. Hi, this is Paul Stoddard on behalf of Jordan.

Speaker Change #139: Thank you we will move onto the next question comes from the line of Jordan Allograph Goldman Sachs. Your line is now open.

Unknown Attendee: I guess a question that we have is, when we look at the percentage of variable contribution on EBIT, kind of coming into that 39% up from the first quarter, I guess, when can we start to see that getting into the high 40 percent range that we started to see pre COVID? Or are there just going to be structural costs that just keep a ceiling on that? Yeah, I'll take the first crack at it, and JT can fill in some gaps and some numbers.

Speaker Change #139: Hi. This is Paul started on for Jordan I guess a question that.

Paul: That we have is when we look at the percentage of variable contribution on EBITDA kind of coming into that 39% from the first quarter I guess when can we start to see that getting into the high 40 percentage range that we started to see pre COVID-19 or is there just going to be structural costs, such as the ceiling on that.

Speaker Change #140: Yes, I'll take the first crack at it and J D can fill in some some gaps on some numbers.

Frank A. Lonegro: I mean, obviously, in a declining revenue environment, it's going to be harder to drop more into the bottom line. But what we're going to ultimately see as the volume environment turns, our fixed costs are not going to go up as a result of that, so you're going to get operating leverage as we pull that forward. A lot of that's going to depend on how much of it's volume-related and how much of that's rate-related, but as we see both of those, we expect to have more fall to the bottom line. Obviously, we've troughed the last couple of quarters, and we're looking forward to coming out the other side stronger. We've got some initiatives internally to really look at the cost structure. As J.T.

Paul: Obviously.

Speaker Change #141: A declining revenue environment, it's going to be harder to drop more to the bottom line.

Speaker Change #142: But what we're going to ultimately see is.

J D: Rate environment turns in the volume environment turns I mean, our fixed costs are not going to go up as a result of that so youre going to get operating leverage.

J D: As we pulled that forward a lot of that is going to depend on how much of it's volume related and how much of that is rate related but as we see both of those we expect to have more fall to the bottom line. Obviously, we've trough last couple of quarters.

J D: We're looking forward to coming out the other side stronger.

J D: We've got some initiatives internally to really look at the cost structure.

James P. Todd: mentioned on this call and I think on the prior call, there's not that much opportunity on the fixed cost side of the equation. We have certain costs that are in the environment, whether we've got a million eight loads or 2.2 million loads, so we're going to focus on that when we're looking at every position that comes open and making sure that we absolutely have to fill that position, and J.T. is sort of the cost cop in some respects and is doing a really good job of making sure that our cost structure stays at an appropriate level. Yeah, thanks, Frank. Paul, you know, mid to high 40s?

J P: As J P mentioned.

J P: On this call I think on the prior call.

J P: There's not that much opportunity in the fixed cost side of the equation, we have certain costs that are in the environment, whether we've got.

J P: 1 million eight loads are $2 2 million loads.

J P: We're going to focus on that while we're looking at every position that comes open and making sure that we absolutely have to fill that position and J T sort of the cost cap in some respects and is doing a really good job of making sure that our cost structure stays at an appropriate level.

James P. Todd: It's a good question. I mean, clearly, the pandemic highs. We printed 55 and 56 OEM, respectively, in 21 and 22. What I will tell you is that I'm still a big believer in our ability to push through 70% of the incremental VC dollars down to operating income. Ultimately, that is how we climb back from an OEM standpoint. To Frank's earlier point, if the majority of that comes from price versus vols, it's easier to leverage that as price doesn't drive the need for more equipment and more insurance exposure, etc.

Paul: Yeah, Thanks, Frank Paul mid.

Speaker Change #144: Mid to high 40%. It's a good question I mean, clearly depend emmick highs, we printed 55%, 56% respectively in 'twenty, one and 'twenty two.

Speaker Change #143: What I will tell you is I'm still a big believer in our ability to push through 70% of the incremental <unk> dollars down to operating income ultimately that is how we climbed back from an OEM standpoint to Franks earlier point, if the majority of that comes from price versus balls, it's easier to leverage that as price doesn't drive the need for more equipment.

James P. Todd: On a positive note, two big inflationary pressures that we've had here for the last and not unique to Landstar, by the way, the last seven years have been insurance and technology. We have had two years in a row now of decelerating gross dollar premium on our excess casualty programs, which is good. I think our May 1, most recent May 1 renewal was about a 5% gross dollar increase. So as that pressure begins to hopefully ease a little bit and the tech side starts growing at a more kind of normalized inflation rate, that should be emphasized. And I would just tell you, Paul, to take a look at the back of the baseball card.

Speaker Change #143: More insurance exposure et cetera et cetera.

Paul: On a positive note two big inflationary pressures that we've had here for the last and not unique to answer by the way last seven years have been insurance and technology.

Paul: Two years in a row now.

Paul: Decelerating gross dollar premium on our excess casualty programs, which is good and I think our may one.

Paul: Most recent may one renewal was about a 5% gross dollar increase so is that pressure begins to hopefully ease a little bit.

Paul: And the tech side start growing at a more kind of normalized inflation rate that should that should emphasize and I would just tell you Paul take a look at the back of the baseball card.

Paul: We've demonstrated over time, even pre pandemic, our ability to achieve that 70% incremental pusher.

Frank A. Lonegro: We've demonstrated over time, even pre-pandemic, our ability to achieve that 70% incremental push through. No, great, that's great. And just as a follow-up, as we think about volumes kind of heading into the second half, obviously, guiding for lower volumes in the third quarter, I guess, any view into peak season and kind of where you think volume could look as we look out to the fourth quarter as well? Yeah, so I'll take a first shot at that one, and then Matt Daniger, who's got the field sales for us, will chime in a little bit in terms of some color that he's hearing from his folks in the field.

