Q4 2024 Landstar System Inc Earnings Call

Today's call is being recorded if you have any objections you may disconnect. At this time joining us today's from Landstar are Franklin Nigro, President and CEO, Jim Applegate, Vice President and Chief corporate sales strategy and specialized freight officer.

Speaker Change: <unk> Dot Vice President and CFO, Joe <unk>, President and length of Landstar system Holdings incorporated.

Speaker Change: Matt Danziger, Vice President and Chief Field sales officer.

Speaker Change: Miller, Vice versa, and Chief safety and operations Officer.

Speaker Change: Now I would like to turn the call over to Jim Todd Sir you may begin.

Jim Todd: Good afternoon, and welcome to Landstar is 2020 for fourth quarter earnings Conference call before we begin let me read the following statement. The following is a safe Harbor statement under the private Securities Litigation Reform Act of 1095 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.

Jim Todd: Asian that relates to Landstar <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 <unk> Form 10-K for 2023 fiscal year described in the section risk factors and other SEC filings from time to time, these risks and uncertainties could cause actual.

Good afternoon, and welcome to Landstar system incorporated year end earnings release Conference call all lines will be in a listen only mode until the formal question and answer session. Today's call is being recorded if you have any objections you may disconnect at this time.

Franklin Nigro: Joining us todays parliaments are our Franklin Nigro, President and CEO, Jim Applegate, Vice President and Chief corporate sales strategy of specialized freight officer, James Dodd, Vice President and CFO, Joe <unk>, President and lunch of Landstar system Holdings incorporated Matt.

Jim Todd: Our 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 I'll now pass it to Lance our CEO Franklin <expletive> for his opening remarks, thanks, Katie and good afternoon, everyone first I want to thank our <unk> in Asia.

<unk>, Vice President and Chief Field sales Officer, Matt.

Jim Todd: <unk> and the Landstar employees, who support them everyday it is unbelievably energizing to engage with our network of entrepreneurs as we work together to position Landstar for the future.

Franklin Nigro: Matt Miller, Vice President and Chief Safety and operations Officer.

Franklin Nigro: Now I would like to turn the call over to Jim Todd Sir you may begin thank you.

Jim Todd: During my first year as CEO of Landstar I've traveled extensively throughout the country meeting with agents in BCS and had been thoroughly impressed with the capability the uniqueness the resiliency and the level of commitment of the independent business owners, who comprise the Landstar network. They are exceptional leaders in our industry and are key to driving.

Jim Todd: Good afternoon, and welcome to Landstar is 2020 for fourth quarter earnings Conference call before we begin let me read the following statement. The following is a safe Harbor statement under the private Securities Litigation Reform Act of 1095 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.

Jim Todd: The continued success of the Landstar business model 2024 was a challenging year in freight transportation, but it was not without success and accomplishment for Landstar as we move into 2025, we continue to be laser focused on accelerating our business model and executing on our strategic initiatives and one major 2024 bright.

Jim Todd: That relates to Landstar <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 <unk> Form 10-K for 2023 fiscal year described in the section risk factors and other SEC filings from time to time, these risks and uncertainties could cause actual.

Jim Todd: Spot I am extremely pleased with the performance of the heavy fall service offering last year, we generated approximately $498 million of heavy haul revenue during the 2020 for fiscal year record revenue performance for Landstar heavy haul.

Speaker Change: 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 I'll now pass it to Lance our CEO Franklin <expletive> for his opening remarks, thanks, Stacy and good afternoon, everyone first I want to thank our <unk> in Asia.

Jim Todd: That achievement was driven by a 9% increase in heavy haul revenue per load and a 3% increase in heavy haul volume.

Jim Todd: Turning more broadly to our core truckload service offering the foundational work we did in 2024 puts us in a great position to leverage the freight environment. When it turns our way. We are also focused on our commitment to continuous improvement in the level of service and support we provide to our customers agents <unk> and carriers each and every day.

Speaker Change: <unk> and the Landstar employees, who support them everyday it is unbelievably energizing to engage with our network of entrepreneurs as we worked together to position landstar for the future.

Speaker Change: During my first year as CEO of Landstar I've traveled extensively throughout the country meeting with agents in BCS and had been thoroughly impressed with the capability the uniqueness the resiliency and the level of commitment of the independent business owners, who comprise the Landstar network.

Jim Todd: Turning to slide five the freight environment in the 2020 for fourth quarter continued to be characterized by relatively soft demand and readily available truck capacity the impact of accumulated inflation on goods.

Speaker Change: They are exceptional leaders in our industry and are key to driving the continued success of the Landstar business model 2024 was a challenging year in freight transportation, but it was not without success and accomplishment for Landstar as we move into 2025, we continue to be laser focused on accelerating our business model and executing on.

Jim Todd: To impact the amount of truckload freight generated in relation to consumer spending.

Jim Todd: Our capacity continued to be readily available with small pockets of supply demand equilibrium and market conditions continue to favor the shipper amidst choppy conditions in the industrial economy.

Speaker Change: Our strategic initiatives and one major 2024 bright spot I am extremely pleased with the performance of the heavy haul service offering last year, we generated approximately $498 million of heavy haul revenue during the 2020 for fiscal year record revenue performance for Landstar heavy haul.

Jim Todd: <unk> that backdrop Landstar revenue performance was admirable in the 2020 for fourth quarter delivering top line results just slightly ahead of the midpoint of our fourth quarter guidance, while earnings per share came in modestly below the midpoint of the guidance, primarily due to some variable contribution margin and insurance and claim cost pressures.

Speaker Change: Achievement was driven by a 9% increase in heavy haul revenue per load and a 3% increase in heavy haul volume.

Jim Todd: Our fourth quarter guidance issued in conjunction with our 2024 third quarter earnings release call for the number of loads hauled via truck to be 4% below to 1% above the 2023 fourth quarter and overall revenue per truckload to be flat to 4% above the 2023 fourth quarter. The actual number of loads hauled via truck.

Speaker Change: Turning more broadly to our core truckload service offering the foundational work we did in 2024 puts us in a great position to leverage the freight environment. When it turns our way. We are also focused on our commitment to continuous improvement in the level of service and support we provide to our customers agents <unk> carriers, each and every day.

Jim Todd: And the 2020 for fourth quarter was three 4% below the 2023 fourth quarter within the lower half of our guidance range actual revenue per truckload in the 2020 for fourth quarter was three 1% above the prior year quarter within the upper half of the guidance range.

Speaker Change: Turning to slide five the freight environment in the 2020 for fourth quarter continued to be characterized by relatively soft demand and readily available truck capacity the impact of accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending truck capacity.

Jim Todd: Our balance sheet continues to be very strong and our capital allocation priorities are unchanged.

Speaker Change: To be readily available with small pockets of supply demand equilibrium and market conditions continue to favor the shipper amidst choppy conditions in the industrial economy.

Jim Todd: Believer in the company's stock buyback program and I'm committed to patiently and Opportunistically executing on our existing authority to benefit our long term stockholders as noted in the release, we deployed over $82 million of capital toward buybacks and repurchased approximately 452000 shares of common stock during the 2020 for fiscal <unk>.

Speaker Change: Considering that backdrop Landstar revenue performance was admirable in the 2020 for fourth quarter delivering top line results just slightly ahead of the midpoint of our fourth quarter guidance, while earnings per share came in modestly below the midpoint of the guidance, primarily due to some variable contribution margin and insurance and claim cost pressures.

Jim Todd: Here in the fourth quarter, given the shorter open window period, and the Trump bump experienced in the equity markets, we did not deploy significant capital towards buybacks in the quarter, but declared a $2 per share special dividend.

Speaker Change: Our fourth quarter guidance issued in conjunction with our 2024 third quarter earnings release call for the number of loads hauled via truck to be 4% below to 1% above the 2023 fourth quarter and overall revenue per truckload to be flat to 4% above the 2023 fourth quarter. The actual number of loads hauled via.

Jim Todd: We continue to invest through the cycle and leading technology solutions for the benefit of our network of independent business owners and allocated a significant amount of capital in 2024 towards refreshing our fleet of trailing equipment.

Jim Todd: Turning to slide six and looking at our network the scale systems and support inherent in the Landstar model helped to drive the operating results generated during the 2020 for fourth quarter <unk> will get into the details on revenue loadings in rate per load in a moment.

Speaker Change: Truck into 2020 for fourth quarter was three 4% below the 2023 fourth quarter within the lower half of our guidance range actual revenue per truckload in the 2020 for fourth quarter was three 1% above the prior year quarter.

Jim Todd: As noted during previous earnings calls I've been in the transportation sector for most of my career and realize just how important landstar safety culture is to our continued success.

Speaker Change: The upper half of the guidance range.

Speaker Change: Our balance sheet continues to be very strong and our capital allocation priorities are unchanged I am a strong believer in the company's stock buyback program and I'm committed to patiently and opportunistically executing on our existing authority to benefit our long term stockholders as noted in the release, we deployed over $82 million of capital towards buybacks.

Jim Todd: <unk> performance is a direct result of the professionalism of the thousands of Landstar <unk> operating safely everyday and the agents and employees who worked to reinforce the critical importance of safety at Landstar.

Jim Todd: I'm proud to report an accident frequency rate of 0.59 dot reportable accidents per million miles during the 2020 for fiscal year, an improvement of approximately 2% as compared to the 2023 fiscal year. This is an impressive operating metric that speaks to the strength skill talent and dedication of our <unk>.

Speaker Change: And repurchased approximately 452000 shares of common stock during the 2020 for fiscal year in the fourth quarter, given the shorter open window period, and the Trump bump experienced in the equity markets, we did not deploy significant capital towards buybacks in the quarter, but declared a $2 per share special dividend.

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

Speaker Change: We continue to invest through the cycle and leading technology solutions for the benefit of our network of independent business owners and allocated a significant amount of capital in 2024 towards refreshing our fleet of trailing equipment.

Jim Todd: Turning to slide seven and the capacity side <unk> truck count decreased sequentially in the fourth quarter from the third quarter by 184 trucks consistent with our expectations of desio declines continuing into the fourth quarter on a year over year basis Bcl truck count has decreased approximately 10% since the end of the 2020.

Speaker Change: Turning to slide six and looking at our network the scale systems and support inherent in the Landstar model helped to drive the operating results generated during the 2020 for fourth quarter <unk> will get into the details on revenue loadings in rate per load in a moment.

Jim Todd: <unk> fourth quarter consistent with the year over year truck revenue decline experienced in fiscal 2024. It is typical to incur turnover and desio truck count and a low rate per load environment.

Speaker Change: As noted during previous earnings calls I've been in the transportation sector for most of my career and realized just how important landstar safety culture is to our continued success.

Jim Todd: <unk> turnover also continues to be influenced by the significant increase in the cost to maintain and operate a truck today compared to before the pandemic. We would expect bcl count to continue to decline in the first quarter given the challenging operating environment faced by many truck owner operators and the typical seasonality in truck count experienced from the fourth quarter to the first quarter.

Speaker Change: 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 worked to reinforce the critical importance of safety at Landstar.

Speaker Change: I'm proud to report an accident frequency rate of 0.59 dot reportable accidents per million miles during the 2020 for fiscal year, an improvement of approximately 2% as compared to the 2023 fiscal year. This is an impressive operating metric that speaks to the strength skill talent and dedication of our <unk>.

Jim Todd: I am excited about <unk>.

Speaker Change: Recent promotion to Chief safety, and operations officer and him putting a fresh set of eyes on how we recruit develop and retain <unk> I will now pass the call back to Jay to walk you through the 2020 for fourth quarter financials in more detail.

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

Speaker Change: Thanks, Frank turning to slide nine as Frank mentioned earlier overall truck revenue per load increased three 1% in 2020 for fourth quarter compared to the 2023 fourth quarter entirely attributable to an 8% increase in onsite. It platform revenue per load revenue per load on loads hauled via van equipment decreased <unk>, 2% year over year on a sequential.

Speaker Change: Turning to slide seven and the capacity side <unk> truck count decreased sequentially in the fourth quarter from the third quarter by 184 trucks consistent with our expectations of Bcl declines continuing into the fourth quarter on a year over year basis Bcl truck count has decreased approximately 10% since the end of the 2020.

Speaker Change: Full basis truck revenue per load increased 1% in the fourth quarter versus the third quarter, we consider the 1% sequential increase in line with pre pandemic normal seasonality a positive sign given the strong launch point of the 2024 third quarter, which saw a truck revenue per load increased three 2% sequentially and.

