LSTR - Earnings call transcript Q2 2021

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Operator

Good morning. And welcome to Landstar System Incorporated Second Quarter 2021 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.

Beacom, Landstar President Gattoni, Vice and Chief Officer; from Fed and President today Chief Commercial Vice and Pensotti, CFO; Joe us are Operations President Jim CEO; and Safety Joining and President Officer. Vice Rob Brasher, to like over call the to turn would I Mr. Jim Gattoni. may begin. you Sir,

Jim Gattoni

Thank XXXX quarter you, And conference earnings Landstar’s Good to morning. call. Kirby. welcome second

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

and During make year, objectives, financial included limited described any to, time Factors in information plans, information. detailed forward-looking undertakes legal to fiscal call, filings These place XX-K Landstar to or or is from this business expectations. but that not for risks XXXX the and subject conference risks, results cause information differ the -- Such we to statements such that fiscal time. and obligation those update and XXXX events publicly materially from on should information in historical forward-looking to and section uncertainties undue operational, not revise strategies Investors actual Landstar’s no the Landstar’s by may relates Form and to results could nature contain Risk other anticipated. or SEC reliance risks forward-looking uncertainties

the by quarterly history. was Our in performance far best XXXX quarter second financial performance Landstar

performance company’s its records gross operating share existing its income income quarterly quarterly company’s all-time in Landstar quarter per are all-time quarter comparisons by quarter earnings time and financial for XXXX the prior prior for the to XX% for first to the put XXXX is XXXX all over performance COVID-XX profit perspective, various Second not and XXXX profit, second XX%, the initiatives revenue, per operating quarter pandemic operating BCOs. In reviewing XXXX in quarter. support its quarter financial second second This and downturn U.S. agents meaningful. general, earnings the by response in records. each quarter, quarter pandemic and and demand margin to were performance, due per all-time the second quarter for services earnings share significant gross quarterly in achieved freight revenue Landstar’s quarter exceeded this in quarterly economy fourth to XX%, revenue, in to and share To XXXX the to income, all profit the and in taken record second Landstar its of XXXX the in XX%, records network relating the respectively. and year operating gross

XXXX billion quarter share billion first $X.XX. earnings per $X.XX. $X.XX call, share quarter $X.XXX per and Revenue to in the revenue earnings be to range guidance in to we second be XXXX earnings XXXX to of was billion our was $X.XXX conference diluted $X.XXX second a quarter diluted and in During provided of the range

month-to-month trends Our at quarter relating short-term most based trends. sequential and entirely the was for time guidance on second recent expectations XXXX those to that the

would increase single-digit assumed first XXXX guidance in costs the initial quarter. mid Our over range truckload percentage a

that quarter truck fourth to of per first typically related it load, lower is second, truck revenue per quarters. load As revenue and than third the

all-time hauled loads However, monthly March truck on via an load per revenue in record. XXXX was

range. mid quarter trend month-to-month load quarter increase in XXXX above the revenue implying the anticipated throughout percentage single-digit that continue the the in initial the and level second per March softer would record seasonal truck second a guidance XXXX overall an XXXX Our quarter second for quarter, at first a XXXX

the would stabilize revenue about per same in March. true April, truckload as held March’s that expectations at per level was Our revenue April truckload as record in

increased April further trends. rate load at per we a seasonal based from May than on However, higher truck historical anticipated in revenue

truck June slightly seasonal below typical was May trends. compared load per While to revenue

truck to sense quarter to revenue with truckload better share revenue while guidance line June quarter on revenue conference performance actual May initial at of seasonal guidance. high revenue recent to an ends trends we time at XXXX second the of record in single-digit updated in exceed updated at second call the trends volume load and mostly and Based XXXX load trending through percentage covering trends via per low and XXXX month-to-month to SEC. our the anticipation was guidance those quarter a non-truckload upcoming XXXX from trends the on initial above was due X-K a at strong compared the time transportation percentage updated dilute the we first However our truck any truckload guidance, in called help slightly Landstar with total all-time little quarter loads the XXth XXth for a trending per Actual XXXX quarter range via expected our May an than investor second level The same above Form XXXX our the generally a double-digit on came with month. guidance per both In To a a hauled in reflects the for guidance we earnings of periods, services. first revenue XXXX. give the high XXXX compared experience compare filed performance updated range.

increased compared first rates trends. number recent the to quarter second than per in XXXX respectively. X%, hauled truck the load On increased pandemic over the We’re quarters truck to not on hauled via XXXX on X.X% first via X.X% to impact given loads both second the freight second including to The are XX% COVID-XX of Clearly revenue or much increased allows adverse the year industry. hauled first XXXX from XXXX, XXXX quarter. now while quarter, had the by growth loads via revenue first and the the quarter number stronger from from results XXXX significant truck fiscal average the per load unloads and

relates trends XXXX our via As loads of hauled to XXXX with from XXXX change number history. March on to April it to based truck the the trended consistently the seasonal

the sequential likely was as fiscal March volume most Although, historical we fiscal to due growth than storms average load moving growth that better in in hauled late XXXX, the trends. February believe via April May to number February. was May trend, from from to the to loads the the to The June from better historical in due XXXX XXX was line elevated March great was XXXX U.S. XXXX hit than increase points in while April to basis with from truck the performance

revenue XXXX below an points beginning XXXX average. drive April to From over US equipment small in number standpoint, the record from XXXX for change slightly from in end with was XXX mostly the in to But per April quarter, quarter. second June of XXXX XXXX. van growth durables improvements due consumer volume to we market points As second loads building and XXXX Load March. e-commerce continue the XX% May experienced in the XXXX sector it products, basis average to grew hauled demand March above to unsided/platform relates to manufacturing basis consumer seasonal XXXX The the in was to XXX below XXXX trend the to average. package via via May load, reflected to