Paul: No great that's great.

Paul: And just as a follow up as we think about volumes kind of heading into the second half obviously guiding for lower volumes in the third quarter I guess any view into peak season, and kind of where you think volumes could look as.

Paul: As we look out to the fourth quarter as well.

Speaker Change #145: Yes, so I'll take a.

Unknown Attendee: First shot at that one and then Matt Danaher, who has got the field Salesforce will chime in a little bit in terms of some color that he's hearing from as folks in the field.

Frank A. Lonegro: Just from a calendar day perspective, this peak season is going to be compressed by a couple of days, so we'll likely see some elevated volumes on a per day basis. It may not be impactful in the grand scheme of things, but to me, it's going to come down to the consumer and what is the consumer going to do with disposable income or credit card debt in the last couple of months of the year.

Unknown Attendee: Just from a calendar day perspective. This peak season is going to be compressed by a couple of days so well.

Speaker Change #146: We will likely see some elevated volumes on a per day basis. It may not be impactful in the Grand scheme of things, but to me, it's going to come down to the consumer and what is the consumer going to do with the disposable income or credit card debt in the last couple of months of the year, we haven't really had peak in the last few years.

Frank A. Lonegro: We haven't really had a peak in the last few years, so I think this year, certainly the GDP numbers would make you think that there's going to be some spending in the second half of the year, but ultimately, it's going to depend on what the consumer wants to buy and, honestly, how much the retailers and the wholesalers want to lean into inventory in this type of an interest rate environment.

Speaker Change #146: So I think this year certainly the GDP numbers would make you think that theres going to be some.

Speaker Change #146: Spending in the second half of the year, but ultimately it's going to depend on what the consumer wants to buy and honestly how much the the retailers and the wholesalers want to lean into inventory in this type of of an interest rate environment. They certainly have peeled them back from where they were in the COVID-19 highs, but I think there is on the other side of equation just a general.

Frank A. Lonegro: They certainly have peeled them back from where they were in the COVID highs, but I think there is, on the other side of the equation, just a general reluctance to build up a lot of inventory not knowing where the sales are going to be. So I think right now, we're going to take a wait and see approach. You know, we've got capacity that is sort of ready to dive in. We've had good conversations with our customers that, you know, Matt can give you some color on. But, you know, if it's there, we're ready for it. I call this math.

Speaker Change #146: Electing to build up a lot of inventory not knowing where the sales are going to be.

Speaker Change #147: So I think right now we're going to take a wait and see approach.

Speaker Change #148: <unk> got capacity that is sort of ready to dive in we've got good conversations with our customers that Mexican can give you some color on that.

Mexican: If it's there we're ready for that.

Mexican: Hi, Paul This is Matt yes, normally about June we sit down with our customers and really take a good look at what their needs are going through peak season.

Matt Daniger: Yeah, normally about June, we get down with our customers and really take a good look at what their needs are going through peak season. Here at Landstar, it's a relatively small group of customers that drive that e-commerce, parcels, substitute, and line haul. And the early projection is it's going to look a lot like last year, certainly not like anything we saw in 21, 22 decelerated a little bit. And, of course, last year, it wasn't much of a peak at all.

Mexican: Sure Lance or it's a relatively small group of customers that drive that E. Com e-commerce parcels substitute line haul and yearly projection as it is going to look a lot like last year, certainly not like anything we saw in 'twenty, one 'twenty two decelerated, a little bit and of course last year.

Matt Daniger: And right now, we're looking closer to 23, you know; we'll finalize that up here in the next month or so as we get our final projections on that. But we're not looking for an overly vibrant peak season this year. Great. Thank you. I appreciate it.

Speaker Change #150: It wasn't much of a peak at all.

Speaker Change #150: Right now, we're looking closer towards 'twenty three.

Speaker Change #150: We'll finalize that up here in the next month or so as we get our final projections on that but we're not looking for a overly vibrant peak season. This year.

Speaker Change #151: Great. Thank you appreciate it.

Operator: Thank you. We will move now to the next question coming from the line of Daniel Imbrose, Stevens Incorporated. Your line is now open.

Speaker Change #151: Thank you we will move now to the next question coming from the line of Daniel Enbrel Stephens incorporated your line is now open.

Unknown Attendee: Hey guys, this is Joe Enderlin on for Daniel. Thanks for taking the question. Could you maybe provide an update on BCO productivity? How much room is there to go higher and then maybe break out training procedures or how you help BCOs select loads better and maximize routes? Thank you. Yeah, let me kick that one to Joe. He's front and center on that one, but it's a great question.

Joseph J. Beacom: Hey, guys. This is Joe <unk> on for Daniel Thanks for taking the question.

Joseph J. Beacom: Could you maybe provide an update on BCS productivity, how much room is there to go higher and then maybe breakout training procedures or how you help bto select loads better maximize routes.

Speaker Change #152: Yeah, Let me take that one to Joe He is front and center on that one but it's a great question. Yeah. Good question, Joe Yes, we were up 3% in the first quarter were up 6% year over year in the second quarter from a utilization standpoint, which is a good sign and I think it's again kind of with the slowing terminations and that kind of thing I think it's a.

Joseph J. Beacom: Yeah, good question, Joe. Yeah, we were up 3% in the first quarter. We're up 6% year-over-year in the second quarter from a BCO utilization standpoint, which is a good sign. And I think it's, again, kind of with the slowing terminations and that kind of thing. I think it's a good sign. From a utilization standpoint, we have a required orientation program when somebody leases, and we go through a two-day tutorial and hands-on exercise for them to use the tools that we have internally that help them navigate our loading opportunities. And it's either via a laptop or their app.