Speaker Change: <unk> fourth quarter consistent with the year over year truck revenue decline experienced in fiscal 2024. It is typical to incur turnover in <unk> truck count and a low rate per load environment.

Speaker Change: In comparison to overall truck revenue per load, we consider revenue per mile on those hard by PCR trucks, a pure reflection of market pricing as it excludes fuel surcharges billed to customers that are paid 100% of the bcl.

Speaker Change: <unk> turnover also continues to be influenced by the significant increase in the cost to maintain and operate a truck today compared to before the pandemic. We would expect bcl count to continue to decline in the first quarter given the challenging operating environment faced by many truck owner operators and the typical seasonality in truck count experienced from the fourth quarter to the first quarter.

Speaker Change: 2024 fourth quarter revenue per mile on that side of the platform equipment hauled by <unk> was 17% above 2023 fourth quarter, while revenue per mile and van equipment. All by <unk> was 3% above the 2023 fourth quarter <unk>.

Speaker Change: I am excited about <unk> recent promotion to chief safety and operations officer and him putting a fresh set of eyes on how we recruit develop and retain <unk> I will now pass the call back to Jay to walk you through the 2020 for fourth quarter financials in more detail.

Speaker Change: <unk> deeper into seasonal trends revenue per mile on loads hauled by <unk> on side of the platform equipment increased 4% from September to October increased 4% from October to November and increase yet another 4% from November to December outperforming pre pandemic typical seasonal patterns each month in the quarter with respect to loads hauled by <unk> on van equipment perform.

Jay: Thanks, Frank turning to slide nine as Frank mentioned earlier overall truck revenue per load increased three 1% in 2020 for fourth quarter compared to the 2023 fourth quarter entirely attributable to an 8% increase in <unk> platform revenue per load revenue per load on loads hauled via van equipment decreased <unk>, 2% year over year on a sequential.

Speaker Change: <unk> versus pre pandemic typical seasonal patterns was choppy or revenue per mile on van equipment hauled by <unk> increased 1% from September to October outperforming these trends decreased 1% from October to November underperforming these trends and increased 3% from November to December again, outperforming it should be noted that month to month seasonal trends on onsite platform equipment or Jen.

Jay: <unk> truck revenue per load increased 1% in the fourth quarter versus the third quarter, we consider the 1% sequential increase in line with pre pandemic normal seasonality a positive sign given the strong launch point of the 2024 third quarter, which saw a truck revenue per load increased three 2% sequentially.

Speaker Change: The less predictable compared to that of van equipment is relative volatility is often due to the mix between heavy specialized loads and standard flatbed volume as Frank alluded to we've experienced strong recent performance in our heavy haul service offering have you all revenue was up an impressive 24% year over year in the fourth quarter significantly outperforming core truckload revenue have you all know.

Jay: In comparison to overall truck revenue per load, we consider revenue per mile on those hard by desio trucks, a pure reflection of market pricing as it excludes fuel surcharges billed to customers that are paid 100% of the bcl.

Speaker Change: <unk> were up approximately 8% year over year, while revenue per heavy haul load increased 15% 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 increase from approximately 33% during the 2023 fourth quarter to approximately 38% in the 2024 quarter non truck.

Jay: 2024 fourth quarter revenue per mile on that side of the platform equipment hauled by <unk> was 17% above for 2023 fourth quarter, while revenue per mile and van equipment. All by <unk> was 3% above the 2023 fourth quarter <unk>.

Jay: Delving deeper into seasonal trends revenue per mile on loads hauled by <unk> on side of the platform equipment increased 4% from September to October increased 4% from October to November and increase yet another 4% from November to December outperforming pre pandemic typical seasonal patterns each month in the quarter with respect to loads hauled by <unk> on van equipment.

Speaker Change: Transportation service revenue in 2020 for fourth quarter was 20% or $18 million above the 2023 fourth quarter. The increase in non truck transportation revenue was mostly due to a 23% increase in ocean revenue per shipment and a 15% increase in ocean volumes, partially offset by 25% decrease in intermodal revenue primarily driven.

Jay: <unk> versus pre pandemic typical seasonal patterns was choppy or revenue per mile on van equipment hauled by <unk> increased 1% from September to October outperforming these trends decreased 1% from October to November underperforming these trends and increased 3% from November to December again, outperforming it should be noted that month to month seasonal trends on inside of platform equipment or <unk>.

Speaker Change: By a 14% decline in revenue per load and a 12% decline in loadings.

Speaker Change: Turning to slide 10, we provided revenue share by commodity and year over year change in revenue by commodity transportation and logistics segment revenue was up 1% year over year on a 5% increase in revenue per load, partially offset by a 3% decrease in loadings as compared to the 2023 fourth quarter within our largest commodity commodity category consumer.

Jay: The less predictable compared to that of van equipment.

Jay: Relative volatility is often due to the mix between heavy specialized loads and standard flatbed volume.

Franklin Nigro: As Frank alluded to we've experienced strong recent performance in our heavy haul service offering have you all revenue was up an impressive 24% year over year in the fourth quarter significantly outperforming core truckload revenue have you all loadings were up approximately 8% year over year, while revenue per heavy haul load increased 15% year over year. This represented a mixed tailwind to our <unk> platform.

Speaker Change: Durables revenue declined 1% year over year on a 6% decline in volumes, partially offset by a 5% increase in revenue per load.

Speaker Change: Revenue across our top five commodity categories, which collectively make up about 68% of our transportation revenue was down 4% compared to the 2023 fourth quarter, 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%.

Franklin Nigro: Revenue per load is heavy haul revenue as a percentage of the category increase from approximately 33% during the 2023 fourth quarter to approximately 38% in the 2024 quarter non truck transportation service revenue in the 2020 for fourth quarter was 20% or $18 million above the 2023 fourth quarter the increase in non truck trans.

Speaker Change: Fourth quarter to the 2020 for fourth quarter total loadings and machinery were approximately equal.

Speaker Change: Automotive equipment and parts decreased 3% building products increased 5% and hazardous materials decreased 11%. 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 24% from the 2023 fourth quarter as we've mentioned many times before.

Franklin Nigro: Rotation revenue was mostly due to a 23% increase in ocean revenue per shipment and a 15% increase in ocean volumes, partially offset by 25% decrease in intermodal revenue, primarily driven by a 14% decline in revenue per load and a 12% decline in loadings.

Speaker Change: Landstar is a truck capacity provider to other trucking companies three pls and truck brokers during periods of tight truck capacity those other freight transportation providers reach out the 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 as reflected in almost all of our commodity groupings <unk>.

Franklin Nigro: Turning to slide 10, we provided revenue share by commodity and year over year change in revenue by commodity transportation logistics segment revenue was up 1% year over year on a 5% increase in revenue per load, partially offset by a 3% decrease in loadings as compared to the 2023 fourth quarter within our largest commodity commodity category consumer.

Speaker Change: <unk> or substitute line haul service offering overall revenue hauled on behalf of other truck transportation companies in the 2020 for fourth quarter was 16% below the 2023 fourth quarter, a clear indicator of the capacity is readily accessible in the marketplace revenue hauled on behalf of other truck transportation companies was 13% and 15% of transportation.

Franklin Nigro: Durables revenue declined 1% year over year on a 6% decline in volumes, partially offset by a 5% increase in revenue per load.

Franklin Nigro: Revenue across our top five commodity categories, which collectively make up about 68% of our transportation revenue was down 4% compared to the 2023 fourth quarter, 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.

Speaker Change: Revenue in 2024, and 2023 fourth quarters, respectively, even with ups and downs in various customer categories. Our business remains highly diversified with over 23000 customers, none of which contributed over 7% of our revenue in the 2020 for fiscal year.

Franklin Nigro: Quarter to the June 20 for fourth quarter total loadings and machinery were approximately equal.

Franklin Nigro: Automotive equipment and parts decreased 3% building products increased 5% and hazardous materials decreased 11%. 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 24% from the 2023 fourth quarter as we've mentioned many times before.

Speaker Change: Turning to slide 11 in 2020 for fourth quarter gross profit was $109 4 million compared to gross profit of $124 6 million in 2023 fourth quarter gross profit margin was 9% of revenue in the 2020 for fourth quarter compared to a gross profit margin of 10, 3% in the corresponding period of 2023 and 2020 for fourth quarter variable.

Franklin Nigro: Landstar is a truck capacity provider to other trucking companies three 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 than during times of more readily available truck capacity the amount of freight hauled by landstar on behalf of other truck transportation companies as reflected in almost all of our commodity groupings <unk>.

Speaker Change: Contribution was $166 5 million compared to $178 1 million in the 2023 fourth quarter variable contribution margin was 13, 8% of revenue in the 2020 for fourth quarter compared to 14, 8% in the same period last year. The decrease in variable contribution margin compared to the 2023 fourth quarter was primarily attributable to a deal.

Franklin Nigro: <unk> or substitute line haul service offering overall revenue hauled on behalf of other truck transportation companies in the 2020 for fourth quarter was 16% below the 2023 fourth quarter, a clear indicator of the capacity is readily accessible in the marketplace revenue hauled on behalf of other truck transportation companies was 13% and 15% of transportation.

Speaker Change: <unk> variable contribution margin on revenue generated by truck brokerage carriers as the rate paid to truck brokerage carriers was 103 basis points higher than the rate paid in the 2023 fourth quarter and the mixed headwind 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.

Franklin Nigro: Revenue and <unk> 24 in 2023 fourth quarters, respectively, even with ups and downs in various customer categories. Our business remains highly diversified with over 23000 customers, none of which contributed over 7% of our revenue in the 2020 for fiscal year.

Speaker Change: Principally certain certain components of selling general administrative costs in comparison to smaller gross profit and variable contribution basis. Other operating costs were $14 $6 million in the 2020 for fourth quarter compared to $13 2 million. In 2023. This increase was primarily due to an increased provision for contractor bad debt and decreased gains on <unk>.

Franklin Nigro: Turning to slide 11 in 2020 for fourth quarter gross profit was $109 4 million compared to gross profit of $124 6 million in 2023 fourth quarter gross profit margin was 9% of revenue in the 2020 for fourth quarter compared to a gross profit margin of 10, 3% in the corresponding period of 2023 and 2020 for fourth quarter variable.

Speaker Change: <unk> of used trailing equipment.

Speaker Change: Insurance and claims costs were $30 $1 million in 2020 for fourth quarter compared to $27 3 million in 2023 total insurance and claims costs were six 7% of <unk> revenue in 2020 for fourth quarter as compared to 6% in the 2023 fourth quarter the increase in insurance and claim costs as compared to 2023 was primarily.

Franklin Nigro: <unk> was $166 5 million compared to $178 1 million in the 2023 fourth quarter variable contribution margin was 13, 8% of revenue in the 2020 for fourth quarter compared to 14, 8% in the same period last year. The decrease in variable contribution margin compared to 2023 fourth quarter was primarily attributable to a deal.

Speaker Change: To increased severity on cargo claims primarily due to cargo theft and fraud in the supply chain and increased net unfavorable development of prior year auto liability claim estimates, partially offset by decreased Bcl miles traveled during the 2024 period.

Franklin Nigro: Greece variable contribution margin on revenue generated by truck brokerage carriers as the rate paid to truck brokerage carriers was 103 basis points higher than the rate paid in the 2023 fourth quarter and the mix headwind 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.

Speaker Change: During the 2024 and 2023 fourth quarters insurance and claims costs included $2 $2 million and $900000 of net unfavorable adjustment in the prior year claim estimates respectively.

Speaker Change: Selling general and administrative costs were $55 $1 million in 2020 for fourth quarter compared to $52 7 million in 2023 fourth quarter. The increase in selling general and administrative costs were primarily attributable to increased information technology costs and an increased provision for customer bad debt, partially offset by decreased provisions for compensation.

Franklin Nigro: Principally certain certain components of selling general and administrative costs in comparison to smaller gross profit and variable contribution basis. Other operating costs were $14 $6 million in the 2020 for fourth quarter compared to $13 2 million. In 2023. This increase was primarily due to an increased provision for contractor bad debt and decreased gains on sale.

Speaker Change: Under our variable compensation programs depreciation and amortization was $12 $7 million in 2020 for fourth quarter compared to $13 $7 million in 2023. The decrease was primarily due to decreased depreciation on software applications, partially offset by increased depreciation on the company's trailer fleet.

Franklin Nigro: <unk> of used trailing equipment.