$XX.X compared to pipeline, continue model. new the XXXX second in was highest new the agent to revenue from As candidates it qualified new agent relates we attract agents Revenue from the million quarter, the more to agents capacity, owners, trucks in by provided truck quarters. end over count. record capacity XXX XX with over the the the quarter At XXXX year to business ended we trucks XX,XXX our

XX% recruited XXXX more the second second During BCOs we the than XXXX quarter. quarter during

capacity Landstar’s Our quarter the a X% number second worth increased in XXXX attract truck increase XXXX -- truck increase Overall below improved the Loads as number the quarter the BCOs BCO BCO truck that and quarter quarter the second quarter retention utilization truck our number was XX% XX% increase to network. also to market. quarter, BCOs the a the XXXX XXXX XXXX the is by second per capacity rate as speaks per as BCO second the hauled BCO on in of for the defined the net impacted via It BCO tight second XXXX over truck compared in XXXX cancellations average carriers the approximately noting cap third-party in adversely loads approved BCO in quarter utilization second second record ability of of qualified both quarter. pandemic. ended count We XX% the a with the quarter. and plus second were trucks

XXXX the of active third-party preceding have who in we a XXX XX% increased the hauled XXXX load second in number second carriers, carriers quarter over define as days While the the quarter. which

financial Fed to truck pass to on few and and statement continues strong I Our now second other network to third-party P&L items. additional a this will quarter Fed? capacity. attract comment is metrics

Fed Pensotti

loads to performed of revenue pandemic first a of is the payments year. May partially look well, in profit hauled revenue offset $XX.X and the to quarter $XX.X margin brokerage gross extremely this gross this relief impact The revenue million everyone, comparison margin grew Jim. $XXX.X at Jim second share The on relevant Good Even some second BCOs additional same Due the companies mix, million in second our in higher our million of profit increased gross from revenue total incentives of COVID last as our XXXX to on profit XX% of we of operating XXXX larger our fixed gross BCOs by made quarter. revenue to to as sequential Gross to also second flow. the XX.X% which to contributed growth profit of gross in to the profit the the compared a highest April million, gross company’s Thanks agents quarter impact history. to margin decrease quarter, well P&L, the the compared of balance in as from in Gross the comments $XXX.X and in year. profit, and and year, mostly a this specifically our morning, so has the compared the truck covered us. our a as quarter increasing pandemic XXXX. XX% mostly in attributable first this by the again quarter last in by second costs, became of sheet joining profit operating XXXX, X.X% with quarter revenue increase our measure or percent and specific revenue percentage the first thanks performance, business, margin to to XXXX to XX% sequential XX.X% was year. income revenue to quarter and was to incentive agent I’ll for taxes, of XXXX about make in the XX.X% more as compared from decreased cash period tied due year the thresholds mix commission XX% in achievement margin in quarter second was of

BCO compensation and Moving to on increase trailing gains in the higher on trailer our count quarter costs, primarily was our costs operating improved in equipment More maintenance to $XX.X year increase the tighter qualification The $X.X by quarter, was XXXX. company’s costs quarter. a an to cash expenses, current entirely incentive result costs was to BCOs the of compared in the of XXXX, to almost year additional indirect claims related to the incentive other $X.X to our revenue million, during the insurance XXXX. claims estimated second administrative unfavorable last plan, of the benefit absolute revenue disposal expense higher and and year. XXXX This of million over during effect XXXX second premiums, expectations increase development forecast variable setting bad the Total decrease period, those million SG&A and BCO in by this cost revenue driven was period trailer the costs a claims general fewer lower million were of offsetting due recruiting year, the quarter increasing in BCO provision year, XXXX net our to of the by plan costs claim second in primarily compared million due compared of insurance financial second were of and record debt. equity million for $X.X fiscal offsetting The percentage utilization. a XX.X this these costs and revenue costs of customer $X.X insurance in and year, the year compared quarter in costs miles from compared second this was BCO to in severity $XX.X to terms, to XX% the $XX.X was X.X% XXXX Selling, XXXX. a prior driven BCOs million second million mostly the for per represented in XXXX increases increase in partially compared million of Insurance In increases XXXX claim and X.X% increase the a in dollar and the $XX.X year. were of quarter last load. a and decrease partially increased the

addition, million was in $XX.X $XXX.X all-time quarterly quarter, XXXX. XXXX million in for was $XX.X XX.X% record $XX.X In Operating Operating and in quarter profit Landstar. compared a expense of XXXX to gross represented income depreciation versus amortization million in of gross new profit income the second XXXX. or XX.X% or the

tax a effective to effective income XXXX higher to second anticipated income the rate, compensation. rate quarter, for well share-based during increased in year tax last Our state recognition the that a of The same compared higher primarily to refund the the the increase tax than during was XXXX. second effective related reduced year quarter tax vesting in attributable period, provision of XXXX as quarter in tax last benefits excess XXXX was XX.X% by XX.X% rate the period compensation second compared executive to offset partially non-deductible as the XXXX the