Joseph J. Beacom: Good sign from a utilization standpoint, we have a required orientation program when somebody leases on and we go through a two day.

Speaker Change #153: <unk> and hands on exercise for them to use the tools that we have internally that helps them.

Speaker Change #153: Navigate our loading opportunities and it's either via laptop or their app.

Joseph J. Beacom: And they can customize that to fit their business plan. So they can look at particular loads based on equipment type or origin, destination, anything. We can follow them around the country and feed them loads that they like to haul. And beyond all the technology, what we really do is emphasize the need to have agent relationships within the system. So we've got about 1,100 agents, and it's just critical for BCOs to make those relationships and introduce themselves, and establish that trust back and forth between the BCO and the agent, which is fairly unique to our model, and the BCOs that grasp that and take a hold of that and own that tend to do very, very well and stay here for a very long time.

Speaker Change #153: And they can customize that to fit their business plan. So they can look at particular loads based on equipment type origin destination.

Speaker Change #153: Anything that we can I can follow them around the country and feed them loads that they.

Speaker Change #153: The hall.

Speaker Change #154: And beyond all the technology, what we really do is emphasize the need to have agent relationships within the system. So we've got about 1100 agents.

Speaker Change #154: And it's just critical for <unk> to make those relationships and introduce themselves and established that trust back and forth between the <unk> and agent.

Speaker Change #154: This is fairly unique to our model and the <unk> that graph that and take a hold of that and on that tend to do very very well and stay here for a very long time, one of the things that we've seen in 'twenty, one 'twenty two and freight volumes were so high.

Speaker Change #155: You could live off the App and as things have gotten a little bit leaner.

Speaker Change #155: Those that didn't have those relationships have struggled a little bit. So we've redoubled our efforts there to make sure. It's the technology, which can pay great dividends, but it's also the relationships and we're doing the same thing from a field perspective.

Joseph J. Beacom: And we're doing the same thing from a field perspective and going to our agents and letting them know that there are BCOs out there and helping make introductions, particularly with new agents, to the BCOs that are in the fleet currently and trying to redouble those efforts to help both parties. Matt, if you want to comment on that from an agent perspective, please feel free. Yeah, Joe, that's been a big push for us here this year. New agents tend to come from a brokerage background and, a lot of times, aren't really familiar with the BCO model and how that works.

Speaker Change #155: And go into our agents and letting them know that there are <unk> out there and helping make introductions, particularly with new agents to the <unk> that are in the fleet currently and trying to read up all those efforts to help both parties.

Speaker Change #155: And Matt if you want to comment on that from an agent perspective. Please please feel free.

Matt Daniger: And so it's easy to fall into what you know, right? So that's a big push for us this year. We're working with Joe to come up with some new ways to get them rooted in that BCO culture and the value that they bring to the customer. That's helpful.

Unknown Attendee: Yes, Joe that's been a big push for US here this year new agents.

Unknown Attendee: Tend to come from our brokerage background.

Unknown Attendee: A lot of times aren't really familiar with the <unk> model and how that works and so it's easy to fall into what you know right. So that's a big push for US. This year, we're working with Joe to come up with some some new ways to get them grained in that <unk>.

Unknown Attendee: <unk> culture, and the value that they bring to the customer.

Joseph J. Beacom: Thank you guys. As a follow-up, manufacturing remains contractionary after a head fake in February. Sounds like consumer durables demand is underwhelming after a pull-forward of demand during COVID. Are you seeing anything new within these end markets or anything increasingly optimistic from shippers on demand? You know, American manufacturing and things like that.

Speaker Change #156: That's helpful. Thank you guys.

Speaker Change #157: Follow up manufacturing remains contractionary after a head fake in February it sounds like consumer durables demand is underwhelmed after a pull forward of demand during COVID-19.

Anything new within these end markets or anything increasingly optimistic from from shippers on demand.

Speaker Change #158: Yes, I think on the on.

Speaker Change #159: On the manufacturing side, there's a couple of things at play.

Speaker Change #159: When I try to back up and look at near shoring and.

Frank A. Lonegro: I mean, I'm bullish on North American manufacturing on a long-term basis, but there will be wobbles along the way. Obviously, the election is going to play a part in that as we go forward into 2025. You know, when I look at where some of the highlights were in the quarter, I mean, consumer durables, I hear you, but it was good to see that it was actually in line. It's been a while since consumer durables have been in line with the company average, so I'd say that's on its way back. You know, machinery is doing okay. Auto vols are there too.

Speaker Change #159: American manufacturing and things like that I mean, I'm bullish on North American manufacturing on a long term basis.

Speaker Change #159: Be wobbles, along the way obviously the election is going to play a part in that as we go forward into 2025.

Speaker Change #159: When I look at where some of the highlights were in the in the quarter I mean consumer durables I hear you, but it was good to see that it was actually in line.

Speaker Change #160: Been a while since <unk>.

Speaker Change #161: Tumor durables have been in line with the company average so.

Speaker Change #162: I'd say thats on its on its way back.

Machinery is doing okay. All evolves are there the rate environments kind of over competitive so.

Frank A. Lonegro: The rate environment is, you know, kind of uber-competitive, so, you know, it wasn't a volume play there. Building products are doing well, and there's, you know, the data center business is embedded within that, so there's a lot of good business in there. It was really the super cyclical elements that JT called out in his, you know, prepared remarks that were one of the things that hurt us a little bit on the top line. I mean, GDP, to me, is a question about, well, what's happening there. There is a point at which the durable good that you bought three or four years ago needs to be replaced.