Franklin Nigro: Insurance and claims costs were $30 $1 million in 2020 for fourth quarter compared to $27 3 million in 2023 total insurance and claims costs were six 7% of <unk> revenue in the 2020 for fourth quarter as compared to 6% in the 2023 fourth quarter the increase in insurance and claim costs as compared to 2023 was primarily attributed.

Speaker Change: The effective income tax rate was 21, 4% in 2020 for fourth quarter compared to an effective income tax rate of 24, 1% and 23 fourth quarter. The decrease in the effective income tax rate was due to the favorable impact of certain state income tax items. During the 2024 period turned.

Franklin Nigro: To increase severity on cargo claims primarily due to cargo theft and fraud in the supply chain and increased net unfavorable development of prior year auto liability claim estimates, partially offset by decreased Bcl miles traveled during the 2024 period.

Speaker Change: Turning to slide 13, and looking at our balance sheet. We ended the quarter with cash and short term investments of $567 million cash flow from operations for the 2020 for fiscal year was $287 million in cash capital expenditures were $31 million. The company continues to return significant significant amounts of capital back to stockholders with a 120.

Franklin Nigro: During the 2024 and 2023 fourth quarters insurance and claims costs included $2 $2 million and $900000 of net unfavorable adjustments to prior year claim estimates, respectively, selling general and administrative costs were $55 $1 million in the 2020 for fourth quarter compared to $52 7 million in 2023 fourth quarter.

Speaker Change: Dividends paid in approximately $81 million of share repurchases during the 2020 for fiscal year. The strength of our balance sheet is a testament to the cash generating capabilities of the Landstar model back to you Frank.

Franklin Nigro: The increase in selling general and administrative costs were primarily attributable to increased information technology costs and an increased provision for customer bad debt, partially offset by decreased provisions for compensation under our variable compensation programs depreciation and amortization was $12 $7 million in the 2020 for fourth quarter compared to $13 $7 million in 2023.

Speaker Change: Thanks J T.

Speaker Change: Through the first quarter, we anticipate that month over prior year month comparisons may become more challenging as both the number of loads hauled via truck and truck revenue per load outperform normal seasonality. During the 2020 for first quarter. As an example last year truck revenue per load increased from fiscal January to fiscal <unk>.

Franklin Nigro: This decrease was primarily due to decreased depreciation on software applications, partially offset by increased depreciation on the Companys trailer fleet.

Speaker Change: Rory by 60 basis points significantly outperforming the typical 160 basis point decrease.

Franklin Nigro: Effective income tax rate was 21, 4% in 2020 for fourth quarter compared to an effective income tax rate of 24, 1% and 23 fourth quarter. The decrease in the effective income tax rate was due to the favorable impact of certain state income tax items during the 2024 period.

Speaker Change: Looking at historical seasonality from Q4 to Q1 pre pandemic patterns would normally yield a 5% decline in the number of loads hauled via truck and a 4% decline in truck revenue per load, yielding a lower topline sequentially on the rate side in fiscal January truck revenue per load has trended reasonably in la.

Turning to slide 13, and looking at our balance sheet. We ended the quarter with cash and short term investments of $567 million cash flow from operations for the 2020 for fiscal year was $287 million in cash capital expenditures were $31 million. The company continues to return significant significant amounts of capital back to stockholders with a 120.

Speaker Change: One with seasonal pre pandemic patterns in terms of truck volumes during fiscal January our truck volumes trended slightly ahead of normal sequential month to month patterns based on pre pandemic seasonal performance trends. However, we did experience some softness during last fiscal week of January.

Franklin Nigro: <unk> million dollars of dividends paid and approximately $81 million of share repurchases. During the 2020 for fiscal year. The strength of our balance sheet is a testament to the cash generating capabilities of the Landstar model back to you Frank.

Speaker Change: It was more pronounced on Bcl dispatch loadings as compared to truck brokerage loadings, we attribute the softness experienced during the last week of the month to the severe winter weather that recently cross the entire country and southern California fires.

Franklin Nigro: Thanks, J T. As we progressed through the first quarter, we anticipate that month over prior year month comparisons may become more challenging as both the number of loads hauled via truck and truck revenue per load outperform normal seasonality. During the 2020 for first quarter. As an example last year truck revenue per load increased from <unk>.

Speaker Change: One other point is worthy of mention with the change in the administration. We like many are looking for visibility into policy shifts that may have an impact on north American freight transportation to be clear our first quarter guidance does not anticipate any potential negative impacts from tariffs.

Franklin Nigro: Fiscal January to fiscal February by 60 basis points significantly outperforming the typical 160 basis point decrease looking.

Speaker Change: Turning to slide 15, our year over year expectations for the 2025 first quarter are the truckload volumes will be in a range of 7% below to 2% below the 2020 for first quarter and truck revenue per load will be in a range of 2% below to 3% above the 2024 first quarter on a sequential.

Franklin Nigro: Looking at historical seasonality from Q4 to Q1 pre pandemic patterns would normally yield a 5% decline in the number of loads hauled via truck and a 4% decline in truck revenue per load, yielding a lower topline sequentially on the rate side in fiscal January truck revenue per load has trended reasonably in la.

Speaker Change: Basis.

Speaker Change: Our guidance for the first quarter implies a 5% decline to a 1% increase in truckload volumes and a truck revenue per load ranging from down 6% to down 1% versus the 2020 for fourth quarter. We also expect revenue for our non truck loads to be modestly below what we experienced in the 2020 for fourth quarter.

Franklin Nigro: <unk> with seasonal pre pandemic patterns in terms of truck volumes during fiscal January our truck volumes trended slightly ahead of normal sequential month to month patterns based on pre pandemic seasonal performance trends. However, we did experience some softness during the last fiscal week of January.

Speaker Change: <unk> reasonably in line with normal seasonality.

Franklin Nigro: Which was more pronounced on bcl dispatch loadings as compared to truck brokerage loadings.

Speaker Change: Based on these assumptions, we expect revenue in the 2025 first quarter to be in the range of 1.0 Sy.

Franklin Nigro: Attribute the softness experienced during the last week of the month to the severe winter weather that recently across the entire country and southern California fires.

Speaker Change: 107, 5 billion to $1 75 billion.

Speaker Change: And earnings to be in a range of $1 five per share to $1 25 per share. The 2025 first quarter guidance incorporates a variable contribution margin of 14.0% to 14, 3% and insurance and claim costs of approximately 6.0% of estimated <unk>.

Speaker Change: One other point is worthy of mentioned with the change in the administration. We like many are looking for visibility into policy shifts that may have an impact on north American freight transportation to be clear our first quarter guidance does not anticipate any potential negative impacts from tariffs.

Speaker Change: Turning to slide 15, our year over year expectations for the 2025 first quarter are the truckload volumes will be in a range of 7% below to 2% below the 2020 for first quarter.

Speaker Change: Revenue one last point before we take your questions. The 2020 for fourth quarter included a $5 to any tax benefit as a result of favorable state income tax items, we do not expect similar tax benefits to occur in the 2025 first quarter with that Arlene wed like to open the line for questions.

Speaker Change: Revenue per load will be in a range of 2% below to 3% above the 2024 first quarter on a sequential basis.

Speaker Change: Our guidance for the first quarter implies a 5% decline to a 1% increase in truckload volumes and a truck revenue per load ranging from down 6% to down 1% versus the 2020 for fourth quarter. We also expect revenue for our non truck modes to be modestly below what we experienced in the 2020 for fourth quarter.

Speaker Change: Thank you very much Sir at this time, we will begin the question and answer session. If you'd like to ask a question. Please press star one on your Touchtone phone. Once again that is star one to ask a question to cancel your request. Please press star two and our first question comes from the line of Scott Group from Wolfe Research.

Speaker Change: <unk> reasonably in line with normal seasonality based on these assumptions, we expect revenue in the 2025 first quarter to be in the range of 1.0 Sy.

Speaker Change: Your line is now open.

Scott Group: Hey, Thanks afternoon, guys. So wanted to just get your views of where we are in the cycle and some of the data may be getting better I think some of the truckers.

Speaker Change: 107, 5 billion to $1 75 billion.

Speaker Change: And earnings to be in a range of $1 five per share to $1 25 per share. The 2025 first quarter guidance incorporates a variable contribution margin of 14.0% to 14, 3% and insurance and claim costs of approximately 6.0% of estimated <unk>.

Speaker Change: More optimistic.

Speaker Change: I hear from you still have lots of capacity available. So where do you think we are and how do you think about the cycle playing out this year.

Scott Group: Yes, Hey, Scott I guess.

Speaker Change: All of things.

Speaker Change: I'd like to think that we're in the beginning of the next cycle I could also argue that we're at the end of the prior cycles, so somewhere at that kind of bottom ish point I.

Speaker Change: Revenue one last point before we take your questions. The 2020 for fourth quarter includes a five penny tax benefit as a result of favorable state income tax items, we do not expect similar tax benefits to occur in the 2025 first quarter with that Arlene wed like to open the line for questions.

Speaker Change: I think sentiment is clearly more positive we hear that from agents, we hear that from customers.

Speaker Change: I think that there are some.

Speaker Change: <unk> from the election.

Speaker Change: Part of that positive sentiment and Thats sort of a pro America Pro North American stance, there, but certainly there is there is more bullishness in the sentiment that we here at the same time, we're all looking for a level of clarity.

Speaker Change: Thank you very much Sir at this time, we will begin the question and answer session. If you'd like to ask a question. Please press star one on your Touchtone phone. Once again that is star one to ask a question to cancel your request. Please press star two and our first question comes from the line of Scott Group from Wolfe Research.

Speaker Change: From D. C. These days on policy certainly anything that is pro U S or pro North America is good for Landstar.

Speaker Change: We're also watching closely the fed obviously you guys all saw the news today of holding steady there.

Speaker Change: Your line is now open.

Speaker Change: Hey, Thanks afternoon, guys. So wanted to just get your views of where we are in the cycle and some of the data may be getting better I think some of the truckers sounding more optimistic.

Speaker Change: There are interest rate sensitive customer bases in our portfolio housing at all that would be examples of that I would say that the rate environment is ever so slowly starting to turn.

Speaker Change: I hear it from you still have lots of capacity available so.

Speaker Change: I think shippers are taking are trying to take one last bite at the Apple.

Speaker Change: Where do you think we are and how do you think about the cycle playing out this year.

Speaker Change: Matt May have some commentary on that one but it does feel like some capacity needs to continue to come out we're continuing to see that not only in RBC of fleet, but also more broadly so.

Scott: Yes, Hey, Scott I guess, a couple of things.

I'd like to think that we're in the beginning of the next cycle I could also argue that we're at the end of the prior cycles, so somewhere at that kind of bottom ish point I.

Speaker Change: At the beginning of the end of the beginning of the beginning would be a short summary, I don't know if you want put any context around some of the agent conversations and customer conversations you're having.

Scott: I think sentiment is clearly more positive we hear that from agents, we hear that from customers.

Speaker Change: Excuse me.

Scott: I think that there are some.

Speaker Change: I would say the agents are cautiously optimistic we're starting to see some positive things.

Scott: <unk> from the election.

Scott: Part of that positive sentiment sort of a pro America pro North American stance, there, but certainly there is there is more bullishness in the sentiment that we here at the same time, we're all looking for a level of clarity.

Speaker Change: Frank mentioned were positive revenue Q4 haven't seen that in a while.

Speaker Change: Consumer Durables, we were just the negative one in Q4.

Speaker Change: Q3, we were minus three so we've made a little ground there and we've not been a positive.

Scott: From D. C. These days on policy certainly anything that is pro U S or from North America is good for Landstar.

Speaker Change: Quarter on that in several years now so it feels like we're chipping away at that same on building products, we're starting to see a little bit of gain there positive two quarters in a row and revenue growth. So.

Scott: We're also watching closely the fed obviously you guys all saw the news today of holding steady there.

Scott: There are interest rate sensitive customer bases in our portfolio housing and all of that would be examples of that I would say that the rate environment is ever so slowly starting to turn.

Speaker Change: I think we can definitely put our finger on some things that are positive, but on the flip side to Frank's point van rates still continue to struggle and we've got a lot of bands out there. So.

Speaker Change: To Frank's point cautiously optimistic.

Scott: I think shippers are taking are trying to take one last bite at the Apple.

Speaker Change: Okay, and then I wanted to just.

Speaker Change: I'll ask on the Bcl count continues to trend.

