- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to Landstar System Incorporated Third Quarter Earnings Release Conference Call. All lines will be in a listen-only mode until the formal question-and-answer session. Today's call is being recorded.

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

Joining us today from Landstar are Jim Gattoni, President and CEO; Jim Todd, Vice President and CFO; Rob Brasher, Vice President and Chief Commercial Officer; Joe Beacom, Vice President and Chief Safety and Operations Officer.

to call like to would I turn over the Mr. Now Gattoni. Jim may Sir, you begin.

Jim Gattoni

Good to and quarter you, morning, Thank Yunis. welcome call. earnings Landstar's conference third XXXX

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

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

much of as we somewhat nature do equipment, over via to per rated trends hauled load the the X% trends industry the and along tends other quarter on and higher platform for other the contracted financial down increase - Historically, the the performance market spot quarter over capacity diluted Earnings essentially decreases has it up month during comparison XXXX and a quarter quarter XXXX X% quarter towards versus our was on air the per of XX. truck of unsided to cycles. third of mostly was with Our quarter range due trailing pronounced van are was reported mostly truckload flat third truck of XXXX equipment results in per XXth We specialized hauled third drop with revenue volume. above truck truckloads truckloads with per end over freight impact best third financial various to hauled via services. increased less XX% the the our on XXXX hauled revenue guidance. contraction act transportation the X% share XXXX truckloads excluding provided haul, the with more of equal ever third X% Revenue Landstar’s in have Landstar's the non-routine X% quarter third prior XXXX at the early within believe was the we third load down Overall was a XXXX revenue to year-over-year attributed market commit Landstar XXXX that than both in low transportation on may third our guidance month in quarter, load pricing X% revenue third X% - revenue freight ocean modes as load. service. Truck XXXX business, fuel quarter often per pricing and that difficult third to sources July part and above since when growth of performance truckload the year costs. quarter spot truckload hook XXXX quarter, per the third approximately Revenue like year-over-year significant seem history. on third that odds via quarter industry in revenue by

the This BCOs influenced diesel the surcharges loads metric as in compared in BCO many given metrics excluded believe customers by to billed this from quarter, XXX% loads load Accordingly, hauled is much XXXX to hauling gauge Landstar's by One revenue. the is which time, less metric follow the influenced fuel quarter fuel on per to of per I third requirements provides fuel revenue Landstar hauled on of many including as market truckload, changes is we by overall all third and the in of BCOs. mile are revenue costs factors, length cost by increase compared and current of XXXX costs. conditions equipment fuel a better delivery passed

While February on via in has near sequentially magnitude mile the year-over-year van change hauled BCOs seen equipment in since it revenue rates not XXXX, industry in we per been decreased have reports. Landstar's reported various peaked

hauled then van August July capacity quarter, July third $X.XX was X% equipment XXXX revenue mile the in below over per was BCO During August via and on XXXX, XXXX.

basis, XXXX, In the mile on sequential in van hauled BCO mile third van all-time as where June the van only prior September though below on revenue first of year-over-year Even the equipment the In month was below in per BCOs XXXX. February. XXXX on by XXXX, hauled mile was fact, hold BCOs the revenue capacity end the was XXXX X% reach equipment since by high quarter corresponding on month of below revenue year. per was a via per August XX% equipment September

unsided a by oversized loads As it per X% August September per September high We to XXXX, July, mile somewhat third quarter. heavy XXXX flatbed influenced of have was BCOs X% record to hauled amount the to strength via XXXX hauled the quarter, BCOs an tend revenue third mile mile. Overall, stable market XXXX. and in for August at via elevated equipment in manufacturing in from over And higher revenue equipment significantly of per took as and in respectively. mile than approximately increased higher unlike per the July, van per and on a BCOs unsided hauled at beginning loads of X% of BCOs oversized revenue by X%, level summer that the sector's equipment, heavy recovery the the revenue as unsided loads on sector, expansion of loads on recovery in attribute BCOs - hauled this demand via impact metric - revenue the demand on hauled equipment, lagged COVID by pricing the relates that mile late and via consumer-based place van by is