and second the XXXX or million, the for XXXX in last million the which period income up net up first $XX.X XX.X% was was year Our to quarter million compared same $XX.X quarter. from $XX.X from

diluted XXXX EPS in $X.XX XXXX the in from quarter. $X.XX, was second quarter the Our first up

mostly a in cash year, decline investments term million. flow cash flow $XXX with year-to-date Cash last with capital capital, up our XXXX a XXXX to the was period the which year-to-date $XXX payable, as at was the working to working working quarter short compared We ended generated decrease and million, increase from less $XXX operations driving accounts million XXXX of in accounts in Looking due The in during cash defined sheet. revenue balance capital period. period. net changes receivable XX% year-over-year, from compared in the to from in same in receivables operations

I even and Before I’d forward you and like at forward and Landstar on I pleased performance meeting permit. way and discuss to I this of by third talking rest quarter, as the past we remainder with Landstar Jim to updated XXXX. we back keeping to hopefully am in to business for say the will many pleased really it of wrap up, you company’s and very I, look our look to throughout now are person the the and the Jim turn schedules that events be to make the just of our outlook team as quarter.

Jim Gattoni

spending. August improve superior Thanks, XXXX. economy U.S. to Freight the and of welcome end in and Fed, August improve begin freight to this management began the environment to from team. as the demand significantly to consumer strength began to increased in The XXXX continued

As quarter. the begin through third year-over-year as such move comparisons financial we to should XXXX normalize

of profit due tends of while the often slightly via to below number to typically quarter. trends, second third a lower of XXXX demand the third year with quarter environment freight strong the company’s supply of are are Currently, revenue second I the range quarter from freight per of of the loads believe When seasonal via via these the normal and revenue revenue second from XXXX and we number and the remains XXXX June load the to this In gross a low to truck XXs continue July, load third and gross load profit price hauled hauled Based of expect in there truck slightly elevated per current with on -- high trends. the range. July the environment, expectations, the revenue second first the our in hauled season levels. experienced line historical loads And to quarter in third trucks I and to hauled Based third relates mid-teen a per we approximates in is exceed few number load while exceeds number the loads truck quarter truck per the quarter, it those tracking second prior quarter. revenue stable, the via quarter truck quarter, typically on percentage stability truck is there a decrease weeks levels. XXXX revenue margin. quarter freight quarter truck tracks the environment, loads to performance, volume percentage slightly As anticipate exceed third typical at a

BCO that anticipate be the X.X% expect to experience number increased XXXX third in to compared coverage also actual premiums quarter above first anticipate claim of am increase of third-party projected costs I impact of a the million our would Overall, million. at specific share on in that are performance. time mostly XXXX that XXXX BCO first increase be July severity costs guidance per a half, $X,XXX quarter second already BCO the per revenues the of trends weeks we with increase by to I $X.XX. per quarter of $X.XX. tend first claims assuming and costs XXXX approximately Landstar’s have in in and is have on approximately extremely revenue third and first million costs half XXXX. quarter to such, assuming to share liability historical we insurance XXXX over quarter As and far compared would companies, relating paying first due third of costs earnings $X,XXX XX% the And based claim insurance quarter in revenue third the our pleased several during periods XXXX be increased quarter reflected with insurance XXXX track half to by claims the XXXX adversely This revenue highest as $XXX second the of in $X.XX more The of auto range to range I the in in insurance share claim to the to earnings and the and previous and compared to X.X% of experienced small or in that half. to the first experience company’s in revenue, experience X.X history revenue approximately set in similar as approximately far range thus revenue cost XXXX third we half. longer claim half % Based the insurance revenue XXXX incidents. line first record earnings insurance diluted

million company’s the profit been gross $XX XXXX and it compared gross share half year the profit and diluted overall of -- earnings in be as were net in history. to increased any as position over approximately While highest strong XXXX half ever or success. any per period. XX% far the by income a continues our In point last in first view, to achieved operating tremendous Landstar first for two has the the decades for Landstar’s environment income

at will continue and to We that, in owners to And look on continue enhancing we and technology thousands providing sides I we expect remain our with to for agent XXXX to network. open our based as business billion small both capacity easily revenue $X bell tools the first time in the pace the for focused Kirby, in of capacity annual record increase our questions. setting its of surpass history.

Operator

Stephens. come Instructions] would much, very question Thank line Our the [Operator Jack Atkins sir. of you from of first

ahead. open. Please is go line Your

Jim Gattoni

How Hey, are you? Jack.

Jack Atkins

your Hi. congratulations Jim. morning. Joe, on company. morning, Rob, Good Good and Hey. and with Great, the role Fed,

Fed Pensotti

you. Thank

Joe Beacom

Thank Good you. morning.

Rob Brasher

morning. Good

Jim Gattoni

Good morning, Jack.