Speaker Change: Matt May have some commentary on that one but it does feel like some capacity needs to continue to come out we're continuing to see that not only in our <unk> fleet, but also more broadly so.

Speaker Change: Trend a little bit lower what are you expecting near term and just given like the pretty dramatic drop in bcl.

Speaker Change: Are we comfortable that when the cycle turns that theyre all going to just come right back or do you think we need to we need to do anything different to sort of incent. The BCA has to come back or the cycle is going to play out and theyre going to come back how do you think about that yes got another good question as always I would say that.

Speaker Change: At the beginning of the end of the beginning of the beginning would be a short summary, I don't know if you want to put any context around some of the agent conversations and customer conversations you're having.

Speaker Change: Excuse me.

Speaker Change: I would say the agents are cautiously optimistic we're starting to see some positive things.

Speaker Change: One of the things that was in the prepared remarks, which I think is really important when you look at ending 24 versus ending 23 Bcf count.

Franklin Nigro: Frank mentioned were positive revenue Q4 haven't seen that in a while.

Franklin Nigro: Consumer Durables, we were just a negative one in Q4.

Speaker Change: It's down about 10% when you look at revenue on a year over year basis, its down on the truck side about 10%. If we were an asset carrier you'd be asking about here youre getting the cost out quick enough given the revenue decline. So I mean, I think our model variable is as those costs almost on a self executing basis.

Franklin Nigro: Q3, we were minus three so we've made a little ground there and we've not been a positive.

Franklin Nigro: Quarter on that in several years now so it feels like we're chipping away at that same on building products, we're starting to see a little bit of gain there positive two quarters in a row and revenue growth. So.

Franklin Nigro: I think we can definitely put our finger on some things that are positive but on.

Speaker Change: When we're in cycles like we've been in for the last three.

Franklin Nigro: On the flip side to Frank's point van rates still continue to struggle and we've got a lot of bands out there. So.

Three years.

Speaker Change: When you when you look at the quarterly view.

Speaker Change: The cycle is moderating in other words, we are having fewer on net basis fewer declines in the overall fleet I would say that if you looked at the second half of 2024, we're sort of in the best shape from a lessening of declines since the first half of 2022. So we're seeing the end.

Frank: To Frank's point.

Franklin Nigro: Actually optimistic.

Okay.

Frank: Then I wanted to just.

Frank: I'll ask on the <unk> count continues to trend.

Frank: Trend a little bit lower what are you expecting near term and just given like the pretty dramatic drop in bcl.

Frank: Are we comfortable that when the cycle turns that theyre all going to just come right back or do you think we need to we need to do anything different to sort of incentive to come back or the cycle is going to play out and theyre going to come back how do you think about that yes got another good question as always I would say that.

Speaker Change: The cycle.

Speaker Change: On that one.

Speaker Change: The first quarter is always a negative quarter for us.

Speaker Change: You look at history.

Speaker Change: In terms of the Bcl kind of relative to the fourth quarter, it's a seasonal phenomenon that pretty much happens religiously.

Frank: One of the things that was in the prepared remarks, which I think is really important when you look at ending 24 versus ending 23 Bcf count.

Speaker Change: When you think about what's going to happen as the cycle turns rates clearly our friend and a percentage pay model right is going to be your friend as the right turns positively.

Frank: It's down about 10% when you look at revenue on a year over year basis, its down on the truck side about 10%. If we were an asset carrier you'd be asking about hey are you getting the cost out quick enough given the revenue decline so.

Speaker Change: We're still adding when you dissect the numbers were still adding hundreds of <unk> every quarter, we obviously need that number to continue to go higher rate helps there, but we are still experiencing turnover.

Frank: Our model variable is as those costs almost on a self executing basis when we're in cycles like we've been in for the last three years when.

Speaker Change: At a higher than typical level and we would expect that number to come down as I mentioned in my remarks, I mean met being.

Speaker Change: Newer in his role since the first of December he is going to look at things with all of the passion energy analytics and creativity that you would expect somebody new coming into that that job would and so let me let him take over a little bit and tell you. How he is really attacking both sides of that equation.

Frank: When you when you look at the quarterly view.

Frank: The cycle is moderating in other words, we are having fewer on net basis fewer declines in the overall fleet I would say that if you looked at the second half of 2024, we're sort of in the best shape from a lessening of declines since the first half of 2022. So we're seeing the end.

Speaker Change: Frank and I appreciate the question.

Speaker Change: Last two quarters, where the lowest net losses and trucks that we've seen to Frank's point in the in the most recent 10 quarters. When you look at it on a percentage of the fleet basis, and then we have seen sequential improvement in that turnover rate such that we've gone from a high watermark last year, a 41% down to 34 five.

Frank: Of the cycle on that one.

Frank: The first quarter is always a negative quarter for us if you look at history in terms of the Bcl count relative to the fourth quarter, it's a seasonal phenomenon that pretty much happens religiously.

Speaker Change: 5%.

Speaker Change: We're now which is beneath the.

Frank: When you think about what's going to happen as the cycle turns rates clearly our friend and a percentage pay model rate's going to be your friend as the right turns positively.

The 2019 in 2016 pass freight recession levels. So in terms of retaining the <unk> I think I think we're seeing quite a bit of improvement there over.

Frank: We're still adding when you dissect the numbers were still adding hundreds of <unk> every quarter, we obviously need that number to continue to go higher rate helps there, but we are still experiencing turnover.

Speaker Change: Over the course of this year quarter over quarter, where it's a little more challenging is getting folks in the door as Frank alluded to and.

Speaker Change: And so we are we're digging into.

Speaker Change: Our marketing we're digging into how we are qualifying we're digging into.

Frank: At a higher than typical level and we would expect that number to come down as I mentioned in my remarks, I mean met being.

Speaker Change: We are going through orientation, and then the support that we provide and trying to make it as easy as possible to do business with us that said.

Speaker Change: Newer in his role since the first of December he is going to look at things with all of the passion energy analytics and creativity that you would expect somebody new coming into that that job would and so let me let him take over a little bit and tell you. How he is really attacking both sides of that equation.

Speaker Change: You look back you don't have to look further than 2021, the model really lends itself to growing the fleet incredibly well. We added 873 net trucks 2020, we added 748 2018, we added 903 in 2014, we added 500, so I do think as things.

Frank: Frank and I appreciate the question.

Last two quarters, where the lowest net losses and trucks that we've seen to Frank's point in the in the most recent 10 quarters. When you look at it on a percentage of the fleet basis, and then we have seen sequential improvement in that turnover rates such that we've gone from a high watermark last year, a 41% down to 34 five.

Speaker Change: Progress and we start to see more in the way of rate.

Speaker Change: A better demand environment, we're going to see the model do what it's done for many many years.

Speaker Change: Makes sense. Thank you guys I appreciate the time thanks, Jeff.

Speaker Change: Thank you. Our next question comes from the line of Jason Seidl from Cowen. Your line is now open Hey.

Frank: 5% here now which is beneath the the.

Frank: The 2019 in 2016 pass freight recession levels. So in terms of retaining the BCS I think I think we're seeing quite a bit of improvement there over.

Jason Seidl: Thanks, operator, Frank and team and good afternoon I appreciate the time.

Jason Seidl: I wanted to focus a little bit on your comments on heavy haul as I thought it was rather interesting I think you said, we didn't heavy haul itself. The revenue per load was up 15% I was wondering what was what was driving that and what you thought was driving increased demand on the heavy haul side in general.

Frank: Over the course of this year quarter over quarter, where it's a little more challenging is getting folks in the door as Frank alluded to and.

Frank: And so we are we're digging into.

Frank: Our marketing we're digging into how we are qualifying we're digging into.

Yes, Jason this is Jim really it's a continuation of the strength that we've seen really throughout 2024, we did call out in September we had a little bit of a step back and we believe that was largely weather related with the hurricanes, but we've seen broad based demand across a whole bunch of different industries, there, Jason whether it's aerospace.

Frank: We are going through orientation, and then the support that we provide and trying to make it as easy as possible to do business with us that said if.

Frank: If you look back you don't have to look further than 2021, the model really lends itself to growing the fleet incredibly well. We added 873 net trucks 2020. We added 748 2018, we added 903 in 2014, we added 500, so I do think as things progress and we start.

Speaker Change: Defense government auto for EPL, et cetera, et cetera, and I'll pass to Jim Applegate, who runs that vertical has had a lot of success. This year alright, Thanks, Jim Hi, Jason how are you doing good.

Speaker Change: Hey, Jason.

Frank: To see more in the way of rate.

Speaker Change: Paul has been a strategic initiative that we identified at the very beginning of the year.

Frank: A better demand environment, we're going to see the model do what it's done for many many years.

Speaker Change: Got a really solid foundation, we're one of the largest fleets that operate within that.

Frank: Makes sense. Thank you guys I appreciate the time thanks, Jeff.

Speaker Change: That segment.

Speaker Change: Supported by probably the safest most train drivers and expert group of agents that go after that market. So basically what we've done is we've invested into talent from a leadership standpoint and in certain areas such as agent development sales and marketing to.

Speaker Change: Thank you. Our next question comes from the line of Jason Seidl from Cowen. Your line is now open.

Jason Seidl: Thanks, operator, Frank and team and good afternoon I appreciate the time.

Jason Seidl: Wanted to focus a little bit on your comments on heavy haul as I thought it was rather interesting I think you said, we didn't heavy haul itself. The revenue per load was up 15% I was wondering what was what was driving that and what you thought was driving increased demand on the heavy haul side in general.

Speaker Change: It really kind of spur our agents to get into those markets and really support them, while they grow and you heard in Frank's opening comments Im really our model is all about support and providing good service and safety to our customers and supporting our agent family. So that they can be successful and over the year. We've done we've done a really good job of doing that and it really kind of bolster the team from an agent.

Jason Seidl: Yes, Jason this is Jim.

Jim Todd: Really it's a continuation of the strength that we've seen.

Jim Todd: Throughout 2024, we did call out in September we had a little bit of a step back and we believe that was largely weather related with the hurricanes, but we've seen broad based demand across a whole bunch of different industries, there, Jason whether it's aerospace.

Speaker Change: <unk> standpoint, a lot of our development efforts, we've increased the amount of agents that actually sell into that space. We grew that base by about 23 agents. So we're getting we're getting a lot of agents getting more interested into it getting trained up and.

Jim Todd: Defense government auto for EPL, et cetera, et cetera, and I will pass to Jim Applegate, who.

Speaker Change: As Jay talked about the end markets that we're going into it's broad based across the board. When you have that many agents that are that are experts in the field supported by a really good staff. It allows you to kind of break into these different markets and that's been very very favorable for us Hey, Jason Frank Good to hear your voice.

Jason Seidl: It runs that vertical has had a lot of success. This year alright, Thanks, Jim Hi, Jason how are you doing good.

Speaker Change: Hey, Jason that heavy haul has been a strategic initiative that we identified at the very beginning of the year. We've got a really solid foundation. We're one of the largest fleets that operate within that.

Jason Frank: Just two other things we've done a fair amount on the technology side recently in the heavy haul space.

Jason Seidl: That segment.

Speaker Change: The thing Thats important there is.

Jason Seidl: Ported by probably the safest most train drivers and expert group of agents that go after that market. So basically what we've done is we've invested into talent from a leadership standpoint and in certain areas such as agent development sales and marketing.

Great rating and appropriate routing and those are areas, where we've deployed some.

Speaker Change: Some new and different technology to make sure that when we do quote something we understand the kind of the full <unk>.

Spectrum of services that are required. This is a very high touch service offering. It's one that has a level of complexity that your typical van freight does not so making sure that we are reading it correctly is important and again, we've deployed some some human capital there and some in some technology capital and then routing obviously those two things.

Jason Seidl: So really kind of spur our agents to get into those markets and really support them, while they grow and you heard in Frank's opening comments Im really our model is all about support and providing good service and safety to our customers and supporting our agent family. So they can be successful and over the year. We've done we've done a really good job of doing that and it really kind of bolster the team.

Speaker Change: In many respects correlated but making sure that we are running those.

Jason Seidl: From an agent family standpoint, a lot of our development efforts, we have increased the amount of agents that actually sell into that space.

Speaker Change: Hi, and wide loads heavy loads for that matter over the right routes and making sure that we're doing it safely and securely.

Jason Seidl: Crew that base by about 23 agents and so we're getting we're getting a lot of agents getting more interested into it getting trained up and.

Speaker Change: There is some real magic there.