Consumer load XXXX As third growth the haul to XX% quarter. attribute substitute throughout to consumer-driven the and XX% in from economy and volume The quarter as and parcel haul loadings. was I each in count products, for represent environment volume of XXXX other of total of In slowing and substitute X% loadings experienced industry compared building prior approximately trend substitute prior in since equal summer July. third carriers. quarter combined durables, to in deselling line softer LTL the re-stabilization continued parts, than third quarter strong in late quarter large hazmat 'XX XXXX rate consumer July primarily hazardous shipments to to the over verticals - general, particular, XXXX. decreased automotive XXXX. the its second networks compared XXXX the August demand line and [ph] the to materials, decrease over due our downward truckload metals second XXXX these August September was slowed to of XXXX the and was quarter. over the in second below year load machinery freight haul the approximately The line in in was year rate of growth September we count, truckload volume XXXX, X%

was qualified We model. capacity count. million The to year-end quarter. business XXXX continue new in ended owners, end lower with the by to of XXX trucks second attract was the agents provided XXX end of third agent the at number the XXXX third our quarter over from than candidates trucks [ph] quarter Revenue the trucks XXXX $XX We quarter. BCO the trucks XX,XXX below of XXXX

quarter We freight third a the number BCOs not environment on quarter unusual X% offset third approximately with an to mile XXXX X% the experience quarter of quarter slightly compared to network. a the a lower truck average few in hauled to per [ph] in hauling increase by Jim the as the quarter utilization, our it's Loads higher quarter line XXXX the on loads utilization in third-party his were typical in items company's per third BCO on XXXX below via within the XX% BCO carriers revenue decreased XXXX in As count. with comments over XXXX specific The third third-party partly number third record now BCO an per quarter. turnover. for defined quarter month-to-month, of XXXX carriers the approved pass lower I'll third quarter. financial increased statements. third ended

Jim Todd

property, debt. third the variable on quarter third decreased typically XX% the in was in by attributable compared contribution in-person increased in truck third large million compared partially in profit of operating year. third corresponding year in mix, carriers period of percentage revenue period XXXX profit gross Other to contribution quarter to Jim. carriers, in of an Variable compared third offset G profit and the quarter million unfavorable third-party period event rate has the XXXX. XX.X% insurance million generated points was the X.X% third XXXX. XXX variable the basis I The revenue BCO included disposal of offset resumption to as XXXX XXXX rate of so will XXXX lower contractor $XX.X million Total Gross revenue current third quarter. million which generated was XXXX Insurance in was period, the an generated a claims was transportation of of covered press compared increased decrease in compared million XXXX insurance primarily margin X% the a in than a and the as XX.X% contribution was margin a and margin by primarily $XX.X by liability for gains margin million in on was to year generated the primarily costs than revenue increased X% to due for which the gross information quarter. quarter third of profit XXXX $XX.X by to XXXX commercial as to bad as maintenance various the rate and company's quarter for period. XXXX same Thanks, in to capacity to our $XXX.X decreased by providers. attributable Jim the costs of contractors third increase has has to third increased the This increased net contribution were XXXX third in revenue purchased mix well as independent million than in revenue to paid margin of third $XX.X in the severity of on during premiums quarter typically higher the third impact estimates. quarter, to rate by was costs last certain operating $XXX.X paid gross unfavorable financial cover provision The the auto to offset quarter, revenue partially providers, and compared was truck BCO period the compared truck was The other XXXX BCO claims XXXX brokerage $XXX.X In claims XXXX brokerage equipment one quarter. decreased claims XXXX multi-mode the by XX.X% in the two, information XXXX in claim of of BCO quarter and costs release. costs, $XXX.X in purchased carriers, compared quarter development capacity XXXX. the partially in was transportation revenue brokerage and contractors variable of And impact of truck the trailing XXXX independent [ph] higher increased excess XXXX prior coverage, increase as

million from in to to amortization The increased the quarter. for rate due XX increase capacity and and insurance quarter, continued tax professional wages and XXXX quarter XXXX refunds million by XX.X% a million XXXX basis and Depreciation to $XXX,XXX tools the investment and The the due compared general with costs, of for in effective our the upgraded and the equity rate tax respectively, to increased in was $XX.X claims the estimated $X.X quarters, tax approximately information decreased were tax upgraded to during During quarter. under third $XX.X in compensation of third and compared rate compared offset equipment effective XXXX under the third technology provision third selling, was $XX.X unfavorable increased costs effective essentially costs $XX.X administrative agents to by fiscal and benefit variable XXXX equal third depreciation trailing for approximately was tax continued fees new $XX.X compensation from higher points prior the costs million incentive year estimates. increased $X.X period net investment administrative and state increase was technology rate Selling, in in employee XX.X% to XXXX. to attributable quarter resulting compensation quarter the attributable provision annual income XXXX adjustments partially XXXX third and million million subscription $X.X applications income In to XXXX and primarily on arrangements. stock-based the in XXXX. income claim the on tax costs effective for and primarily anticipated income variable was the third decrease programs million applications year million, included of excess and below The general in compensation decreased capacity. programs income in use in and agency This by new realized XXXX than for benefits XXXX depreciation. use was