Speaker Change #163: It wasn't a volume play they're building products is doing well and there is the data center businesses embedded.

Speaker Change #164: Within that so theres a lot of good a lot of good business in there. It was really the super cyclical elements that J P called out in his pre.

J P: Prepared remarks that we're one of the things that hurt us a little bit on the on the topline I mean GDP.

J P: GDP to me. It's a question of what is the consumer going to do what are they going to spend their money on.

J P: I think you've seen the pull forward I think it's kind of well telegraphed what's happening there there is a point at which the durable that you bought three or four years ago needs to get replaced so.

Frank A. Lonegro: So, you know, that cycle will be helpful for us when it does come around. And again, I'm bullish on the American economy and the American consumer and American manufacturing capabilities. You know, and I think the election is ultimately going to put more people back to work regardless of who the victor is.

J P: Cycle will be helpful for us when that does come back around.

J P: I'm bullish on the American economy, and the American consumer and the American manufacturing capabilities.

J P: I think the <unk>.

J P: Election, ultimately is going to put more people back to work regardless of who the Victor is and it's going to put more emphasis on U S and North American manufacturing, so long term I see us in a good spot.

Frank A. Lonegro: And it's going to put more emphasis on us and North American manufacturing. So, long term, I see us in a good spot. Yeah, Joe, I would just add even with the choppy ISM backdrop that Frank mentioned, you know, I was pleased we grew unsighted platform volume 7% sequentially. And on a revenue per load basis, that increased 4% sequentially. And if you dive in even deeper into the heavy haul component that we called out, the demand there really was broad-based across a whole bunch of customers and different industries. Jim can touch on that more.

J P: Yes, Joe I would just add even with the choppy backdrop.

Speaker Change #165: Backdrop that Frank mentioned I was pleased we grew one sided platform volume, 7% sequentially and on a revenue per load basis that increased 4% sequentially and if you dive in even deeper into the heavy haul component that we called out the demand there really was broad based across a whole bunch of customers different industries, Jim Jim can touch on that.

Unknown Attendee: Yeah, and just to kind of add to that Frank outlined a couple of the end markets that have been really strong, like, you know, the building products, data centers, but something, you know, kind of encouraging, I think that we're seeing over on the project side, we are seeing wind, we're seeing projects starting to kick back up for that. And we're also seeing, you know, some refurbishment of equipment for the oil and gas industry. And I think that's actually something that's pretty encouraging. And it might be a sign of things in the future, if that keeps going on. Got it. Thank you, guys. That's all for us.

Unknown Attendee: Yeah, and just kind of kind of to that Frank.

Unknown Attendee: A couple of the end markets that have been really strong like development products data centers, but something kind of encouraging I think that we're seeing over on the project side, we are seeing wind.

Unknown Attendee: Projects, starting to kick back up for that.

Unknown Attendee: And we're also seeing.

Unknown Attendee: Some refurbishment.

Unknown Attendee: Equipment for the oil and gas industry, and I think thats, thats actually something thats pretty encouraging and there might be a sign of things in the future if that keeps up.

Speaker Change #166: Got it. Thank you guys Thats all for us.

Unknown Attendee: Thank you. We will move now to the next question coming from the line of Elliot Alper, OTD. Call in. Your line is now open.

Speaker Change #167: Thank you we will move now to the next question coming from the lineup Elliot Alper with TD Cowen. Your line is now open.

Operator: Hey, great. Thanks, guys. This is Elliot on for Jason Seidl.

Elliot Andrew Alper: Okay, great. Thanks, guys just sell it on for Jason Seidl.

Elliot Andrew Alper: Any idea on why May was.

Elliot Andrew Alper: We can talk about I thought I heard that in the prepared remarks, I just want to clarify that and then does that bounce back and Jim.

Elliot Andrew Alper: Any idea on why May was weak in truckload? I thought I heard that in prepared remarks. I just want to clarify that. And then did that bounce back in June? Yeah, Elliot, good question. In May, we typically get about a 3.3% tailwind from April on a per workday basis, and it's almost always positive.

Speaker Change #168: Yes, good question and it may we typically get about a three 3% tailwind from April on a per per workday basis, and its almost always positive we were down about half half a percent.

James P. Todd: We were down about half a percent. The weakness we saw, a couple of our automotive accounts were a little softer in May. Some loadings from other transportation companies were a little soft in May as well.

Speaker Change #169: The weakness we saw a couple of our automotive accounts.

Speaker Change #170: Were a little softer in may.

Loadings from other transportation companies.

Speaker Change #170: A little soft in may as well coming off in April that we felt good about it was a little bit surprising.

James P. Todd: Coming off an April that we felt good about, it was a little bit surprising. From a volume perspective, May into June, we increased 150 basis points, admittedly off a low starting point, which was pretty close to the plus 240 we usually get from May to June. Okay. Very helpful. And then you brought up cross-border Mexico as an area of focus in your prepared remarks. We'd love to hear maybe any more commentary around that. Yeah, I'll give it a shot here and then kick it over to Joe.

Speaker Change #170: From a volume perspective may into June we increased 150 basis points admittedly off a low starting point, which was pretty close to the plus $2 40, we usually get made a gym.

Speaker Change #171: Okay helpful. Thanks, and then you brought up cross border Mexico as an area of focus in your prepared remarks wed love to hear maybe.

Speaker Change #173: Maybe any more commentary around that.

Yes, I'll give it a.

<unk> here and then kick it over to Joe.