Speaker Change: We deployed in 2024 will benefit us going forward.

Jason Seidl: As Jay talked about the end markets that we're going into it's broad based across the board. When you have that many agents that are that are experts in the field supported by a really good staff that allows you to kind of break into these different markets and that's been very very favorable for us Hey, Jason Frank Good to hear your voice.

Speaker Change: That sounds good I appreciate that color I also wanted to dive in you mentioned, obviously that your commentary does not include any impact from potential tariffs could you sort of remind us where you think your exposure is tariffs on China versus terrorists versus sort of like a north South Mexico, Canada.

Speaker Change: Just two other things we've done a fair amount on the technology side recently and the heavy haul space.

Speaker Change: Yes, I would say Jason that are.

Speaker Change: Larger exposure relative to the items that you just mentioned is on the U S Mexico Cross border.

Speaker Change: One of the things that's important there is appropriate rating and appropriate routing and those are areas, where we've deployed some.

Speaker Change: <unk> get into the numbers of that and others around the table can chime in on.

Speaker Change: Some new and different technology to make sure that when we do quote something we understand the kind of the full.

Speaker Change: The business works, but if there are tariffs on.

Speaker Change: U S Mexico, which then require.

Speaker Change: Spectrum of services that are required. This is a very high touch service offering. It's one that has a level of complexity that your typical vance rate does not so making sure that we are reading it correctly is important and again, we've deployed some some human capital there and some in some technology capital and then routing obviously those two things are.

Speaker Change: Aren't sourcing of manufacturer <unk>.

Speaker Change: Assuming that's somewhere else in North America to me, that's just a shift.

Speaker Change: Where that revenue would come from.

Speaker Change: It ultimately comes from places that are offshore which doesn't seem likely.

Speaker Change: In many respects correlated but making sure that we are running those.

Speaker Change: We would have less impact there I mean, our our intermodal business is not as large or.

Speaker Change: Hi, and wide loads and heavy loads for that matter over the right routes and making sure that we're doing it safely and securely.

Speaker Change: Air and Ocean business is not that large relative to the cross border business.

Speaker Change: But that would be where we would see the impact if there was anything on the U S. China from J D hit the details, yes, Jason sort of to Frank's point, we did just over $540 million of U S. Mexico Cross border revenue in 2024.

There is some real magic there that I think we deployed in 2024 will benefit us going forward.

Speaker Change: Well that sounds good I appreciate the color I also wanted to dive in you mentioned, obviously that your commentary does not include any impact from potential tariffs could you sort of remind us where you think your exposure is tariffs on China versus terrorists versus sort of like a north South Mexico, Canada.

Speaker Change: Oh.

Speaker Change: Good commentary.

Speaker Change: Perfect.

Speaker Change: Gentlemen, I appreciate the time thanks.

Jason Seidl: Yes, I would say Jason that are our larger exposure relative to the items that you. Just mentioned is on the U S. Mexico Cross border.

Speaker Change: Thank you. Our next question comes from the line of Jordan Alegar from Goldman Sachs. Your line is now open.

Speaker Change: Thanks, everyone. This is Paul started on for Jordan Alger I guess I was curious just thinking about the bcl continuing to drip out.

Speaker Change: J P get into the numbers of that and others around the table can chime in on how that business works, but if there are tariffs on U.

Speaker Change: How much of this impacting the variable contribution mix and how should we think about this as they start to come back in can we start to see variable contribution mix really start to improve and see that percentage go higher.

Jason Seidl: U S Mexico.

Jason Seidl: Then require.

Jason Seidl: Current sourcing of manufacturer <unk>.

Jason Seidl: Assuming that's somewhere else in North America to me, that's just a shift.

Jason Seidl: Where that revenue would come from.

Speaker Change: That's a real good question, obviously very <unk>.

Jason Seidl: It ultimately comes from places that are offshore which doesn't seem likely.

Speaker Change: Zervan on on your part it has impacted clearly.

Speaker Change: Along with net revenue.

Jason Seidl: We would have less impact there I mean, our our intermodal business is not as large or.

Speaker Change: Margin compression on the brokerage side I think when we come out the other side of this it's going to depend on the relative growth rates of the <unk> handled freight versus the brokerage handled freight and if those.

Jason Seidl: Air and Ocean business is not that large relative to the cross border business.

Jason Seidl: But that would be where we would see the impact if there was anything on the U S. China, Jackie yes, Jason sort of to Frank's point, we did just over $540 million of U S. Mexico Cross border revenue in 2024.

Speaker Change: <unk> go in favor of <unk>, then you're going to see and assuming that you don't have the same compression on the brokerage side youre going to see.

Speaker Change: Variable contribution margin increase when you look at it on a true bottom line perspective, they're relatively equivalent so we're not in the business of saying note afraid if it wants to come into the brokerage side versus the <unk> side.

Jason Seidl: Oh.

Jason Seidl: Good commentary.

Jason Seidl: Perfect.

Jason Seidl: Gentlemen, I appreciate the time thanks.

Speaker Change: Thank you. Our next question comes from the line of Jordan Alegar from Goldman Sachs. Your line is now open.

Speaker Change: Obviously, both good for Landstar and good for our customers.

Matt Scott: But I'd certainly like to see and Matt Scott.

Speaker Change: Thanks, everyone. This is Paul started on for Jordan Alger I guess I was curious just thinking about the bcl continuing to drip out.

Matt Scott: The labor more on this one to make sure that our Bcl count inflect positively as.

As we've turned the page into the.

Matt Scott: The middle of 2025, and I think he's got some good things that he is working on to get that fleet back where we want it to be and as I mentioned and I think Scott groups.

Speaker Change: How much of this impacting the variable contribution mix and how should we think about this as they start to come back in can we start to see variable contribution mix really start to improve and see that percentage go higher yes.

Matt Scott: Question rates our friend on this one is rate progresses forward.

Matt Scott: Percentage pay model is really a benefit to the Bcf isn't a benefit to us and we look forward to that when that happens, but J T or Matt you guys have additional color you want to provide on them.

Speaker Change: Yes, that's a real good question, obviously very.

Speaker Change: Observing on on your part it has impacted clearly.

Speaker Change: Along with net revenue.

Matt Scott: Nothing to add there.

Speaker Change: Margin compression on the brokerage side I think when we come out the other side of this.

Matt Scott: Great and then.

Speaker Change: A follow up I was I was curious as we see that it really is volumes that continued to be negative in the total truck space.

Speaker Change: Going to depend on the relative growth rates of the <unk> handled freight versus the brokerage handled freight and if those.

Speaker Change: Needs to happen to see that volume really turnaround is it really going to do we need to see demand to really come in to actually start to see this up cycle come through.

Speaker Change: <unk> go in favor of <unk>, then you're going to see and assuming that you don't have the same compression on the brokerage side youre going to see.

Speaker Change: Variable contribution margin increase.

Speaker Change: Or as far as just thinking about total earnings do we need to start to see more of that capacity come out so I guess, which which side of the coin are we looking at more demand or more capacity having to exit.

Speaker Change: You look at it on a true bottom line perspective, they're relatively equivalent so we're not in the business of saying no to freight if it wants to come into the brokerage side versus the <unk> side.

Speaker Change: Both I guess as a quick answer to your question I think on the demand side the.

Speaker Change: Obviously, both good for Landstar and good for our customers.

Speaker Change: But I'd certainly like to see and Matt Scott.

Speaker Change: The industrial economy.

Speaker Change: The labor more on this one to make sure that our Bcl count inflect positively.

Speaker Change: As sort of sputter along in the in the high $40 for example.

Speaker Change: As we turn the page into the.

Speaker Change: ASM and things like that and Youre seeing the IDP, maybe at a percentage. So we're not seeing tremendous strength at a macro level in the industrial economy, So whether it's GE.

Speaker Change: The middle of 2025, and I think he's got some good things that he is working on to get that fleet back where we want it to be and as I mentioned in.

Speaker Change: I think Scott groups.

Speaker Change: Question rates our friend on this one is rate progresses forward.

Speaker Change: Deregulation or less regulatory overtones, better interest rate environment.

Speaker Change: Percentage pay model is really a benefit to the <unk> isn't a benefit to us and we look forward to that when that happens, but on the J T or Matt you guys have additional color you want to provide on them.

Speaker Change: Pro U S policy, whatever you want to say in that respect I mean, if we ended up with a better a better U S manufacturing U S. Industrial complex will clearly going to benefit from that at the same time when you hear us talk about the platform business and the heavy haul business. We are clearly doing well in those areas even in a sluggish industrial economy.

Speaker Change: Nothing to add there.

Speaker Change: Great and then.

Speaker Change: As a follow up I was I was curious as we see that it really is volumes that continued to be negative in the total truck space.

Speaker Change: So that's only going to work to our benefit if we end up getting a little bit more help on the demand side I think on the consumer side of the economy, I think we're still a little bit and the overhang of.

Speaker Change: It needs to happen to see that volume really turnaround is it really going to do we need to see demand to really come in to actually start to see this up cycle come through.

Speaker Change: Covid, where.

Speaker Change: More people bought a lot more goods during that period of time and now it's a little bit more on the services side. So that as that comes back towards equilibrium, So maybe potentially where it was in the pre COVID-19 time period, that's going to be a benefit to us as well.

Speaker Change: Or as far as just thinking about total earnings do we need to start to see more of that capacity come out, so I guess, which which side of the coronary looking at more demand or more capacity having to exit.

Speaker Change: And I think the capacity is going to continue to come out because I don't think rates are going to are going to boomerang back I think theres going to be a slow slow steady progress of rate improvement throughout 2025 absent policy overdose.

Speaker Change: Both I guess as a quick answer to your question I think on the demand side.

Speaker Change: The industrial economy.

Speaker Change: As sort of sputter along in the in the high 40% for example on.

Speaker Change: ASM and things like that and Youre seeing IDP, maybe at a percentage. So we're not seeing tremendous strength at a macro level in the industrial economy, So whether it's <unk>.

Speaker Change: And so I think youre going to continue to see some capacity come out not just from our fleet from others, because I think it's going to it's going to meet at some point in time, whether it's in 25% or 26, where we're actually going to see.

Speaker Change: Demand.

Speaker Change: Deregulation or less regulatory overtones, better interest rate environment.

Speaker Change: Combined with lesser supply and Youre going to see a nice rate inflection.

Speaker Change: Great. Thanks, everyone.

Speaker Change: U S policy, whatever you want to say in that respect I mean, if we end up with a bedroom a better U S manufacturing U S. Industrial complex will clearly going to benefit from that at the same time when you hear us talk about the platform business and the heavy haul business. We are clearly doing well in those areas even in a sluggish.

Speaker Change: Thank you. Our next question comes from the line of Daniel <unk> from Stephens incorporated your line is now open.

Speaker Change: Hey, guys.

Reed: Excuse me this is reed on for Daniel.

Speaker Change: I just wanted to ask about.

Speaker Change: Industrial economy, so that's only going to work to our benefit if we end up getting a little bit more help on the demand side I think on the consumer side of the economy I think we're still a little bit and the overhang of Covid where.

Speaker Change: Had some unfortunate weather events recently, given your mix of business should we expect to see any benefit from rebuilding efforts in the near future.

Speaker Change: On the east coast or on the West Coast and could you also remind us of any presence or what size presence you have out in California.

Speaker Change: A lot more people bought a lot more goods during that period of time and now it's a little bit more on the services side, so that as that comes back towards equilibrium.

Speaker Change: Maybe potentially where it was in the pre Covid time period, that's going to be a benefit to us as well.

Speaker Change: I would say.

Speaker Change: <unk> took a step back and looked at the last.

Speaker Change: And I think the capacity is going to continue to come out because I don't think rates are going to are going to boomerang back I think there is going to be a slow slow steady progress of rate improvement throughout 2025 absent policy overdose.

Speaker Change: Let's call it nine to 12 months.

Speaker Change: <unk> had.

Speaker Change: A number of hurricanes from the.

Speaker Change: Hurricane season in 2024 that impacted Florida, as well as the kind of the Appalachian valleys.

Speaker Change: And so I think youre going to continue to see some capacity come out not just from our fleet, but from others. So I think it's going to it's going to meet at some point in time, whether it's in 25% or 26, where we're actually going to see.

Speaker Change: So do I think we will see something over time from those storms, yes.

Speaker Change: Think that many of those areas.

Speaker Change: Better demand combined with lesser supply and youre going to see a nice reflection.