X the sheet, cash Looking from cash were $XXX $XX the million. of was Cash capital The year the history. at our flow X balance first operations Jim. generation exceeds XXXX XXXX any we short-term months to fiscal cash of with Back of fiscal $XXX and expenditures in million months million year you, flow first flow and the full company's operating during investments quarter cash ended $XXX for million. operating of

Jim Gattoni

quarter XXXX The revenue for XXXX. compressor difficult most quarter any provides to fourth prior earnings Jim. over year in quarter quarter [ph] Thanks, and the

revenue quarter a load revenue $XXX fourth was over load the per the record XXXX was quarter. XXXX truck per time example, first truck an quarterly As at

load fourth count Additionally, truck quarter quarterly all-time in was the loads. of lesser XXXX an XXX,XXX record

the fourth and the XXXX have truckload the have this muted expectations, thus the October of throughout one more higher per pandemic. quarter of rest average comparing will the far our season X to fourth weeks sequential X%. volume a October, fourth quarter approximately truckload the a and also quarter the the third of truck our in third includes week truckload the the fourth the that truck revenue revenue the predict quarter in count and in from fiscal fourth XXXX third to load years On XXXX approximately the assumed pandemic, first below volume quarter. the fiscal the trends preceding X% quarter we Truck equal in in harder to extra in on the truckload the was due shipping from the we on XXXX change to XXXX year. relate recent timing to quarter, the in quarter [ph] year-end. load has account the it the of be revenue softening based sequential holiday quarter As decrease a I've average In week load years to was expect Note and extra to anticipation few quarter given experienced quarter been when per when to the quarter fourth X% into the range given continue to XXXX fourth fourth quarter. fourth the XXXX per in Even comparing experienced that fiscal historically the than expect quarter, taking preceding in X compared week fourth in fourth quarter, continue trend volume we

XXXX quarter, to the load quarter below truck However, X% third revenue Yet XXXX on to the Based the like XXXX, per fourth revenue quarter. more in X% quarter the third quarter revenue fourth load the quarter load quarter. in fourth X%. look revenue X% expected was truck load in fourth third in truck XXXX, truck in over exceeded by below with expect be per XXXX the recent per trends, I XXXX per

X% of assumption, anticipate BCO billion of currently quarter the the of in XXXX X.X% be via loads the Based billion. revenue revenue the be in these insurance number revenue $X.XXX quarter of on of X% claim to earnings quarter. XXXX are I per of approximately per fourth anticipate range that revenue. $X.XX. in hauled truck load the I be and range Based XXXX diluted costs $X.XXX to fourth Given would revenue, that load per below on and quarter share to fourth to truck, to XXXX fourth assuming expectations $X.XX range truck

providing guidance quarter. approach the typical our the Following guidance not be of financial periods providing uncertainty given and beyond do of the economy, upcoming we expect U.S. to financial for

experience operating still estimate, model's or an normalized were insurance, XXXX full XX% if we an as to generate decrease the revenue believe would resiliency XX% in However, assuming margin year example in of from Landstar and more. we XXXX a of our

scenario in domestic XXXX U.S. in and revenue new cash environment. our however, year freight, free estimate, XXXX decrease XXXX. Logistics, fiscal relies Transportation The strong exceed of flow domestic to [ph] $XXX XX% from model, cash the in any a in full free flow provide anticipate on demand Given We'll and manufacturing. business our almost million we answer heavily consumer

While support in the we large invest and we continue equipment and continue business to to comprise that shareholders. network, who Landstar owners small facilities technology, cash return the to

Since During time, Landstar to XXX,XXX line Our has cash purchased of Instructions] flow. came million. [Operator questions. of stock, dividends cycle, the via will we total cost that, of over at Regardless ISI. approximately with amount third share you we free the X% the open point cash we purchased a shares will first count. we billion of flow share $X.X Landstar returned excess question-and-answer in when the of XXXX, in outstanding this year-end from the much, first X.X and $XX And Evercore question Yunis, million quarter, Thank the to significant started XXXX business XXXX purchases. shareholders purchase to company Jon stock of Chappell sir. use our our shares, the Year-to-date, purchased share of session. programs, primary At very begin the a

now is line open. Your

Jon Chappell

morning, Jim. Good and you. Jim Thank

Jim Gattoni

morning. Good

Jon Chappell

hit time you here of laid you just and out I that know your towards themes as you how want a what half don't some getting from for shine from macro And 'XX about the demand? relative let's perspective? you help but feel with of bigger XXXX. of But 'XX bigger a every any head to kind can't you first What volume to outlook, customers, macro day. guidance hearing over consumers second just to XQ to the from inventories picture on you these Jim, half give are with of the do say, about, and bridge the think