Jack Atkins

picking begin that folks down the about happening once had and know if talking off sort even see, and were see from a there sort costs on on going a am lot And happening you you have start, anticipate into But you I realistic, conference XXXX a they just are we very, and trend what’s get would can above think that up that know one a slower today. I net normalize lot would get to your around depending and chance of in earnings lot thoughts kind to a being to maybe freight sort comments trend I you margins know up we be curious were your very the sustainability are and last guess operating questions I of anticipated maybe up business that maybe about a in made what’s predict net of things subject? No you I from sort market it’s of of how -- Do of to cycle difficult the of think trends gross going to perspective. the to year, of begin of where So how could flex to flex are curious spot to XX% operating and back on a Jim, call, just with topline margins if if next that’s XXXX, grow with we I profit. and here.

Jim Gattoni

of the one things Jack, Yeah. I consideration. take in

you As -- the that year plan, our and bonus second are employees variable And our wasn’t have our back ever -- one. targets actually look the you team XXXX didn’t results. and therefore highly best hit we we know, and incentive at there it’s management to here compensation

run equity because projection to right a complaints the awards now the there for and then And for this million we And growth best And probably equity you similar actually earnings. have works but similar another that. equity flip comp in I’ll you based probably million. elevated. at tell an $XX our comp side this tied and typically that in it’s and to year probably fashion, $XX having looking million million for on about range we’re a therefore, variability a in that great it’s year on our $XX could year $X variable So the be that on then like is --

So $XX year be that’s in million about combined. and normal $XX year in it’ll a comp combined this million about to you’re $XX in a looking million

if margin, can So pressure the XX% on that lot and supporting got have our we -- a decent still the a XX% you’ve So we’re variable the the and The here gross great comp right? team a the margin you it’s and executive profit of kind year the thing, XX% operating of agents year, are way of aren’t decrease theory the and agents get up, great that having can that, same awarded the tailwinds in putting shouldn’t and there’s and of BCOs programs, then do well the and art, which soft doing just that support is benefits BCOs margin. if a that because this Like great. doing we’re everybody. markets we

kind XX%, model when I protects don’t think itself kind of that pullback the softening say profit have the the probably on perspective of a size numbers. gross So and when XX% around could and But it the line. I into come have from SG&A tailwind a still we into margin year and have about or -- little decent a in because that would you

Jack Atkins

your think makes profit because this the your topline past are some those and given investments, thoughts guys year profit BCOs That the the lot is over to years. over accelerating pushed follow-up technology that a in I into my of have perspective, appreciate you guys accelerating appreciate windfall investments you have perspective? Jim. sense No. additional been Okay. I last a technology have that, you have And how and people and several I much maybe a color from guess, question, any under strong on how from just of years. And and just a forward But there sort this agents few technology of gross

Jim Gattoni

open a I I say, in what back told better role, would I XXXX to are when I get can was to Jack, make in done. checkbook that stepped we it Joe, spending everybody our tools we an and No.

effective right? making that making experience, stuff them already there. Agents we and making that many that but in have pipeline have right things tools effective the projects lot trucks, in air there’s would out more aren’t more of on, nothing list. or to and more add existed, and the on focused stands front-end right project efficient, What now -- of the a There we’re We the user now. so we is them the this

our pretty or On jump works focused jam to the rush reason sooner in. it -- much build system, the the within on back-end as that And administratively we to It’ have it’s helps on really ERP that and is but but because -- today it ‘XXs. an into building, will there’s billing from don’t stuff user that, efficiencies no but experience. help we’re we’ll later will

into another anything today, there’s million don’t trickle spend would year there we wouldn’t the a the I’d I So maybe But should accelerate projects to tech we that where -- say got be in, I forward that there’s of $XX that we’re we it’s this sudden all little million. on I going say, hey, telling to bit? be world might $XX think anything are move project a will and going cost

stay be. anything. not because say, that’s the where still is of probably actually do to that going no We we’re million we where spending to to incremental, think I level probably probably And were of and incrementally. million that incremental $XX were spend right used Almost you where rate and aware we is where $XX what to over four do longer is. now we like spend years we million an we’re extra it ago $XX are million going or $XX

pull forward. there it’s $XX to to going But say, wouldn’t We’re something, jump to million how’s that. $XX million if was million $XX to going I million, from to $XX

Jack Atkins

Okay.

again for and sense. time Thanks congrats That a… makes the total guys Okay. on

Jim Gattoni

Yeah. Thanks.

Jack Atkins

great … quarter.

Operator

you. Thank

come Our of Markets. next line of Capital the from Todd KeyBanc would Fowler question

open, go is ahead. sir. line Please Your

Jim Gattoni

Todd. Hey,

Todd Fowler

are the [ph]. like, to Fred everybody team, Hey. self-proclaimed superior welcome management Jim. Good proclaimed morning,

Fed Pensotti

to Good here. you. be Thank

Todd Fowler

on year? suggests last to you’ve comps are what we normalize, you run shift historical seasonality side starting things the from in more ahead of patterns. to understand or year-over-year versus of the back are would supply you’ve Jim, and seasonal Yeah. Is there way quarters it bias I you of to underlying seasonal trends? move as I seeing the seen couple with sense patterns. to that Are set line going anything to know so makes that based demand the on that that things on that guidance up guidance right now seasonal that the another in or the we’re seeing one either you’re there the half

Jim Gattoni

first because the was was skeptical -- second in little Todd, different. good. think, a little quarter the March I Well, flattened I bit out so quarter got it’s and a But I June this was time, I great.