Frank A. Lonegro: So, you know, cross-border obviously is an important thing for us. It's a great long-term play in terms of nearshoring, you know, initiatives. And so I think it's absolutely the right strategy. It's becoming more competitive, not surprisingly, as other people see the same thing that we are seeing.

Joseph J. Beacom: Cross border obviously.

Joseph J. Beacom: An important thing for us it's a great long term play in terms of the near shoring.

Joseph J. Beacom: Initiatives and so I think it's absolutely the right strategy.

Joseph J. Beacom: Getting more competitive not surprisingly as other people see the same thing.

Frank A. Lonegro: I think we were a first mover, clearly, certainly in the Laredo Gateway. We've got a great facility down there, great folks down there, so continuing to introduce agents into that. So I do think, you know, it probably wasn't our best quarter on a year-over-year basis for cross-border. But it's absolutely the right thing to do. I'll let Joe provide some color on that one.

Speaker Change #172: That we are seeing I think we were a first mover clearly certainly in the Laredo gateway.

Speaker Change #172: We've got a great facility down there are great folks down there so continuing to introduce agents into that so I do think it.

It probably wasn't our best quarter on a year over year basis for cross border. It's absolutely the right thing to do Vela, Joe provide some color on that alright, Thanks Frank R.

Joseph J. Beacom: Thanks, Frank. Yeah, our volumes were actually off just a little bit greater than the company average, isolated to a handful of accounts, a lot of consumer goods, and consumer durable kind of accounts that are down.

Joseph J. Beacom: Our volumes were actually off just a.

Joseph J. Beacom: A little bit greater than the company average.

Speaker Change #174: Isolated to a handful of accounts a lot of consumer goods consumer durable kind of accounts that are down we don't believe that we've lost the business. We just believe that theyre slow at the moment. So we're.

Joseph J. Beacom: We don't believe that we've lost the business. We just believe that they're slow at the moment. So we're, you know, on top of that looking for any rebound when that occurs. But to Frank's point, you know, we've got our slogan and our strategy around Mexico made simple to really provide the necessary tools, facilities, and capabilities, whether it's on the border with our facilities, which are across a number of gateways, or with the carriers in the interior of Mexico that we've had for years, all CTPAT certified.

Frank: On top of that looking for any rebound when that occurs but to Frank's point, we've got our slogan and our strategy around Mexico made simple to really provide the necessary tools facilities and capabilities, whether it's on the border with our facilities, which are across a number of gateways are with us or with.

Frank: Carriers in the interior in Mexico that we've had for years RCT Pat certified we really think we've got a great framework when things bounce back we think we'll be in a great position to do that we've added some dedicated salespeople that are in the interior.

Joseph J. Beacom: We really think we've got a great framework. When things bounce back, we think we'll be in a great position to do that. We've added some dedicated salespeople that are in the interior. So if an agent has an opportunity but doesn't want to make the trip south of the border, we've got resources there to help them along. So we think we're in the right place with the right strategy going forward and just kind of waiting for a few things to turn our way.

Frank: If an agent is an opportunity but doesn't want to make the trip south of the border. We've got resources there to help them along so we think we're in the right place with the right strategy going forward.

Frank: Just kind of waiting for a few things to turn.

Frank: Turn our way, yes, Matt we've got agents down there that we're introducing obviously to the cross border initiatives, maybe folks that haven't.

Joseph J. Beacom: Matt, we've got agents down there that we're introducing, obviously, to the cross-border initiative, maybe folks that haven't really engaged in cross-border or have done it a long time ago. So tell us a little bit about what you're doing there. Yeah, it's been a big push for us, Frank. You know, we really need to get the agents familiar with Mexico. You know, you've got customs down there going over borders. It can be a little bit scary if it's not something that you're used to doing.

Unknown Attendee: Really engaged in cross border have done it a long time ago, So tell us a little bit about what youre doing there, yes, it's been a big push for spring.

We really need to get the agents too familiar with Mexico.

Speaker Change #175: You've got the customers down there going over borders it can be a little bit scary, if it's not something that youre used to do and so we're really trying to take that fear away from them. So the field is out there we're meeting with agents here in the spring we got done with.

Matt Daniger: So we're really trying to take that fear away from them. The field is out there. We're meeting with agents here in the spring. We just finished, I guess, a round robin of agent meetings throughout the country, talking about Mexico and how we can help them grow their business down there. It's a tremendous opportunity that I think everybody in the industry is looking at right now and jumping into. So we're really just trying to get them comfortable with it and lead them to the table and take that fear out of it. We've got Mexico 101 classes to get them coached up on what the operating expectation is down there, how to sell it, and get in front of their customers.

Speaker Change #175: I guess, a round robin of agents agent meetings throughout the throughout the country talking about Mexico.

Speaker Change #175: And how we can help them grow their business down there is tremendous opportunity that I think everybody in the industry is looking at right now and jumping into so we're really just trying to get them comfortable with them and lead them to the table and take that fear out of it.

Speaker Change #175: We've got Mexico 101 classes.

Speaker Change #175: Get them coached up on what the.

What the operating.

Speaker Change #175: Expectation is down there how to sell it getting in front of their customers. So it's really been a full push throughout the entire sales team.

Matt Daniger: So it's really been a full push throughout the entire sales team to get in front of the agents. And we've identified a little over 150 agents right now that we're really pushing, and we're coming up with opportunities. And I wouldn't say the market's great right now to be chasing those, but crawl, walk, run. And we're really starting to crawl right now.

Speaker Change #175: To get in front of the agency we've identified.

Little over 150, I think right now.

Speaker Change #175: So, we're really pushing and we're coming up with opportunities.

Speaker Change #175: I wouldn't say the market is great right now.