Jim Todd

Well, I shippers the second season relatively going flat peak would that had were that of our were in fourth be say quarter quarter to more last year. a the commentary to some favorable and to couple more our

that a has little thought think of – bit. kind I disappeared that process

Now muted everybody flat peak is to a season. soft

clearly So anticipation up call, softened would July the of our say to - since peak a have season. compared things better I the

that's So I think turned.

year and talk quarter. The - for quarter last quarter. if be into difficult are we I'm first the us demand you going - drove at first to got first there, consumer and extremely Our had look demand then the sorry, we to record it really you how about know, first side coming the in next a this year, comparisons

in demand to see per quarter, is where you off first is in from you And drop in first We load X% another typically, not a quarter like we XX%, in were the to are quarter. already January. a the drop fourth behind you Clearly, where know, the like rates. on X% December bought off see we the is [ph] that XX% revenue

stable going to September into to and the and direction tough first be first just year. - So going thing, next the volume demand August going - of is July first rest seen season to the throughout We and comp from of we've decrease on an from but the peak kind definitely to of looking half comparisons July to that challenging to anticipate quarter year kind I - on the be be feel the the scenario the sequential - economy. extremely based think it's at we're load the - very the next July trends half of June

Jon Chappell

That XX% about Okay. at operating of have margin I then macro makes quick in just decline margin. a your talk that you bit the backdrop for elevated a And keep XX% commentary type can pretty revenue levers the would plus just laid a little still just difficult that pull follow-up. very that sense. Can you thought out? to you end,

Jim Todd

contribution, As a our XX% I a through of XX% fixed pushing are - few we leverage percent shows contribution mean - variable to variable lot there. costs. in very - a don't operating that in as of really your income costs of have our there's very fixed of

it's There's employees. a revenue we probably X,XXX We've maybe the compliance need There's all a it's not leverage in through now. XX number the - of for have the right? we the people, per whether or have employees - years there. side trucks had of the X,XXX number We still If lot system volumes passing load decline, if the the system. on loads of

and a benefits of the on - wages XX% So there's leverage - not SG&A. which up makes about because on

So We tweak but can of if - tweak turn leverage. a don't you like not fill and in there's I've positions, can past, lot there. down, rehire, there's here the said we just of cost pieces, a things don't variable would you we program. to million guess I downturn other the compensation $X have $XX could $XX in million the next on million structure. pickup And the maybe And or million $XX year, - we

have. labor a other that, maintenance for trailer always than operating inflation you and system other But on repairs. we got that of in So that with lot the there's our costs

still day. is hits live unpredictable transports some with because every You've come mean over unfavorable. in been we we've the I that last couple that a now, of technology build so efficiencies elevated the seen you've years still network. few The investing the with depreciation to with insurance agent out right got insurance other

the - out not to the little of So other it going we leverage piece than there's I lot is bit, think, again, can but get a again, a the the pull on fixed programs. it's off biggest be tweak costs, variable to to compensation - trying

Jon Chappell

for Okay. That makes Jim. sense. time Thanks the

Operator

from next Bascome of our And came the Susquehanna. you. line Thank question Majors of

Your line open. now is

Bascome Majors

last Hey if comp, stock the comment, there's you changed on where anything for including accrued has comp, this be But "normal from XX? year" square next of us we missed if update Jim, maybe that and that give an [ph] the you that can And variable more an X apologies to just make year would year? to it.

Jim Todd

Hey, Bascome.

Just see a as a variable contribution we follow-up, some over expansion 'XX. too, 'XX in downturn margin, should

think of $XX I about million in variable programs, be the under approximately case, million. XXXX, similar $XX variable compensation target margin million. million accrual we $X as 'XX And expansion. picked bear up contribution current bps to [ph] XQ about for XX $XX would respect to With is numbers then

Bascome Majors

Thank the XX% out scenario plan that X still actually pay to the you you. have of go Would revenue would incentive out? decline. you XX? In Or than a could the laid where comp kind lower

Jim Todd

answer in on a But not. don't setting we January anticipate for at it that target XXXX for million, a will set for you chance but not would chance XXXX. pay it revenue. off targets if a know targets I yet. XX% when the our have there's better have a we also decline set We There's we in might a to our I'll $X could -

that through as January. update more process. don't targets our actually you go we We finalize give I'll till So

Bascome Majors

[indiscernible] for one the And for last Thanks one me.

was transportation XX% there believe other it volumes at peak. XXXX I that so look truck XX% a the if above number, the or line still in talked haul, are You But close revenues. I down to about substitute lot

below sorry, for and a still how pre-pandemic has what over far next what number you. kind above that the time. year? Thank volume So would pre-pandemic as a of get are pretty any the still sense good have parcel we of some year growth you would a of some been into have sense a been have LTL they're been story customers planning we what - Do And level? on

Jim Todd

as driven start but trailing a a good might demand. size, not wasn't That - It's just was - our it power-only looking near not people we just the Look, be very for pre-pandemic that's pandemic capacity. question.