We’re what trend and you per I seasonal that, when June below -- seasonally comes in through we’ve load. XXXX, through to when then revenue sitting June, to you loadings was XXXX, the line more high went slightly in it XXXX May again But May comments, June to all-time was if trends. load my seen revenue talking heard per

June on because spiked, think May it’s May really the I So softer May probably spiked. because to June was -- the right? the rate

-- and weeks in sitting to the seeing I normal in of couple the in three first July, July July So trend. and June am here first the we’re weeks

or stability, of got I So right from on those six-week I basing we years tracking am about are things six in seeing that XXXX this four seeing, weeks have three XXXX. of I normal to seen now stability a we’re and years seven-week right? XXXX, as think would

than So, point. pushing there’s at this us either nothing or that lower higher

field the a trend. talks agents with more looking always, it’s we’re it’s then and come by So that’s with We up the quarter his they’re commentary or how going the that. third the we the get look we how what his we team we to with, Joe second supported And normal of customers at And to in quarter is out the trend to coming team we’re meeting -- talking to and and about Rob seeing clearly, meets think continue. and market.

Todd Fowler

Okay. sense that’s Yeah. and know makes helpful. I that

the stability. in So more last kind six more consistency what and or it sounds rooted more like in so of seen we’ve weeks

along lines, just and seasonal what after specific on both and from the side or of on can turn you’re to the would you’re anything expectations those over different year? that. you a side seeing what it for between van And what rest so, your for seeing I’ll be those the of unsided/platform the maybe speak standpoint

Jim Gattoni

still little really. bit where better. gangbusters. side, really is still or not strength the has mean, consumer is market that. out with But from and -- the flatbed It’s the stuff a it’s it’s quarter, building whether still they’re concerned van hearing the better. talk gotten where -- I those like Yeah. shippers and haul the products, peak coming line customers substitute performances durables stands, are about flatbed is the of the right, -- I it’s we’re of really And being most that and van on they’re most that back still of

of. thing, the automotive we The those specific and it side. But So, that I side is -- on everybody sectors, the dynamics little And nothing go we about about there’s maybe improvement is the as either through lack like flatbed change right? quarter. the in the normal trend van talk talk a that one aware just of sector seasonal a And other am feels then of the chips.

continue. and or of One had -- from the only second to going nothing had we’re the expect And in two one and year. right? I trends expected there’s in sectors I the that think quarter that we one’s the quarter. the of we’ve that coming rest commodity looking than was for dropped -- But at quarter -- to commodities that only volume that other load trend the unusual really that And first into automotive, we

Todd Fowler

Yeah. Okay.

of that makes All sense.

morning. the so Thanks for much this time Okay.

Operator

you. Thank

come would Our Bascome next Susquehanna. of the of question from Majors line

Please Your go ahead. line is open.

Bascome Majors

for Thanks my Yeah. here. taking questions

Jim Gattoni

Hi.

Bascome Majors

when could do mode attractive on we’re than was come in still aggressively down point more But you certainly in your the you that higher when we’re special it return buying in more the as be up. capital or a dividend come feel where you Jim, if stock when is that past has comes? Do multiple that were lot time the years. approaching earnings absolute have normal think terms

Jim Gattoni

quarter. XXX,XXX of anything kind noticed, a the seen for quarter in we business in dynamics. had back really light the us. We pullback about brought XX% That’s As stock didn’t in a and shares change we see the the you on about

a for when We lot look also you was is months, now than reasonable the months saying $X.XX Street -- year at year, it what the $X.XX you six for more seven our clearly ago. the is RPE or

situation that it’s it -- going be is, it’s think there would So, expect now buying and stabilizes opportunistic opportunistic. -- in a and we’re is I where think, yeah, I opportunity we’re to I it if

will like start any did always something in we see it a sheet opportunistic if what on it the dynamics. in doesn’t still and any special It now investors price compete We’re the stabilizes similar business in we seeing we we to position But again end out the as balance second at a long don’t December count was we but against the in discuss in right now. as And expect where year right of opportunities quarter climb up, an and stability we didn’t the at certain the the the cash and if looking have within I’d a starts that market. we change range. by

Bascome Majors

question. housekeeping margin know where if update us on that gross on trend. if it. you and should an I the One heard missed I that. I apologize give sharing for Can Thanks thoughts don’t I

Jim Gattoni

but say little because secret. second it’s we’re the a less it as maybe didn’t actually We similar a than quarter. No, keeping

of You I think typically see bit and is a a downturn little the XX.X. quarter first

it we’re maybe And at think this using to XX point. like I really is… XX.X

Bascome Majors

Okay.

Jim Gattoni

we mean come up we the any it’s more mean to just of I really nothing end a with from way the brokerage do It’s little capacity. I trend. typically across. just pressure seeing tightness

Bascome Majors

at mean the somewhere settling did comments on July turn I make could I able a out I pretty dollars looks that mean, one maintain your next about some you question margin against there, an if good least side if even year. reasonable to more And based earlier in revenue been to with get single-digit sell It operating you’ve year. a decline you net does is next EPS mid-to-high crystal XXXX like ball. at feel

we thoughts from on bridge So next. year how any to this

Jim Gattoni

XX months may I project unpredictability stops. back difficult this to to work, the be of think pandemic of out people People it’s the because very stimulus coming in environment travelling.