Speaker Change: Had.

Speaker Change: Almost complete destruction, so youre going to have more demolition first and rebuilding second I would say the same honestly in the in the California wildfire situation, obviously, they've got to get things completely under control out there, but theres going to be demolition before there's reconstruction.

Speaker Change: Great. Thanks, everyone.

Speaker Change: Thank you. Our next question comes from the line of Daniel <unk> from Stephens incorporated your line is now open.

Speaker Change: Hey, guys. This is <unk>.

Speaker Change: We did see a little bit of an uptick in the Carolinas with food and water and things like that in the immediate aftermath of.

Reed: This is reed on for Daniel.

Reed: I just wanted to ask about do we have had some unfortunate weather events recently, given your mix of business.

Speaker Change: One of those named storms from from last fall.

Reed: We expect to see any benefit from rebuilding efforts in the near future.

Speaker Change: So I think yes, we will see we will see it over an elongated period of time, we don't participate in the.

Speaker Change: On the east coast or on the West Coast and could you also remind us of any presence or what size presence you have out in California.

Speaker Change: Deconstruction element of things. So we're more on the construction element when that springs back in but I think it's going to trickle in over long periods, and I don't think youre going to see.

Reed: Yeah, I would say.

Reed: <unk> took a step back and looked at the last.

Speaker Change: A significant bump back in that one our California exposure.

Reed: Let's call it nine to 12 months.

Speaker Change: Don't have very many <unk> that are still domiciled in California, just given the.

Reed: Had.

Reed: A number of hurricanes from the.

Reed: The hurricane season in 2024 that impacted Florida, as well as the kind of the Appalachian valleys.

Speaker Change: The 85 and similar.

Speaker Change: Regulatory items out that way, but we do have people that go in and out of California, I wouldn't say it's.

Reed: So do I think we will see something over time from those storms, yes.

Speaker Change: A huge piece of our business, but.

Speaker Change: If there is a need to have a truckload service in and out of California to help rebuild after the wildfires, we're ready willing and able to do that.

Reed: Think that many of those areas.

Reed: <unk>.

Reed: Almost complete destruction, so youre going to have more demolition first and rebuilding second I would say the same honestly in the in the California wildfire situation, obviously, they've got to get things completely under control out there, but theres going to be demolition before theres reconstruction.

Speaker Change: Alright, perfect. Thank you.

Speaker Change: And just zooming in on the expenses front, we saw it flipped positive year over year for the first time in quite a few quarters here in the fourth quarter.

Speaker Change: Can you talk about maybe some puts and takes in 2025 and kind of Directionally, where we should expect to see that go from here.

Reed: We did see a little bit of an uptick in the Carolinas with food and water and things like that in the immediate aftermath of.

Speaker Change: Of course, and Youre talking the indirect expenses.

Reed: One of those named storms from from last fall.

Speaker Change: <unk> began commitments correct.

Reed: So I think yes, we will see I think we will see it over an elongated period of time, we don't participate in the.

Speaker Change: Yes, so the big one I would size up for you read is about a 14 million dollar headwind 25 versus 24 on the rebuild of the performance based incentive compensation and stock based compensation coming off a bear case 2024, we will endeavor to.

Reed: Deconstruction element of things. So we're more on the construction element when that springs back in but I think it's going to trickle in over a long period of time, I don't think youre going to see.

Reed: A significant bump back in that one our California exposure we.

Speaker Change: Eat into that as much as possible.

Speaker Change: Items I'd throw out our contractor bad debt given the prolonged.

Reed: We don't have very many <unk> that are still domiciled in California, just given the.

Speaker Change: Elongated freight recession here in 2023, and 2024 has run significantly above average we are looking for mean reversion there clearly right sizing the trailer fleet.

Reed: <unk> 85 in similar Reg.

Reed: Regulatory items out that way, but we do have people that go in and out of California, I wouldn't say it's a.

Speaker Change: Raines ringing.

Reed: A huge piece of our business, but.

Speaker Change: Some gains on disposal Frank talked about the refresh that we did we took delivery of a lot of new trailers in the <unk>.

Reed: There is a need to have a truckload service in and out of California to help rebuild after the wildfires, we're ready willing and able to do that.

Speaker Change: Fourth quarter of 2024.

Speaker Change: With that you would expect maintenance entire tailwind on.

Reed: Alright, perfect. Thank you.

Reed: And just zooming in on the expenses front, we saw it flip positive year over year for the first time in quite a few quarters here in the fourth quarter.

Speaker Change: New equipment and then we continue to be very disciplined on Capex and people. We've only got 340 employees here supporting a five plus billion dollars topline, but we will continue to run.

Reed: Can you talk about maybe some puts and takes in 2025 and kind of Directionally, where we should expect to see that go.

Speaker Change: Tight ship from a people and capex standpoint into 'twenty five.

Reed: From here.

Reed: Of course, Youre talking the indirect expenses below began commitments.

Alright, I appreciate the help guys.

Speaker Change: Thank you. Our next question comes from the line of Bruce.

Reed: Act.

Reed: Yes, so the big one I would size up for you read is about a 14 million dollar headwind 25 versus 24 on the rebuild of the.

Bruce Cheng: Cheng from Stifel. Your line is now open.

Speaker Change: Hi, good afternoon Andrew.

Speaker Change: Andrew Cox.

Speaker Change: I wanted to talk about kind of the current state and mix up the Bcl fleet.

Reed: <unk> based incentive compensation and stock based compensation coming off a bear case 2024.

Speaker Change: Looking at where it sits right now online.

Reed: We will endeavor to.

Speaker Change: Online was a decade ago.

Reed: And to that as much as possible a couple items I'd throw out our contractor bad debt given the.

Speaker Change: And then the 10% year over year.

Speaker Change: I just wanted to know if there is any input.

Speaker Change: Okay.

Reed: Elongated freight recession here in 2023, and 2024 has run significantly above average we are looking for mean reversion there clearly right sizing the trailer fleet.

Speaker Change: Based on what.

Speaker Change: And one of them, whether it be by tumor type or age.

Speaker Change: Any other changes you want to speak to the last couple of years. Thank you.

Speaker Change: Rams ringing.

Speaker Change: Some gains on disposal Frank talked about the refresh that we did we took delivery of a lot of new trailers in the fourth quarter of 2024.

Speaker Change: Hey, Andrew good good set of questions.

Speaker Change: What's interesting as we look at the fleet.

Speaker Change: Folks that.

Speaker Change: That don't have a truck payment, obviously have a little bit of a competitive advantage.

With that you would expect our maintenance entire tailwind on.

Speaker Change: Generally not the first job that drivers have.

Speaker Change: New equipment and then we continue to be very disciplined on Capex and people. We've only got 30 140 employees are supporting a five plus billion dollars top line, but will continue to run and run a tight ship from a people and capex standpoint into 'twenty five.

Speaker Change: More later career because of the freedom and the opportunity that we provide folks to take the loads and run as much as they want and where they want and the type of freight that.

Speaker Change: They want to haul so they're able to be more specialized rather than on a forced dispatch which is a company concerned you've pretty much everywhere at all anything.

Speaker Change: Alright, I appreciate the help guys.

Speaker Change: Thank you. Our next question comes from the line of Bruce Chan from Stifel. Your line is now open.

Speaker Change: Thats you are qualified to haul.

Speaker Change: The average age of drivers I don't think it's changed very much amount will get into the details, but I don't think our average age has changed very much I don't think the average age of the tractor has changed very much. So I think our the composition of our <unk> is relatively similar to where it's been in the past I think when we look at the economic.

Speaker Change: Hi, good afternoon.

Andrew Cox: Andrew Cox.

Andrew Cox: Yes.

Andrew Cox: I wanted to talk about kind of the current state and mix of the Dcs.

Andrew Cox: Looking at where it sits right now.

Andrew Cox: <unk> was a decade ago dominant at 10%.

Andrew Cox: I just wanted to know if there's any impact.

Speaker Change: As to the driver the folks who have a.

Andrew Cox: Conservative.

Andrew Cox: Based on what you mean.

Speaker Change: Truck payment, it's harder to make ends meet and therefore.

Andrew Cox: It would be by total pipe or <unk> or any other changes you want to speak to the BCA.

Speaker Change: What youre able to do as an alternative while the rate environment improves.

Speaker Change: Last couple of years. Thank you.

Speaker Change: Bit of a closer question you can run locally.

Andrew Cox: Hey, Andrew good good set of questions whats.

Speaker Change: You can work construction or something like that and if you have a truck.

Speaker Change: What's interesting as we look at the fleet.

Andrew Cox: Folks that.

Speaker Change: Secondly, the same amount of money. If you don't have a truck payment then you are still at a.

Andrew Cox: Don't have a truck payment, obviously have a little bit of a competitive advantage.

Speaker Change: A better place by by doing long haul trucking like we do.

Andrew Cox: We're generally not the first job that drivers have were.

Speaker Change: But <unk> got a bunch of the detail. So let me let him take a sure. Thanks, Frank and I would echo what he said that cost structure is a critical element and of course folks that we're purchasing equipment as the supply chain crisis sort of ensued put some at a difficult spot and the prolonged nature of the economic downturn has.

Andrew Cox: More later career because of the freedom and the opportunity there.

Andrew Cox: We provide folks to take the loads and run as much as they want and where they want and the type of freight that.

Andrew Cox: They want to haul so they're able to be more specialized rather than on a forced dispatch which is a company concerned you've pretty much everywhere at all anything that.

Speaker Change: Obviously hit those folks harder than somebody that had little to no debt on their truck. The average age of the bto, you're just north of 50 years old and that's been the case for a very long time. The average age of the truck is about 10 years old which has been the case for a very long time, one thing that we don't move.

Andrew Cox: That you're qualified to haul.

Andrew Cox: Our average age of drivers I don't think has changed very much metal going into the details, but I don't think our average age has changed very much I don't think the average age of the tractor has changed very much. So I think our the composition of our <unk> is relatively similar to where it's been in the past I think when we look at it.

Speaker Change: That perhaps others do move then that would have an impact on folks coming in the doors are safety standards, which which Frank mentioned in his opening remarks that we feel is an incredibly important element of our differentiation is our safety standards and maintaining that safety standards. So so.

Andrew Cox: <unk> to the driver the folks who have a truck payment it's harder to make ends meet and therefore.

Andrew Cox: What you are able to do as an alternative while the rate environment improves.

Andrew Cox: A little bit of a closer question you can run locally.

Speaker Change: Could that move differently, if we if we made it easier to get in the door absolutely have we know.

Andrew Cox: You can work construction or something like that and if you have a truck.

Andrew Cox: Effectively the same amount of money. If you don't have a truck payment then you are still at a.

Speaker Change: Okay understood. Thank you that's helpful. I guess, just a quick follow up on that so given the.

Andrew Cox: A better place by by doing long haul trucking like we do.

Andrew Cox: That's got a bunch of the details so let me let him take sure. Thanks, Frank and I would echo what he said that cost structure is a critical element and of course folks that we're purchasing equipment as the supply chain crisis sort of ensued put some at a difficult spot and the prolonged nature of the economic downturn has.

Speaker Change: In the heavy haul onside platform business.

Speaker Change: Mix of the BCS there versus Dan hasn't really changed over time.

Speaker Change: On the heavy haul side, we have seen sort of something that you would expect given the uptick that we've seen on heavy haul.

Speaker Change: Roughly to the tune of 17% more acos.

Andrew Cox: Lee hit those folks harder than somebody that had little to no debt on their truck. The average age of the bto, you're just north of 50 years old and Thats been the case for a very long time.

Speaker Change: In the most recent quarter.

Speaker Change: Okay well. Thank you that's very helpful. I'll pass it on thank you.

Andrew: Thanks, Andrew.

Speaker Change: Thank you. Our next question comes from the line of Stephanie more from Jefferies. Your line is now open.

Andrew Cox: The average age of the truck is about 10 years old which has been the case for a very long time, one thing that we don't move that perhaps others do move then that would have an impact on folks coming in the doors are safety standards, which which Frank mentioned in his opening remarks that.

Speaker Change: Hey, How's it going guys. This is Peter Sullivan, calling for assessing more I was just curious to get a little bit more thoughts on capital allocation heading into 2025, specifically when it comes to share buybacks dividends and then potentially opportunity opportunistic M&A. Thanks.

Andrew Cox: We feel is an incredibly important element of our differentiation is our safety standards and maintaining that safety standards. So so could that move differently. If we if we made it easier to get in the door absolutely have we know.