I It's of kind that drop After was the in was, almost do. like about I think talk it's as the where people of - with a trailer. someone hook the unfortunately, move that hook drop we volumes and else's don't have business that that could - where But out. try that the substitute up, haul little I more that being say bit I that's prior and a we'll a dig see maybe to XXXX, sits. would little get line that - and

So going I having than beyond off back our little and commodities. you're not that see a year. to the last drop for quicker general history apologize But business

Bascome Majors

Thank you.

Operator

line question next our And you. Atkins Jack is Thank Stephens. the from of of

line Your is now open.

Jack Atkins

Hey, Good guys. morning. the Thanks questions. for

about So let XXXX. and think have sort as and housing sensitivity what Jim to of unsided you housing a demand, that? to sort maybe I have about you sort sensitivity the impact, of me would in of ask sort you would were Gattoni, unsided just guys that? think, mean related sort kind flatbed that of slowdown the want the what market to think - demand you on Or of industries so could of you do have

Jim Gattoni

market unsided a generally, right, be mean I strong. relatively as the last negatively think was - building strong market it pretty for would I and products year was the over us impacted. the Well, a housing half, producer was

So X% of building I that highly diversified. revenue. our Again, makes products up we're would say about

almost like act else. would it me, everything to So

durables We sit have other all that stuff and the is consumer where appliances we hold. the

June, stuff everything the and demand, machinery durables. near coming rest take carriers. consumer the a - the metals some slowdown substitute mean, would your building stuff through the think to bit there. - coming parcel consumer I and the But a piling on you've similar and even And decline It's at up very that say the affecting I else, seen the overall line applying not across decline economy side. in products, we see right? was of clearly little But warehouses that excess dynamic the you about see market I on you you're the So freight flatbed haul, talked going specific to

any business, though or that in softness machinery one not our where directly general flow into like dynamic, flatbed categories the about of think will that housing we're into you it's housing. even So stuff or those tied

So…

Jack Atkins

Okay…

Jim Gattoni

there, Rough answer about But… lousy Jack.

Jack Atkins

answer, No, it then… was Jim. And a good

Jim Gattoni

didn't the plane. I land

Jack Atkins

kind maybe to and when due surprised ocean. That's I to area been strength commentary of there? the guess, couple sort following that kind the new but through and just slowdown lines in over Do you seeing I a been of then, air years. And business, the it's you of that you of a agent it's there? a smaller lagging the - - of additions was bucket, guys think up, tailwind strength a one is we're that's last the that that of me of markets? look Can in international Any kind specialize nice for upside sort different the

Jim Gattoni

Yes, to they're mostly look rate, only volumes loads it, I Jack, this XX,XXX year look our right? quarter like there in only think XX,XXX we ocean think, We about there, I at year. it's compared in the XX%. did last

And it's where bit rates. the ocean, compared air other really XX% thing mean, category year. to agents which a is were increase, it's So that into little the did still drove of a elevated a rate-driven. few last mostly to yes, on about but of rates are volume I we the they

times As one driving rates point, or I a ocean think but X you back bit, were and they little were ago, it. a X pulled what's the know, at that's year where that's

Jack Atkins

it turn time, again the I'll for over. Okay. Thanks guys.

Jim Gattoni

Yes.

Operator

line Todd of KeyBanc question next Markets. Fowler of from our And is Capital you. the Thank

is Your line open. now

Todd Fowler

good great. Thanks morning. and Hey,

how revenue I revenue just load that's van seemed the you of this So spot seems a a per had commentary your some we've some at in of contract. now up time spend little there. 'XX, to that in and out line trending prepared more wanted little the in When But that And and it around on rate a quite look bit more about versus remarks. data know kind talked this like rates. your with track was comments bit correlated bit spot a load about your it's XX%, little is with more I bit Jim, I to past,

shift the much that you mean, 'XX. I that and the see to you spend And as start so into little on will or load more move van you you to some more things know, only that you can there's per power of mix more just expecting bit a is revenue decline time, more

spend load little between Thanks. that with Just spot on revenue what of and you're more seeing kind per rates? wanted to bit decoupling a time

Jim Todd

There's Like and little of through when hook, it I a significant than more. put our you're steady, so put those little and spot work if more tend to It there. But a It's out longer. in while a you said, of and kind question. that longer trailers providing that little can you drop on market just and get fast little pressure you steady. when more is part trailers in as no them not trailers rates lock kick little They little you system pricing. a more bit the you'll a a a - hold takes stable does

trying load, pays you when to think they most saw is the our look like tend about, little model we about thing them utilization bit talked a slide their - the find because bit. know, little right? they're other premium, a that BCOs, rate So you The down [ph] and is pays you the load to for

they're the load. they're So still model for out not looking They're hauls because loads many sitting there.