I think difficult EPS. of where it’s to that answer

to, Is But in we as I to the a Now question going end think still half. toward do management here, reasonable? softness right this see street that team better think we’re year is And know the I than it you think It’s we million think I a the about now. of year margin, sometime first is worth of have where hit especially we what would in going $XX variable SG&A the XX% targets comp that get got tailwind. point this it’s about of to I when that not below that have to it’s that tailwind us don’t if it year next has. some softness going that sitting

-- answered next in that profit. I I question. a comfortable, So hope I am softness we’ll am a XX% year little with maintain I gross sitting here margin

Operator

Thank you.

would Our come next question from…

Jim Gattoni

Thanks.

Operator

of Research. of Wolfe Scott line the … Group

line ahead. Please open. Your is go

Scott Group

of normal Hey. Good costs, Jim, morning, a your guys. sort one insurance on about this we is range in quarter or Thanks. think this in costs? insurance mind uptick the new event should as this

Jim Gattoni

little are to of the have And a first takes is you special into increase used we it an longer change. severity of aware three about quarter, probably and when hear of Part sometimes of facts coming the the just it lot getting because July. incident, than bit it, a you facts weeks to

first So we these of outcome the know in things of exactly the couple happened quarter. a don’t that

would hoping now of -- about fact excess we a might if are we’re probably I things and we number lesser than in X.X%, little have think there. support we that maybe you a the on But they incidents would X.X%, they have that stuff the like. are bit sound and that very guess So what apply -- on pattern conservative know -- without X.X%. there’s not those -- I severity

X.X% it’s with So I hefty think you. be a the to honest little

predict I conservative. history to think But in little Based it’s on it’s happen to heavy. probably insurance hard claims. and going what’s it’s so

Scott Group

Right. Right. Right.

Okay.

normal point period seasonality, Your have weeks been last inline typically or the long your have seasonally history? about Do outperforming a of we than such to back we beginning period or this of we this six so your is what’s after to What’s or underperforming crystal normal. do normal, with have here? typically a transition ball of get the normal historically better a shot after to

Jim Gattoni

satisfy My at ball, And question what hard up, right, or demand it’s Capacity happen is just seasonal I there’s there’s very is there. you’re peak, sure in the strong. it’s crystal fourth be think for going going all creeps we am to market decipher demand strong tight, we’re trailing better a very equipment to to pretty I than to October, to still across the no December. coming quarter. seasonal. going think anticipating demand still I still -- and enough November, trailing if equipment not

about seasonal. So strong it a as but September, here in we last year, might see acceleration through as see August, you stability was we be might if coming get peak an

you scenario is out. do which play quarter but as going the am our more could I quarter that? look that and think, Right here, we’ll just out a finish trend. that, seasonal like I quarter, looks I I tell and like now fourth to the third a believe would second sit year at pessimist is Now I No, that this the

Scott Group

and generates shareholder then amazing returns? don’t I you balance just with that Is opportunities know model. sort just model ask are if guys And debt your there can and can of tremendous some the Fred pace Okay. on sheet flow in I one, argument an more run cash the there of such that increase acquisition the dramatically

Fed Pensotti

debt. right, doubt. do, that I cash. raise the more what no you question debt support There’s can That’s you The mean, if one. a tough company is, with

capital to consider the we’ll no time. over now But plans structure. change Something right

Jim Gattoni

of whole averse Look, to debt our opportunity model debt we Landstar balance is. unless see much the been on pretty is an And way right? lives, like the throw kind sheet the we

We pay and have and flexibility when when we we buy dividends.

like unloading debt opportunity reason and lot an totally but there’s it. balance the on a putting hit. are your one-time averse do to debt to a up to books, got be with move? We to feels sheet We’re just me What’s the a next of not

Scott Group

Thank you time right. guys. Got the for it. All

Operator

of question from would next Chan Bruce The you. Thank of Stifel. the line come

is go Your Please open. ahead. line

Bruce Chan

have it the don’t morning, of Operator, visibility just the you, Thank been do you you’ve about talked team. Yes. having. I concerns based for What of and year. Jim, of end about normalize? the but make their peak on of are that conversations tons right shipper and how you good take here, where know them to will and you’ve some inventory now some the And long levels of

Rob Brasher

you when are consumer in going again, is, levels, things especially consideration mean, are into the look the mean Rob. as Inventory everything think, at Hey, Good on take on the e-commerce inventory at of ports This disrupted. I it spending that I I things question. going overseas. levels, kind Bruce. is that the rail, and you of is

We haven’t stabilization seen yet. of a whole lot

operate care making sure our peak we’re know. first they’re conversation sure they’ve that to got we’ve been customers taken And that they them of. capacity, is, having the So making quarter, a as like that aligning since the in don’t this that with conversation with true having

based that sales new So it’s that happen a I indications seems uptick seem variables the kinds of to all high, of to there’s think big high, with consumer again now remodel, pandemic. be still home to But we a could right spending unknown. on All that have be things that.

how they’re peak concerned fourth third is into, late be through So going and to -- strong quarter about now, we a looking they’re call the for early quarter. moving

Bruce Chan

where earlier kind year levels about this right still now, those normal that expecting of that, you I around No. were said I were expecting of rate the of your comments know hold Do year. as question. That’s are potential think great about, could. you around edges XX-month color. inventory sort more a follow-up And cycle. if next to as peak, said maybe XX-month in true? But you just you one Jim, part the chipping maybe been of We’ve softness comments you you earlier think the some