Speaker Change #175: To be chasing those but.

Speaker Change #175: Crawl walk run and we're really starting to crawl right now so I think as the economy pushes back we should be in really good shape to take advantage of that.

Matt Daniger: So I think as the economy pushes back, we should be in really good shape to take advantage of that. Appreciate all that. Thanks, guys.

Speaker Change #175: I appreciate it thanks guys.

Operator: Thank you. We will have the last caller for today's conference. From the line of Stephanie Moore of Jeffries, your line is now open. Hi, good afternoon.

Speaker Change #176: Thank you we will have the last caller for today's conference from the line of Stephanie <unk> of Jefferies. Your line is now open.

Stephanie Lynn Benjamin Moore: Thank you. I wanted to maybe touch back a little bit on just kind of where we are in the cycle and the overall freight environment. I appreciate your color, the color you provided about, you know, seeing some improvement but not going to call it a full inflection.

Stephanie: Hi, good afternoon. Thank you.

Stephanie Lynn Benjamin Moore: I wanted to maybe touch touch back a little bit on just kind of where we are in the cycle on the overall freight environment I. Appreciate your color. The color you provided about seeing some improvement, but not going to call a colon collection I'd love to get your thoughts on.

Stephanie Lynn Benjamin Moore: I'd love to get your thoughts on the, you know, answering the "what's it going to take?" question, meaning does capacity need to keep bleeding lower at the rate that we're seeing now, or does it need to accelerate? Is this a demand shock? I know we all have our own crystal balls, but I do appreciate your opinions on what you see. Thank you.

On the answering what's it going to take questions, meaning this capacity you need to keep going lower.

Speaker Change #177: At the rate that we're seeing now or is there any accelerated demand shock.

Speaker Change #178: We all have our own crystal ball, but I do appreciate your your opinions on what you see I appreciate it. Thank you.

Frank A. Lonegro: Thank you. I think it's ultimately a couple of things that you referenced. I do think capacity needs to continue to come out. To Joe's earlier point, it's hard to know the exact number of trucks that came in during the COVID, Induced Era. If you look at just the number of new authorities that were granted during that period of time, it was significant.

Speaker Change #178: Sure. Thanks, Stephanie Thank you.

Speaker Change #178: I think it is ultimately a couple of the things that you referenced I do think capacity needs to continue to come out to Joe's earlier point, it's hard to know the exact number of trucks that came in during the Covid.

Speaker Change #179: Induced era, if you look at the just the number of new authorities that were granted during that period of time it was significant.

Frank A. Lonegro: We also believe that it was largely smaller carriers coming into the business who were able to, you know, buy a used truck and get into the business, given the fact that the rate was so significantly greater than it had been in the pre-pandemic period. And so folks made a lot of money during that time period of, you know, kind of the second half of 20, 21, 22, even into the first half of 23.

Speaker Change #179: I also believe that.

Speaker Change #179: It was largely smaller carriers coming into the business that we're able to.

Speaker Change #179: Bye bye used truck and get into the business given the fact that the rate was so significantly greater than it had been in the pre pandemic period.

Speaker Change #179: So folks made a lot of money during that time period of kind of second half of 2021 'twenty two even into the first half of 'twenty. Three so there is some staying power in that capacity. We do think there is a significant amount of truck capacity rather than <unk>.

Frank A. Lonegro: So there is some staying power in that capacity. We do think there is a significant amount of truck capacity, rather than authorities, that is on the sidelines, and appropriately so, given the operating environment that we're in. You know, continuing growth, whether it's on the good side of GDP or IDP, is certainly going to be helpful. Not that we wish for hurricanes or other things like that, but you could end up with something that helps us a little bit on the demand side that's unexpected.

Speaker Change #179: <unk> that is on the sidelines and appropriately so given the operating environment that we're in.

Speaker Change #179: Continuing growth whether it's on the good side of GDP or IDP is certainly going to be helpful.

Speaker Change #179: Not that we wish for hurricanes or other things like that but you could end up with something that helps.

Helps us a little bit on the demand side thats unexpected, but I think it's going to be continued growth of the economy and it's going to be a return to our goods preferenced by the consumer and then continuing to have capacity.

Frank A. Lonegro: But I think there's going to be continued growth in the economy, and there's going to be a return to a goods preference by the consumer, and then continuing to have capacity come back out of the equation. And while all of that's happening, we're going to remain very, very focused on the strategic initiatives that we have, and other things that we're, you know, talking about internally that are more secular in nature, rather than cyclical in nature, and we're going to continue to push for that agent-BCO relationship that you heard Joe and Matt talk about.

Speaker Change #179: Come back out of the equation and while all of that's happening we're going to remain very very focused on the strategic initiatives that we have and other things that we're talking about internally that are more secular in nature rather than cyclical.

Nature, and we're going to continue to push for that agent <unk> relationship that you heard Joe and Matt talk about <unk>.

Frank A. Lonegro: And we're going to continue to keep an eye on costs, and as I mentioned in the last call, we're going to be stronger as a result of this trough and come out the other side really well. Unknown Speaker And then just to follow up on the conversations that you're having with some of your large customers, do you feel like there's an overall lack of confidence kind of just holding on the sidelines in a lot of cases? Because you're right.

Speaker Change #179: Continuing to keep an eye on costs and as I mentioned I think in the last call we're going to be stronger.

As a result of this trough.

Speaker Change #179: And come out the other side of it.

Speaker Change #180: Got it no I appreciate that and then just to follow up on the conversations that youre, having with some of your large customers do you feel like it.

Overall lack of confidence kind of holding on the sidelines and a lot of cases, because you are right.