So little going rates going they'll drive walk the They're haul as of months. the to keep not XX%, if going still to look - there's in they're a X load. up rates down for to where model that only they're to much not are bit away

of like the flatbed whole up load, actually bit. So if little have non-routine, you total stabilizes there's because we - flatbed it a flatbed revenue per a The at bunch things. the combined look of part

So that's the overall driving thing.

the us, and industry started XX% with seeing XX% correlated far a below is. the we spot to flatbed When February. - is from since and figuring softness so I but the haven't we're be - supporting where It's side. the with you're with last just we coming van And we're first seeing this, you, off side, year. out Todd, below just little So with why struggling honest from I'm - market in not waves out freight them

when Now XX% data on is fuel envelope, and the out, read even like of they some we behind. I've stuff back - a done ex-fuel, we're you lot the pull the and

reading XX% industry. So not in the you're that or XX%

And talk truck rate, what paid shipper in of a factor. to to There's kind thing it not We value, BCO. the getting I mean are actual was and the other on doesn't put it's posted stop numbers shipper. other And We don't build stabilizing to as The if billing what's for mean stabilized. the believe piece that I is another about fuel the paid. data what's mentioned the - necessarily necessarily truck opposed the doesn't it going freight then to trucks is moved.

the the is BCO BCO I the $XXX Jim the the I from have of think fuel the over fuel $XXX or have removed I because are forget you surcharges forget, what side was, surcharge upwards the million. fuel So million but piece number - don't may on volatility number.

numbers. So not in that's the

out, a that takes little too. So of volatility

spikes that we So and revenue. have of XX% declines effect our the for don't fuel of

Todd Fowler

know it. some Yeah, that's I about we on helpful. And I it. I know work done - spoke know you've

and as And we're try we think about what correlations seeing. so and helpful continue to the it's and everything just

appreciate the I thoughts there. So

how share a follow-up, the us so. Can been margin? that on relatively elevated Todd, and for back weaken four you ships And and Thanks. quarters the the would into ship the to margin, loads freight maybe is 'XX? if from brokerage variable as contribution contribution know BCO, for the mix away changing. then I thoughts quarter or with Just move on it's the fourth does see market we we last some Jim kind variable of trend that just the consistent

Jim Todd

Yeah. Sure, Todd.

think XQ XQ utilization about this years, more which to to to We walking about the variable up XQ, point, dipped was. soften the exaggerated as we starting back look a to if to bit XQ XQ, that XQ don't in year, it the it you little XX thought, because contribution X if started think soft be margin expected bps. we you see XX we last I than

got as much not we've a expected XQ of as quarters. but be international to XQ, of in XQ a bit share compression a little bit couple of the So to in little than with last recent years. smaller same And

Jim Gattoni

- many bps? Jim things which when made the some how on a margin we'll is early down, And expansion, actually get slow about comment

Jim Todd

in brokerage The know, guys up 'XX as you I a the falls picked in a We faster [ph] brokerage off downturn, about hypothetical Yeah. guidepost. VCM typically freight use right? XX XX% So decrease, a bps on

Todd Fowler

Yeah.

morning. That's I the this did helpful. Thanks that. good. for catch Okay, time

Jim Todd

Yeah.

Operator

Research. Thank our line Wolfe you. from of is next And Group of the Scott question

Your Scott. line open, is now

Scott Group

fourth volume And I FEMA or in morning. hurricane guide? year. down then any between Good wondering, Jim, would revenue think you is sort XX% the benefit there thanks. price? How and contemplate as was you the quarter maybe Hey, mix of potentially about next

Jim Todd

guidance the first material quarter question, of the to do our the the third in wasn't As it any either. we and anticipate in not of part end hurricane,

So in it's about there's not is the disaster When not volatility, always it's such word, but always always volatility nothing related. bad with a than often I more material think there - that's relief - us. price

tend to the the as volumes market Our much spot model does. as impact not pricing

year-over-year over or XX the XX history, or X at years, always our volumes last have It's been you those price. dropped off If in X the volatility the years. look of only

think would I same year, the next thing. into going So

- next mark expect hardest I load. going we see going think to to And think the year. volumes pricing. decline I would just biggest like this is the had crazy bigger say is per on in predict. will But question the to It's we're revenue the the my volumes record impact be - part we - on probably I I year.