Speaker Change: Hey, good good questions Peter.

Speaker Change: I think if you if you look at our history.

Speaker Change: Over the last six or eight years.

Speaker Change: Very consistent in the way that we've deployed capital.

Speaker Change: Okay understood. Thank you that's helpful. I guess, just a quick follow up on that so given the growth in the heavy haul onside platform business.

Speaker Change: We've got our regular dividend, we generally speaking have increase that every year, we've had a special dividend almost every year in that period that I mentioned, we obviously declared and paid that very recently as we concluded the fourth quarter and started the first quarter.

Speaker Change: <unk> of the Dcs, there versus Dan hasn't really changed over time.

Speaker Change: On the heavy haul side, we have seen sort of something that you would expect given the uptick that we've seen on heavy haul.

Speaker Change: Buybacks I would say that our policy has not changed which is to be patient, meaning we're not going to let our balance sheet cash number thats.

Speaker Change: To the tune of 17% more acos.

Speaker Change: In the most recent quarter.

Speaker Change: Okay well. Thank you that's very helpful. I'll pass it on thank you.

Speaker Change: A little bit outsized relative to history, we're not going to let it burn a hole in our pocket, we're looking for opportunities to be in the market and take advantage of volatility we didn't see that level of volatility it was sort of asymmetric in the open window for us in the <unk>.

Andrew Cox: Thanks, Andrew.

Speaker Change: Thank you. Our next question comes from the line of Stephanie more from Jefferies. Your line is now open.

Speaker Change: Hey, How's it going guys. This is Peter Sullivan, calling for assessing more I was just curious to get a little bit more thoughts on capital allocation heading into 2025, specifically when it comes to share buybacks dividends and then potentially opportunity opportunistic M&A. Thanks.

Speaker Change: In the fourth quarter, given the election and the post election run up so we were largely on the sidelines in Q4, but volatility not unlike any other.

Speaker Change: Other trader volatility works in our favor so we're going to be again patient and opportunistic going forward.

Speaker Change: Good good questions Peter.

Speaker Change: I think in terms of M&A.

Speaker Change: I think if you if you look at our history.

Speaker Change: As I think I've mentioned in prior calls.

Speaker Change: Over the last six or eight years, we've been very consistent in the way that we've deployed capital.

Speaker Change: Neatness of our model.

Really takes the overall.

Speaker Change: Universe of potential targets down significantly.

Speaker Change: We've got our regular dividend, we generally speaking have increase that.

Speaker Change: So not to say that we wouldn't do something if it was a really good fit we just don't have the same degrees of freedom, perhaps that that other companies might if youre an asset provider you can buy other asset providers, but we're not going to get into the asset provider business we have.

Speaker Change: Every year, we've had a special dividend almost every year in that period that I mentioned, we obviously declared and paid that very recently as we concluded the fourth quarter and started the first quarter.

Speaker Change: Got a really really good model that's been successful over a long period of time, but if there are opportunities.

Speaker Change: Buybacks I would say that our policy has not changed which is to be patient.

Speaker Change: Where it's sort of core to what we do.

Speaker Change: Meaning we're not going to let our balance sheet cash number thats.

Speaker Change: We will certainly look at.

Speaker Change: Good Thank you guys.

Speaker Change: A little bit outsized relative to history, we're not going to let it burn a hole in our pocket, we're looking for opportunities to be in the market.

Speaker Change: Thank you at this time I'm showing no further questions I would like to turn the call back over to you Sir for closing remarks.

Speaker Change: Advantage of volatility, we didn't see that level of volatility it was sort of asymmetric in the open window for us in the.

Speaker Change: Thanks, Harley and closing what the freight environment remains challenging we do see some positives in the near term in Q4, we were encouraged to see year over year quarterly revenue growth for the first time since the 2022 third quarter. In addition, even with the choppy industrial backdrop, we were pleased with the 6% year over year revenue increase on our <unk> platform.

Speaker Change: In the fourth quarter, given the election and the post election run up so we were largely on the sidelines in Q4, but volatility not unlike any other any other trader volatility works in our favor so.

Speaker Change: We're going to be again patient and opportunistic going forward.

Speaker Change: Service offering driven by strong year over year improvement in revenue per load and 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.

Speaker Change: I think in terms of M&A.

Speaker Change: As I think I've mentioned in prior calls.

Speaker Change: Neatness of our model.

Speaker Change: Really takes the overall.

Speaker Change: Universe of potential targets down significantly.

Speaker Change: So not to say that we wouldn't do something if it was a really good fit we just don't have the same degrees of freedom, perhaps that that other companies might if youre an asset provider you can buy other asset providers, but we're not going to get into the asset provider business.

Speaker Change: Terms are way. Thank you for joining us. This afternoon, we look forward to speaking with you again on our 2025 first quarter earnings conference call in late April.

Speaker Change: Keith.

Speaker Change: Got a really really good model that's been successful over a long period of time, but if there are opportunities.

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

Speaker Change: Where it's sort of core to what we do.

Speaker Change: We will certainly look at.

Speaker Change: Good Thank you guys.

Speaker Change: Thank you at this time I'm showing no further questions I would now like to turn the call back over to you Sir for closing remarks.

Speaker Change: Thanks, Charlie in closing, while the environment remains challenging we do see some positives in the near term in Q4, we were encouraged to see year over year quarterly revenue growth for the first time since the 2022 third quarter. In addition, even with the choppy industrial backdrop, we were pleased with the 6% year over year revenue increase on our <unk> platform.

Speaker Change: Service offering driven by a strong year over year improvement in revenue per load and 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.

Speaker Change: What terms are way. Thank you for joining us. This afternoon, we look forward to speaking with you again on our 2025 first quarter earnings conference call in late April.

Speaker Change: Yes.

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

Speaker Change: [music].

Speaker Change: Good afternoon, and welcome to Landstar system incorporated year end earnings release Conference call all lines will be in a listen only mode until the formal question and answer session. Today's call is being recorded if you have any objections you may disconnect at this time.

Speaker Change: Yesterday's from that's R. R.

Clinique Rowe: Clinique Rowe, President and CEO, Jim Applegate, Vice President and Chief Corporate sales strategy had specialized raped officer, Jamie THAAD, Vice President and CFO, Joe because precedent and length of Landstar system holdings incorporate that Matt.

Speaker Change: Matt Danziger, Vice President and Chief Field sales officer.

Clinique Rowe: Matt Miller, Vice President and Chief Safety and operations Officer.

Speaker Change: Now I would like to turn the call over to Jim Todd Sir you may begin thank.

Speaker Change: Thank you good afternoon, and welcome to Landstar is 2020 for fourth quarter earnings Conference call before we begin let me read the following statement. The following is a safe Harbor statement under the private Securities Litigation Reform Act of 1095 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.

Speaker Change: Formation that relates to Landstar <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 <unk> Form 10-K for 2023 fiscal year described in the section risk factors and other SEC filings from time to time, these risks and uncertainties could cause.

Speaker Change: 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 I'll now pass it to Lance our CEO Franklin <expletive> for his opening remarks, thanks, Stacy and good afternoon, everyone first I want to thank our <unk>.

Speaker Change: Agents and the Landstar employees, who support them every day. It is unbelievably energizing to engage with our network of entrepreneurs as we worked together to position landstar for the future.

Speaker Change: During my first year as CEO of Landstar I've traveled extensively throughout the country meeting with agents in BCS and had been thoroughly impressed with the capabilities of uniqueness the resiliency and the level of commitment of the independent business owners, who comprise the Landstar network.

Speaker Change: They are exceptional leaders in our industry and are key to driving the continued success of the Landstar business model 2024 was a challenging year in freight transportation, but it was not without success and accomplishment for Landstar as we move into 2025, we continue to be laser focused on accelerating our business model and executing on.

Our strategic initiatives and one major 2024 bright spot I am extremely pleased with the performance of a heavy fall service offering last year, we generated approximately $498 million of heavy haul revenue during the 2020 for fiscal year record revenue performance for Landstar heavy haul.

Speaker Change: Achievement was driven by a 9% increase in heavy haul revenue per load and a 3% increase in heavy haul volume.

Speaker Change: Turning more broadly to our core truckload service offering the foundational work we did in 2024 puts us in a great position to leverage the freight environment. When it turns our way. We are also focused on our commitment to continuous improvement in the level of service and support we provide to our customers agents <unk> and carriers each and every day.

Speaker Change: Turning to slide five the freight environment in the 2020 for fourth quarter continued to be characterized by relatively soft demand and readily available truck capacity the impacted accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending truck capacity.

Speaker Change: To be readily available with small pockets of supply demand equilibrium and market conditions continue to favor the shipper amidst choppy conditions in the industrial economy.

Speaker Change: Considering that backdrop landstar as revenue performance was admirable in the 2020 for fourth quarter delivering topline results just slightly ahead of the midpoint of our fourth quarter guidance, while earnings per share came in modestly below the midpoint of the guidance, primarily due to some variable contribution margin and insurance and claim cost pressures.

Speaker Change: Our fourth quarter guidance issued in conjunction with our 2024 third quarter earnings release call for the number of loads hauled via truck to be 4% below to 1% above the 2023 fourth quarter and overall revenue per truckload to be flat to 4% above the 2023 fourth quarter. The actual number of loads hauled via.

Speaker Change: Truck in the 2020 for fourth quarter was three 4% below the 2023 fourth quarter within the lower half of our guidance range actual revenue per truckload in the 2020 for fourth quarter was three 1% above the prior year quarter.

Speaker Change: The upper half of the guidance range.

Speaker Change: Our balance sheet continues to be very strong and our capital allocation priorities are unchanged I am a strong believer in the company's stock buyback program and I'm committed to patiently and opportunistically executing on our existing authority to benefit our long term stockholders as noted in the release, we deployed over $82 million of capital towards buybacks.

Speaker Change: And repurchased approximately 452000 shares of common stock during the 2020 for fiscal year in the fourth quarter, given the shorter open window period, and the Trump bump experienced in the equity markets, we did not deploy significant capital towards buybacks in the quarter, but declared a $2 per share special dividend.

Speaker Change: We continue to invest through the cycle and leading technology solutions for the benefit of our network of independent business owners and allocated a significant amount of capital in 2024 towards refreshing our fleet of trailing equipment.

Speaker Change: Turning to slide six and looking at our network the scale systems and support inherent in the Landstar model helped to drive the operating results generated during the 2020 for fourth quarter <unk> will get into the details on revenue loadings in rate per load in a moment.

Speaker Change: As noted during previous earnings calls I've been in the transportation sector for most of my career and realize just how important landstar safety culture is to our continued success.

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

Speaker Change: I'm proud to report an accident frequency rate of 0.59 dot reportable accidents per million miles during the 2020 for fiscal year, an improvement of approximately 2% as compared to the 2023 fiscal year. This is an impressive operating metric that speaks to the strength skill talent and dedication of our <unk>.

Speaker Change: <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 fourth quarter from the third quarter by 184 trucks.

Speaker Change: Distant with our expectations of Desio declines continuing into the fourth quarter on a year over year basis Bcl truck count has decreased approximately 10% since the end of the 2023 fourth quarter consistent with the year over year truck revenue decline experienced in fiscal 2024. It is typical to incur turnover in <unk>.

Speaker Change: Count and a low rate per load environment.

Speaker Change: <unk> turnover also continues to be influenced by the significant increase in the cost to maintain and operate a truck today compared to before the pandemic. We would expect bcl count to continue to decline in the first quarter given the challenging operating environment faced by many truck owner operators and the typical seasonality in truck count experienced from the fourth quarter to the first quarter.

Speaker Change: I am excited about <unk> recent promotion to chief safety and operations officer and him putting a fresh set of eyes on how we recruit develop and retain <unk> I will now pass the call back to Jay to walk you through the 2020 for fourth quarter financials in more detail. Thanks.

Jay: Thanks, Frank turning to slide nine as Frank mentioned earlier overall truck revenue per load increased three 1% in the 2020 for fourth quarter compared to the 2023 fourth quarter entirely attributable to an 8% increase in onsite. It platform revenue per load revenue per load on loads hauled via van equipment decreased <unk>, 2% year over year on a sequential.

Jay: This truck revenue per load increased 1% in the fourth quarter versus the third quarter, we consider the 1% sequential increase in line with pre pandemic normal seasonality a positive sign given the strong launch point of the 2024 third quarter, which saw a truck revenue per load increased three 2% sequentially.