Frank A. Lonegro: I mean, I think we can all speak to the secular challenge ahead of us. So we'd love to hear maybe some of the commentary that maybe they're hearing in this environment more on the demand side. Yeah, and so a couple things maybe. We certainly have others around the table that can chime in on this one. I mean, being a spot market player, you know, we're generally going to be on the cyclical end of things.

Speaker Change #181: Secular challenges ahead of us so we'd love to get any worse.

Speaker Change #182: Commentary that maybe you're hearing in this environment on the demand side.

Yes, so a couple of things, maybe we and certainly have have others around the table that can chime in on this one I mean being a spot market player.

Speaker Change #183: We're generally going to be on the cyclical end of things.

Frank A. Lonegro: You know, as folks went through the bid cycle, I think there was a lot of commentary about holding the line and then prices dropped, and people locked in the volume. So I do think that the contract piece of the market probably took some rate decreases, and that would be consistent with the commentary that we've heard publicly from folks. And if you think about where we are, we play in a bit of a different element of the cycle.

Speaker Change #183: As folks went through the bid cycle.

Speaker Change #184: I think there was a lot of commentary about holding the line and then.

Speaker Change #184: And then prices dropped and people locked in the volume. So I do think that the the contract piece of the market probably took some rate decreases and that would be consistent with the commentary that we've heard publicly from folks.

Speaker Change #184: And if you think about where we are we playing a bit of a different element of the cycle. We are beginning to see it come off of the bottom of the rate.

Frank A. Lonegro: We are beginning to see it come off the bottom. The rate inflections that we've talked about are helpful there. I think customers are beginning to come back to us. You know, we've had instances both in the areas that Jim Applegate handles as well as the areas that Matt handles where, you know, maybe we were, I'll say, underbid in the competitive process back in the spring.

Speaker Change #184: Inflections that we've talked about are helpful. There I think.

Speaker Change #184: Customers are beginning to come back to us.

Speaker Change #184: Had instances both on the.

Unknown Attendee: The areas, Jim Applegate handled as well as the areas that Matt handles where maybe we were I'll say under bid in the competitive process back in the in the spring folks are coming back to US which is nice to see I think that is.

Frank A. Lonegro: Folks are coming back to us, which is nice to see. I think that is almost directly related to our service product and how good we are at what we do and the professionalism of the BCOs and the approved carriers that we have. Like, we do a really good job, and we make sure we do a really good job. But that good service comes at a bit of a premium. And so we've got to make sure that, you know, we stay true to that and that we don't bottom fish in terms of rates. And that's been a real hallmark of the Landstar model. And it's not something that, you know, I intend for us to change.

Unknown Attendee: Almost directly related to our service product and how good we are at what we do and the professionalism of the <unk> and the approved carriers that we have.

Speaker Change #185: We do a really good job and we make sure we do a really good job, but that could service comes at a bit of a premium and so we've got to make sure that we stay true to that and that we don't bottom fish in terms of rates and thats been a real hallmark of the Landstar model and it's not something that I intend for us to change that.

Speaker Change #185: And Jim you guys got thoughtfulness, yes, I'll jump in real quick.

Frank A. Lonegro: But Matt and Jim, you guys have thoughts on this? Yeah, I'll jump in real quick. As a part of normal business here at the start of July, we take a look back at the first part of the year and kind of set the level for the next. Back half of the year and, kind of, early on the 25th, and through that, we go through all of our top agents, all of our million-dollar agents and, you know, get some input from what they're hearing from their customers and what we can expect. And I still think there's still quite a bit of pessimism out there. You've got the election coming up.

Unknown Attendee: As part of normal business here at the start of July we we take a look back at the first part of the year and kind of level set for the next.

Unknown Attendee: Back half of the year than kind of an early on the 25 and through that we go through all of our top agents all of our million dollar agents.

Unknown Attendee: Get some input from what what they're hearing from their customers and what we can expect.

Matt Daniger: There's still talk of pending recessions coming up, so I think going through the backside of this year, we're not overly optimistic for that big tide to come and switch the cycle. It can't come soon enough for all of us, but I would say in the near term through this year, most of the general feedback is that they're not overly optimistic. And I'd echo that, and I would say specifically the consumer side of it, very rate sensitive right now, very rate driven, to Frank's point about valuing service versus rates.

Unknown Attendee: And I still think theres still quite a bit of pessimism out there you've got the election coming up there is there is still talk of pending recession is coming up so I think going through the back side of this year, we're not overly optimistic for that big tied to come in and switch the cycle. It can't come soon enough for all of us but.

Unknown Attendee: I would say in the near term through this year.

Unknown Attendee: Most of the general feedback is they're not overly optimistic.

Speaker Change #186: And I would echo that I would say specifically the consumer side of it very rate sensitive right now very rate driven to Frank's point about.

Frank: Without valuing service versus rates. However, I do think some of the end markets over in the spot market specifically around the heavy haul.

Matt Daniger: However, I do think some of the end markets over in the spot market, specifically around the heavy haul area, we're starting to see some of those end markets with some encouraging signs. And I think our agents, you know, the nice thing about our model, our agents are very incentivized to find that, and typically, they find it first. Got it. You said I was the last.

Area, we're starting to see some of those end markets with some encouraging signs and I think our agents. The nice thing about our model. Our agents are very incentivized to find that and typically they find it first.

Frank: I expect our models are kind of continuing to kind of identify those quickly and get us out in front of some of those markets.

Unknown Attendee: I have one last question because no one else has asked it: buy back your appetite. I'd love to get your thoughts here at this level. And I'll be quiet. Thanks, guys. Yeah, hey, no worries.