Scott Group

Okay. the lower inflected BCOs And year-over-year. then count

of what issue? that the if thing? - more do becomes that is ABX how seeing big that bigger picture, think then And this make you of what risk Just a you're from national continues? you curious And just do model, to a

Joe Beacom

is Joe. Yeah, Scott, this

count, would utilization start February. the into peak decline. in load the per third We revenue saw second in say we the saw count yes, in that BCO quarter with So and decline the to truck I

of to a where One is there a typically - of that think is off we function And that. it. of I seeing their is the in to additions inability of the or the because up times pieces lot a used see from to ability a couple terminations or that's And fashion. reduced decline get inability we're in also either trucks get but timely number demand, repaired of also the price a trucks.

The that's few as relocate around process. BCO in some all in last XXX as mentioned were bit So quarter, into they've been BCO majority hit going have, ABX year. by bottom affected of their in saw made and of the going as XX. not them, we year like and a factoring bottom are see California, get and stay normalize, freight we or out quarter further hopefully then will fourth or but front, have authority. to California did it them from think We who things stay to expect much either we the similar where contact not of their And scenario. own of decisions California loads or a kind with to BCOs those would relocation whether all started all I in little the of kind outbound of great California the of all go a increase XXXX I kind count to those us it drop of on And this count. into and next in

significant see the count forward. don't in impact our ability a California we service So or to going for BCO

Scott Group

sort Yeah, I that sorry, issue? a when wrong talking Maybe to I said was the about asked of of ABX. national it make Biden more proposal I [ph]

Joe Beacom

proposal? labor The

Scott Group

yes… Correct,

Joe Beacom

same The amount.

Okay, yes.

time. one, So governance now, quite and right bit wage And overtime. Scott, different on of that is are minimum actually. bit little a from drivers the to labor This a different it truck it's fair the exempt so relates or over as standards,

proposal, actually of drivers. it to going operator, test. with watch. we're employee relationship are that understand But a as came have an we your a three, driver and that an economic one number a to something out. there it's recall, prongs just reality would inside of there's So what call owner current that more you different DOL the you change factors they the proposal, at action And we if fail truck that as And you're look to to it, be of congressional look there the and any holistic unlike as ABX, for have with you at three again,

details anything we relationship we're expectation. come up. that that to comfortable at get our But it's it is going this we something But more more really we again, with don't feel right that However, uncomfortable satisfying as about. interpret and that now, watch detail point remain

Scott Group

helpful. you, Very Thank guys.

Joe Beacom

Yeah.

Operator

Elliot the Thank the And of you. question Alper from line is next of Cowen.

line Your now is open.

Elliot Alper

Thank you. Great.

environment, be do the year, So of freight attractive discussed through any to thoughts free portfolio? opportunities best desk cash you would of coming on And your growth? months pressuring I X you M&A across you would for the generated the kind inorganic think where given the the there that's be Are place flow curious any the first within carriers. hear

Jim Todd

against support a really those just wide owners truckload buying look open doesn't at we look trucking we If a the here were anything that model The moving broker support. agents. small conflicts freight even or Yeah. would the generally acquisitions to we at U.S. compete business because company with it in

aren't of model. there for that So domestic when wouldn't create there you us opportunities transportation, talk conflict about ground lot the within a a

are support really we few see So We the our owners. so the for we agent, that don't the with We M&A, we all the options but the big We're capacity us. triggers on on is it. always a - continue - and wouldn't time, pull support not conflict M&A would stuff very model, out organization. focus business on core, there what's there lean what

mean opportunity not could kind Could popped play, of on it us. compete. the horizon it's always generally have we our for could question. flow and buybacks. do via we're it it I looking, no sit a any say think be I'm I would what's be forward wouldn't there's international, tech not shareholders I cash - [ph] be We We're that - do there term some nothing to and of would short-term just keep but plan we It's there's - to do do never don't a and yet. freight or the for - open. take to as long we a share So have going eyes the thing. nothing's dividends just plan it our and return M&A, but

Elliot Alper

thanks. Great, I on network. Okay. the just within the visibility guess one other one

un-visible a changed ago. kind season months what peak through still few are the has the largest below as since expectations compared then, So of season, rest guess has in kind QX? I within because uncertainties what of are we peak that move to come of

Jim Todd

Well, with volumes I our - us, think we are pretty I were mean, the volume estimates pretty good. good.