Jim Gattoni

was No. back right? through. we’re rates pessimist, back where year And climbing a talking contract because to rates -- I -- our spot I half XX-month end in come the that and was XX-month I into this at the January look -- I am I are of year heading release cycle about

XX the only the and cycle rates majority months the normal stuff perspective Now, is to significant is a months. to of put in spot XX and

we’re think, yeah, -- I we’re going to a see cycle. Now,

stabilize. are extended that’s later it’s next where kind to looking just I or of and at sooner year. going think Things we’re

a business. We’re cyclical in

going that travel as be -- the maybe people -- with not get to coming pushed little were been bit, traveling I people So anymore, buy or variants and home not -- we’re a to the new goods starting stuff are maybe and They theory that’s later if contract But in up and there’s And we do of buying much. and the of and of out especially the still that rates maybe entertainment bit to hesitate a coming we and sooner some or continue going that will are Maybe moving haul of little rest to the over year. demand. the of to more. contract. freight a goods slowdown throughout travel anticipate again

anticipate we of -- keep into some the contract that, of that will think Now the but rate some changes I extended. it’s from spot market runs I just and it that don’t think cycle

Bruce Chan

you. Thank Perfect.

Operator

you. Thank

of come Next Jason question Cowen. Seidl will from

Your go open. line is Please ahead.

Jason Seidl

Thank you, Operator. Hey. Good morning, gentlemen.

Jim Gattoni

Hi.

Jason Seidl

on on that the some the And stimulus agree to to we been maybe here. the wanted maybe the remove and has ever to hits keep if at that touch to welcome should thoughts difficult all in then of think I bill, impacting year Fred And Washington some team any Landstar? difference how BCOs infrastructure get payments? seen them? of it if how if states if attracting And next we an that you’ve some

Joe Beacom

think, say I Joe. as we made that Yeah. have I we remarks, on to recruiting for to Jason, environment is up. be makes them. pretty mean, work remiss don’t are, the this is network volume Jim would it But some in location would I pretty his hard think say to get things the them BCOs the are effect the door. that and and in where I attractive we provide comments

of you as Landstar. I why the at into think, long a the the numbers we up lot way in our as opportunity and transparency see stays So environment door that’s it provide the -- is,

think at good that increasingly time. we over get I

be anything I I financial out if what they’re environment they’re who truck to way owns Landstar wants we’ve good if without who don’t are or you do you’re own on that for somebody those can’t say overall continue just that paid authority or or give enhanced decision can that and think of a percentage get we states don’t to from wants unemployment and detail the benefits. in where think your to the But coming with out to you think to So trying an what future we and you coming so. I really what I seen attractive own that’s from make any chart picture do our that another we’ve things, kind to steps I as at we’re states that the last capitalize I know and their at able -- to for on quarters that’s And it helps and people provide. on we been incredibly you’re to show several think come the system, I that. and

Jason Seidl

how to that… regards in a potential bill impact understructure And and so Okay. the

Joe Beacom

Yeah.

maintains a don’t flatbed think in Landstar. bit that bill, it and when I you and activity it. But and it infrastructure it that, directly think Jason. may market those I what if add little rates really that industrial of participate high are haul which I in the going Landstar impacts I But of of happens helps lot think And that effect We I see at directly course, don’t the any see very continue for climb. the on. rates rosy direct market tightens further opportunity equipment. general might to is we does from think a

Jason Seidl

always the as on time quarter. the gentlemen. Appreciate Okay. Congrats

Joe Beacom

Take Thanks. Yeah. care.

Operator

you. Thank

come next time Scott this go from questions Oppenheimer. would Schneeberger Please of two on The As queue. question have ahead. we more

Scott Schneeberger

business. a end half carriers That’s really business for but haul you and see What am looking really bigger capacity view how do Thanks What guess, capacity out to in regard the growing. picture? morning. and of you I very this playing markets. Not curious I year going the do just few forward? personnel out substitute happens much. there with back few your line questions have Good years. Welcome I the a the industry Jim, for Fred. on with been Thanks.

Jim Gattoni

Yeah. No.

quarter the I elevated throughout three assets is we think It We elevated would be where bring always right? there inconsistency as a happening right, after patterns that even now right? have the they the rest the of right plan, to and is. But of parcel to of well, first is, customers, of or realign, the little base in I just, it freight it like their participating line large into talked But shippers, as about historically, not elevated we they it’s and On we’ll either But think would for flow more us. haul they compared before substitute in-house. that on level the I assets. a anticipated I bit the because the significant think carriers, -- that I that’s substitute of put we’re even shippers kind line system anticipate decide year I is think, now two Not number and and assets in we’re stay business, or the and least where improve networks right hearing carrier that next their to that. anticipated stuff what stay wanting at not into year. or haul at that as we put hearing high they

for hold true this will that while. I for think think So a I holds true condition

and what of side it’s e-commerce on Because I that the from that increased -- the think trends. volume quarter the first business tell the can quarter, second mean, and that I question right it you was your XX%. to I now, in load

haul especially seasonal normal So it’s to it for would pretty line what now. outperform substitute elevated be trend the continues a and right