Speaker Change #189: Got it you said that was left I have one last question because no one else asset buyback appetite love to get your thoughts here at this level and then I'll be quiet thanks, guys.

Frank A. Lonegro: So it was really good to reengage, you know, in buybacks. And I think, as I mentioned on the prior call, we were a little bit blocked out from the market given the CEO transition at the end of the fourth quarter and the beginning of the first quarter. So give us a pass on Q1, but obviously, we're back in the market, and did well. I mean, you know, one of the things that is a hallmark of the Landstar model on capital returns is we're very patient, and we're very opportunistic.

Speaker Change #190: Hey, no worries.

Speaker Change #188: So it was really good to reengage.

Speaker Change #192: And buybacks I think as I mentioned on the prior call.

Speaker Change #187: We're a little bit blocked out from the market given.

Speaker Change #187: CEO transition at the end of the fourth quarter and the beginning of the first quarter. So.

Speaker Change #187: Give us a pass on Q1, but obviously back in the market.

Speaker Change #191: Well I mean, one of the things that is.

Speaker Change #191: The hallmark of the Landstar model capital returns as we are very patient and we're very opportunistic I think we bought well.

Frank A. Lonegro: I think we bought well in the quarter, and you'll see in the queue that, you know, we bought sub-180 on an average basis. So I think we did really well in terms of doing that. And we'll continue to have that opportunistic and patient appetite as we go forward into, into Q3. We have the authorization to do it, but, you know, we're not going to have the money burn a hole in our pockets, so to speak.

Frank A. Lonegro: And we're gonna be real, real thoughtful around how we engage in buybacks. It was nice to raise the dividend 9% today, and that's another way to return capital to shareholders.

In the quarter and Youll see in the Q.

Speaker Change #191: Q that we bought sub $1 80 on an average basis. So I think we did really well in terms of doing that and we will continue to have that opportunistic and patient appetite as we go forward into into Q3, we have the authorization to do it but we're not going to have the money burn a hole in our pocket so to speak and we're going to be real thoughtful around how we engage.

And buybacks it was nice to raise the dividend 9% today.

Speaker Change #191: Another way to return capital to shareholders, we're excited about being able to do that real confidence.

Speaker Change #191: Vote from our perspective in terms of the future.

Operator: And we're excited about being able to do that real confidence vote from our perspective in terms of the future. Appreciate it. Thank you. Thanks, everybody. Thank you. We have the last caller for today's conference from the Linus Katz Group of Wolf Research, Linus Nowel. Hey, this is Jake Laxon again.

Speaker Change #193: I appreciate it. Thank you thanks everybody.

Speaker Change #193: Thank you we have the last caller for today's conference from the line of Scott Group with Wolfe Research. Your line is now open.

Jake lacks: Hey, this is Jake lacks on again, just one follow up.

Jake Laxon: Just one follow-up. Aaron Ocean cargo pricing looks like it took a big step up in M2Q; do you expect that to continue in 3Q?

Speaker Change #193: Okay.

Scott H. Group: In Ocean cargo pricing looks like it took a big step up in <unk> do you expect that.

Speaker Change #194: Continue on <unk> does it.

Operator: Transcripts provided by Transcription Outsourcing, LLC. Transcripts provided by Transcription Outsourcing, LLC. I got it.

Speaker Change #195: And even higher just as the ocean rates picked up through the quarter will just be good to give you a sorting.

Speaker Change #196: Near term expectations there Jake look at your plan lead off man on the call on finishing up now to your point, we had a 39% uptick in our ocean revenue per load from the first quarter second quarter. I think we had a couple of rounds of <unk> paas and stick.

Speaker Change #197: Ours is project based Theres, probably 10 or a dozen so agents.

Jake plan in that space.

Speaker Change #197: We will see the guidance calls for multimode.

Speaker Change #198: Multimode revenue to be relatively flat <unk> to <unk>, so theres not a back embedded in the guidance on the continuation of that ocean rent per load move.

Frank A. Lonegro: Thanks again, guys. At this time, I have no further questions. I would like to turn the call back over to you, sir, for your closing remarks. Thanks, Bill. In closing, while the freight environment remains challenging, we do see some positives in the near term. We are encouraged that truck revenue per load seems to have stabilized and is moving higher, which is potentially a positive sign for the rest of 2024. Regardless of the economic environment, the resiliency of the Landstar variable cost business model continues to generate significant free cash flow. Landstar has always been a cyclical growth company, and we are well positioned to navigate these dynamic times and look forward to higher highs when the freight market turns our way.

Speaker Change #199: Got it thanks again guys.

Speaker Change #200: At this time I show no further questions I would like to turn the call back over to you Sir for closing remarks. Thanks.

Speaker Change #201: Thanks, Paul in closing, while the freight environment remains challenging we do see some positives in the near term. We are encouraged that truck revenue per load seems to have stabilized and is moving higher which is potentially a positive sign for the rest of 2020 for regardless of the economic environment. The resiliency of the Landstar variable cost business model continues to generate significant free.

Speaker Change #201: Cash flow Landstar has always been a cyclical growth company and we are well positioned to navigate these dynamic times and look forward to higher highs when the freight market turns are way. Thank you for joining us. This afternoon. We look forward to speaking with you again on our 2024 third quarter earnings Conference call in late October. Thank you.

Operator: Thank you for joining us this afternoon. We look forward to speaking with you again on our 2024 third quarter earnings conference call in late October. Thank you for joining us on the conference call today. Have a good afternoon. Please disconnect your lines at this time.

Speaker Change #202: Thank you for joining the conference call today have a good afternoon. Please disconnect your lines at this time.