Jay: In comparison to overall truck revenue per load, we consider revenue per mile on those hard by Bcl trucks, a pure reflection of market pricing as it excludes fuel surcharges billed to customers that are paid 100% to the bcl.

Jay: 2024 fourth quarter revenue per mile on that side of the platform equipment hauled by <unk> was 17% above for 2023 fourth quarter, while revenue per mile and van equipment. All by <unk> was 3% above the 2023 fourth quarter <unk>.

Jay: Delving deeper into seasonal trends revenue per mile on loads hauled by <unk> on side of the platform equipment increased 4% from September to October increased 4% from October to November and increase yet another 4% from November to December outperforming pre pandemic typical seasonal patterns each month in the quarter with respect on loads hauled by <unk> on van equipment.

<unk> versus pre pandemic typical seasonal patterns was choppy or revenue per mile on van equipment hauled by <unk> increased 1% from September to October outperforming these trends decreased 1% from October to November underperforming these trends and increased 3% from November to December again, outperforming it should be noted that month to month seasonal trends on onsite platform equipment or <unk>.

Jay: The less predictable compared to that of van equipment is relative volatility is often due to the mix between heavy specialized loads and standard flatbed volume as Frank alluded to we've experienced strong recent performance in our heavy haul service offering have you all revenue was up an impressive 24% year over year in the fourth quarter significantly outperforming core truckload revenue have you all know.

Jay: <unk> were up approximately 8% year over year, while revenue per heavy haul load increased 15% 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 33% during the 2023 fourth quarter to approximately 38% in the 2024 quarter non truck.

Jay: Transportation service revenue in the 2020 for fourth quarter was 20% or $18 million above the 2023 fourth quarter. The increase in non truck transportation revenue was mostly due to a 23% increase in ocean revenue per shipment and a 15% increase in ocean volumes, partially offset by 25% decrease in intermodal revenue primarily driven.

Jay: By a 14% decline in revenue per load and a 12% decline in loadings.

Jay: Turning to slide 10, we provided revenue share by commodity and year over year change in revenue by commodity transportation and logistics segment revenue was up 1% year over year on a 5% increase in revenue per load, partially offset by a 3% decrease in loadings as compared to the 2023 fourth quarter within our largest commodity commodity category consumer.

Jay: Durables revenue declined 1% year over year on a 6% decline in volumes, partially offset by a 5% increase in revenue per load.

Jay: Revenue across our top five commodity categories, which collectively make up about 68% of our transportation revenue was down 4% compared to the 2023 fourth quarter, 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%.

Jay: Fourth quarter to the June 20 for fourth quarter total loadings and machinery were approximately equal.

Jay: Automotive equipment and parts decreased 3% building products increased 5% and hazardous materials decreased 11%. 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 24% from the 2023 fourth quarter as we've mentioned many times before.

Jay: Lance or some truck capacity provider to other trucking companies three pls and truck brokers during periods of tight truck capacity those other freight transportation providers reach out the 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 as reflected in almost all of our commodity groupings <unk>.

<unk> or substitute line haul service offering overall revenue hauled on behalf of other truck transportation companies in the 2020 for fourth quarter was 16% below the 2023 fourth quarter, a clear indicator of the capacity is readily accessible in the marketplace revenue hauled on behalf of other truck transportation companies was 13% and 15% of transportation.

Jay: Revenue in 2024, and 2023 fourth quarters, respectively, even with ups and downs in various customer categories. Our business remains highly diversified with over 23000 customers, none of which contributed over 7% of our revenue in the 2020 for fiscal year.

Jay: Turning to slide 11 in 2020 for fourth quarter gross profit was $109 4 million compared to gross profit of $124 6 million in 2023 fourth quarter gross profit margin was 9% of revenue in the 2020 for fourth quarter compared to the gross profit margin of 10, 3% in the corresponding period of 2023, and the 2020 for fourth quarter variable.

Jay: Contribution was $166 5 million compared to $178 1 million in the 2023 fourth quarter variable contribution margin was 13, 8% of revenue in the 2020 for fourth quarter compared to 14, 8% in the same period last year. The decrease in variable contribution margin compared to 2023 fourth quarter was primarily attributable to a deal.

Jay: <unk> variable contribution margin on revenue generated by truck brokerage carriers as the rate paid to truck brokerage carriers was 103 basis points higher than the rate paid in the 2023 fourth quarter and the mix headwind 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.

Jay: Principally certain certain components of selling general and administrative costs in comparison to smaller gross profit and variable contribution basis. Other operating costs were $14 6 million in the 2020 for fourth quarter compared to $13 2 million. In 2023. This increase was primarily due to an increased provision for contractor bad debt and decreased gains on.

Jay: <unk> of used trailing equipment.

Jay: Insurance and claims costs were $30 $1 million in 2020 for fourth quarter compared to $27 3 million in 2023 total insurance and claims costs were six 7% of <unk> revenue in the 2020 for fourth quarter as compared to 6% in the 2023 fourth quarter the increase in insurance and claim costs as compared to 2023 was primarily attributed.

Jay: To increase severity on cargo claims primarily due to cargo theft and fraud in the supply chain and increased net unfavorable development of prior year auto liability claim estimates, partially offset by decreased Bcl miles traveled during the 2024 period.

Jay: During the 2024 and 2023 fourth quarters insurance and claims costs included $2 $2 million and $900000 of net unfavorable adjustments to prior year claim estimates respectively.

Jay: Selling general and administrative costs were $55 $1 million in 2020 for fourth quarter compared to $52 7 million in the 2023 fourth quarter the increase in selling general and administrative costs were primarily attributable to increased information technology costs and an increased provision for customer bad debt, partially offset by decreased provisions for compensation.

Jay: Our variable compensation programs depreciation and amortization was $12 7 million in the 2020 for fourth quarter compared to $13 $7 million. In 2023. This decrease was primarily due to decreased depreciation on software applications, partially offset by increased depreciation on the Companys trailer fleet in.

Jay: The effective income tax rate was 21, 4% in the June 20 for fourth quarter compared to an effective income tax rate of 24, 1% in just 23 fourth quarter. The decrease in the effective income tax rate was due to the favorable impact of certain state income tax items during the 2024 period.

Jay: Turning to slide 13, and looking at our balance sheet. We ended the quarter with cash and short term investments of $567 million cash flow from operations for the 2020 for fiscal year was $287 million in cash capital expenditures were $31 million. The company continues to return significant significant amounts of capital back to stockholders with a 102.

Speaker Change: <unk> million dollars of dividends paid and approximately $81 million of share repurchases. During the 2020 for fiscal year. The strength of our balance sheet is a testament to the cash generating capabilities of our last our model back to you Frank.

Frank: Thanks, J T. As we progressed through the first quarter, we anticipate that month over prior year month comparisons may become more challenging as both the number of loads hauled via truck and truck revenue per load outperform normal seasonality. During the 2020 for first quarter. As an example last year truck revenue per load increased from.

Frank: Fiscal January to fiscal February by 60 basis points significantly outperforming the typical 160 basis point decrease looks.

Frank: Looking at historical seasonality from Q4 to Q1 pre pandemic patterns would normally yield a 5% decline in the number of loads hauled via truck and a 4% decline in truck revenue per load, yielding a lower topline sequentially on the rate side in fiscal January truck revenue per load has trended reasonably in la.

Frank: <unk> with seasonal pre pandemic patterns in terms of truck volumes during fiscal January our truck volumes trended slightly ahead of normal sequential month to month patterns based on pre pandemic seasonal performance trends. However, we did experience some softness during the last fiscal week of January.

Frank: Which was more pronounced on bcl dispatch loadings as compared to truck brokerage loadings.

Frank: Attribute the softness experienced during the last week of the month to the severe winter weather that recently crossed the entire country and southern California fires.

Speaker Change: One other point is worthy of mention with the change in the administration. We like many are looking for visibility into policy shifts that may have an impact on north American freight transportation to be clear our first quarter guidance does not anticipate any potential negative impacts from tariffs.

Speaker Change: Turning to slide 15, our year over year expectations for the 2025 first quarter are the truckload volumes will be in a range of 7% below to 2% below the 2020 for first quarter and truck revenue per load will be in a range of 2% below to 3% above the 2024 first quarter on a sequential.

Speaker Change: Basis.

Speaker Change: Our guidance for the first quarter implies a 5% decline to a 1% increase in truckload volumes and a truck revenue per load ranging from down 6% to down 1% versus the 2020 for fourth quarter. We also expect revenue for our non truck modes to be modestly below what we experienced in the 2020 for fourth quarter.

Speaker Change: <unk> reasonably in line with normal seasonality based on these assumptions, we expect revenue in the 2025 first quarter to be in the range of 1.0 side.

Speaker Change: 107, 5 billion to $1 75 billion.

Speaker Change: <unk> earnings to be in a range of $1 <unk> per share to $1 25 per share. The 2025 first quarter guidance incorporates a variable contribution margin of 14.0% to 14, 3% and insurance and claim costs of approximately 6.0% of estimated <unk>.

Speaker Change: Revenue one last point before we take your questions to 2020 for fourth quarter includes a five penny tax benefit as a result of favorable state income tax items, we do not expect similar tax benefits to occur in the 2025 first quarter with that Arlene wed like to open the line for questions.

Speaker Change: Thank you very much Sir at this time, we will begin the question and answer session. If you'd like to ask a question. Please press star one on your Touchtone phone. Once again that is star one to ask a question to cancel your request. Please press star two and our first question comes from the line of Scott Group from Wolfe Research.

Speaker Change: Your line is now open.

Speaker Change: Hey, Thanks afternoon, guys. So wanted to just get your views of where we are in the cycle and some of the data may be getting better I think some of the truckers sounding more optimistic.

Speaker Change: I hear it from you still have lots of capacity available so.

Speaker Change: Where do you think we are and how do you think about the cycle playing out this year.

Speaker Change: Yes, Hey, Scott I guess, a couple of things.

Speaker Change: I'd like to think that we're in the beginning of the next cycle I could also argue that we're at the end of the prior cycles, so somewhere at that kind of bottom ish point.

Speaker Change: I think sentiment is clearly more positive we hear that from agents, we hear that from customers I think that there are some.

Speaker Change: <unk> from the election.

Speaker Change: Part of that positive sentiment sort of a pro America pro North American stance, there, but certainly there is there is more bullishness in the sentiment that we here at the same time, we're all looking for a level of clarity from.

Speaker Change: From D. C. These days on policy certainly anything that is pro U S or pro North America is good for Landstar.

Speaker Change: We're also watching closely the fed obviously you guys all saw the news today of holding steady there.

Speaker Change: There are interest rate sensitive customer bases in our portfolio housing and all of that would be examples of that I would say that the rate environment is ever so slowly starting to turn.

Speaker Change: I think shippers are taking are trying to take one last fight at the Apple.

Speaker Change: Matt May have some commentary on that one but it does feel like some capacity needs to continue to come out we're continuing to see that not only in our Bcl fleet, but also more broadly so.

Speaker Change: At the beginning of the end of the beginning of the beginning would be a short summary, I don't know if you want to put any context around some of the Asian conversations and customer conversations you're having.

Speaker Change: Excuse me.

Speaker Change: I would say the agents are cautiously optimistic we're starting to see some positive things.

Speaker Change: Frank mentioned were positive revenue Q4 haven't seen that in a while.

Speaker Change: Consumer Durables, we were just the negative one in Q4.

Speaker Change: Q3, we were minus three so we've made a little ground there and we've not been a positive.

Speaker Change: Quarter on that in several years now so it feels like we're chipping away at that same on building products, we're starting to see a little bit of gain there positive two quarters in a row and revenue growth. So.

Speaker Change: I think we can definitely put our finger on some things that are positive but on.

Speaker Change: On the flip side to Frank's point, Dan rates still continue to struggle and we've got a lot of bands out there. So.

Speaker Change: To Frank's point.

Speaker Change: Actually optimistic.

Speaker Change: Okay.

Speaker Change: Then I wanted to.

Speaker Change: I'll ask on the <unk> count continues to trend.

Speaker Change: Trend a little bit lower what are you expecting near term and just given like the pretty dramatic drop in bcl.

Speaker Change: Are we comfortable that when the cycle turns theyre all going to just come right back or do you think we need to we need to do anything different to sort of incentive to come back or the cycle is going to play out and theyre going to come back how do you think about that yes got another good question as always I would say that.

Speaker Change: One of the things that was in the prepared.