Scott Schneeberger

then And then please sectors you two first were that I talking in curious versus the a to wrong, it the that being and Thanks. Please handling I I parts that you overall. you there if question, you’re and if automotive quarter about of about that were quarter, Appreciate that. one. in second correct am guys forward? movement. auto dynamic Thanks. curious done And how I And Todd’s am other. lot me think said there I going think right, curious heard heard and am correct about was automotive. just chip car new I dynamic that were down were I had

Jim Gattoni

Yeah.

right one had and yeah, it was I got down was automotive so categories. revenue is -- from every growth comment of major volume. of to than X%, was so, to this volume So you X%, wasn’t sequential other volume and growth QX. other volume our had automotive, that you’re nothing the our which it actually saw was is had QX. less one negative the it sectors our we X% -- X%, We -- which that and one is QX volume two was on. sector electrical, And positive But QX mean, it what volume of a --

doing over As in still it may buy moves. and move significant bit the new new relates the But this of little we we’re that. in of that business. of area out XX% to cars, parts aren’t not piece going car of We plants, playing a

Scott Schneeberger

Thanks. there thanks follow categories Great. on year-over-year. other lesser detail. just and the your but catch a know for it’s quarter And overall, to growing one is the I of of Yeah, a all,

it’s Just you that’s call curious the category worth anything would in so since industry anything out just broad, noting? in Thanks. that

Jim Gattoni

it’s broad the total called of freight like the is part of XX% losses As for quarter. kinds our probably and all

he on the when puts those So SAK it agent just puts when -- [ph]. there,

nothing within governments as durables, line But building is consumer small, that’s or some non-hazmat X%, But moved there in volume, There’s as It’s their but the know haul. dramatically is. within -- commodity. XX% that that’s products somewhere up the the just biggest the some category nothing a substitute up really customer foodstuffs stuff moved nothing So there there’s small. don’t generally relatively much typical the what that other we, we non-toxic, commodity of know your needle type other. that actually within somewhere any

Scott Schneeberger

that. for Thanks it. Got

Jim Gattoni

Yeah.

Operator

queue Thank Stephanie the in of one you. come line of [Operator Next would Instructions] Moore Truist. from

Your open. line go Please is ahead.

Stephanie Moore

good Hi, morning.

Jim Gattoni

Good morning.

Fed Pensotti

Good morning.

Stephanie Moore

there you’ve of topic to actually tech just exposure contractual a on out of in of know little bit the touch I just that I how Blue business, to small with initiatives that, is and the but freight. of update shift Landstar portion a rolling any terms a of towards it of been it’s a some kind want

Blue. update to update So I there on rollout the Landstar get with as any multiyear But know a initiatives, as Landstar of Blue? organization, the just some also I’d maybe on of well across it’s love kind an technology

any helpful? So be there would color Thanks.

Jim Gattoni

kind do Yeah. are here One it spot and they’ve for is built Landstar designed world two-fold. years the -- or here over Blue are on our the really XX systems technology just is, the business, of and maybe mentioned, a been out core of systems in what you as And kind years they’re more into good which that very for a we needs very we’re arena. different contractual getting and XX they’re dedicated good that TMS.

Landstar our to from TMS So a that capacity, with Landstar The stuff connectivity over is assign that need and similar there pricing different our tool standpoint visibility is like a like core we’re dedicated little stuff little there tool, our run access using capacity that’s to business all a that dedicated Blue component business bit is Blue that. So contract bit The rates, is has a of than right? different. which and I Clarity, is that’s also right? it

the how third-party of with one best is examples give to is Clarity’s similarities. to are trucks. use is to the there us it ability So for that how see it -- effective

want or information they load an getting don’t If challenge. to your kind want the trucks the from third-party their do you’ve to industry ways to is you know it. out share with you of to trucks figure As data got app, don’t

us go on and aggregators there on directly dedicated opportunity gives piece that visibility the clarity capacity get with to us it specific lanes -- on the the actually work you to work through the So and side through to communication frame.

there to freight now help out what million -- with. run them of it. thing to kind help ever into get on their will to The of $XX of too want parade road million that dedicated to them technology we’re the grow show they business us, as It’s down kind we right the we agents is, run progressed will continue to and it by $XX through doing. how They tune we other we

dedicated that We’re in world. not capacity

is agents, right? load. talk capacity tool does Blue want a freight to right, where The the of right? product a able and just of to know us on their call automated. accept took where one handle call of on Book it -- can the that phone the as, agents we the freight that’s where that trucks off and Now don’t our our it. picking The the want the freight the that lot going take the we and can Book lot is In world, to is It carrier here to have or button be freight we capacity traction pushing and them right thing have, all just Landstar a lot push knows concept, traction we’re pushing the to So button dedicated freight to a when push they a a we’ll It Now do let Because owned and that get its they

Core. in the we’re stages the day getting And running. have up told those the variations early in -- between loads we and few the other was we’ll of that the getting running, there’s the running will weeks start Blue TMS technology through are I So it. a and --

it’s good some So to existing way using. a of it’s test agents progress and were the the tools that

Stephanie Moore

thank the for you so Great. Well, color. much

Operator

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

Jim Gattoni

good again rest Yeah. forward Kirby, on quarter look speaking I scheduled for your you of Good earning’s with week. a luck. you. thank third our conference XXst. you, Have call And XXXX Thank October currently to and

Operator

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

Landstar System (LSTR) 22 Jul 212021 Q2 Earnings call transcript