the to I think it's the side. on happen the and going of what's demand pricing unpredictability

we quarter, bit rates which you to compared the fourth did If coming - for be third quarter anticipate into to negative. a pretty little the slowdown of in is us unusual

the thinks the not I think demand to going unpredictable Everybody soft. the - be it's thing necessarily is going coming most think, I across, soft. to be clearly, it's

Automotive quarter. I as think we the pricing to still keeping was where Jack over slowdown to talked and where We substitute about continue a haul is thing volumes what Even the down move the in happens housing. year. up strong, goes it last bit. which little to a be with do relatively through the is compared that our one building that's anticipate - line products to

would other - So keep be demand piece the an eye the from on XPLs. and

of XPLs other faster. that we little the they up, lot to when very look One a at good finding can't tight truck or a we're carriers the a is of the us see loosens things market. that a capacity and as And off very find in truck drop

those we're on. carrier looking eye for our we part that So that's our or another off dropped revenue for a It another it drops broker XPL of they're of off permanently was truck - down another where of it keeping XPL, That XX% XX% quicker. business capacity a like we're and was or now. little when year, last their revenue XX - haul our network. us thing It dropped use just or they about

eye an keeping we're So on too. that,

that tender to as know, you little quicker slows rejection XX%, up most. from in coming demand XX% the XX%, you're a than As when down go accepting business rates

substitute As seen line. the line in haul

Elliot Alper

you. Appreciate Okay. Thank that.

Operator

of Schneeberger is from our And you. Scott question next the line Oppenheimer. of Thank

now line Your open. is

Scott Schneeberger

give that Thanks. out? in are then us where have there morning. a you very non-res - And Thanks for can much. an Or And I'll products follow-up shakes Gattoni is large Jim idea building is And category, that residential? the component? Good similar? you a predominantly

Jim Gattoni

not mix lumber be of could I both. a general. It's mean It's you doing commercial. into

even So some it doing to stuff may or stuff shingles side. a in We - - not the new to the residential know of and it's commercial We and I for we're don't demand is final it coming the split whether be that not moving where home coming we're right? like not what We not bringing yards it's But out stuff. stuff it's lot we between doing of destination. is, in necessarily and buildings. were think may from generally from not

Scott Schneeberger

the to tricky plan year? that, beneficial next Or probably be you this up Understandable. of given Yeah. the next wind can business model. anything just of limited And But - any same but and coming that, mill visibility just things that just to not contributing along Are to But infrastructure there? just not maybe large next too, very energy, for catching wind catching alternative limited have like energy, are or it's answer projects. in you the build, you year, one, visibility to through [ph]. shippers

Jim Gattoni

off in the are Well, business would mentioned. that now. of not some some now things right we there's coming from any are of about you of - the in aware right where nothing talking move that the sectors There's people needle spike

Scott Schneeberger

call, as one from deceleration quick going Last - investment spending forward? enough. it acceleration in me. kind the or thoughts touched investment earlier about Any in with you any but Okay. business on of real upon spending of Fair the changes you thoughts

Jim Gattoni

you've we then trailing and equipment probably consistent right, Well, be the I going spend, think spend technology is is where got year-over-year. two to The things technology.

that cash sitting on the because as grow in starting starting it's we But what's the out as that to prepaid depreciation is launch. roll tools, about probably capitalize be is side, we depreciation the these was same. going new to So happening stuff spend to you're

trailing struggling the enough the with maybe it cash on still, the - building equipment, is I trailers then an So but not increase you're technology. enough keeping going demand. out the as industry to the in depreciation technology for see the think going And forward, relates to spend,

the the said, I of second at think, were range getting new like the we're we when at quarter, quotes looking $XX,XXX. paying end I - $XX,XXX As we're on in trailers

years, unable We have - about them reach been trailers to replace been we've cycle. X we on to our and a unable X-year keep

there's be them, cost trail spend We're the replacement. back so going to them get can the - ago. the because but going start going higher And is be back the clearly, ones higher trying cash They're is replacing is to year no trailer we when what the the replace, in significantly cost start one to we a higher, than just today predict next is us to depreciation a as just it growing was new of We're fleet. system year. not trying to mostly

get when what to trailing for trailers The we is more and we little to where spend, predictable that's points year right? our technology. biggest happens So can orders investment, going our is in the trailers. We'll see equipment, cost. are really two And a us for those our technology see of what next

Scott Schneeberger

very Thanks it. Got much.

Operator

is Thank Chan of question you. next line of [Operator Stifel. Instructions] Bruce Our from the

line Your now is open.

Bruce Chan

west? at know, demand. color the east Hey, And your things there's gents. maybe good you out do call any revenue But to there to on from more maybe on look if Is think appreciate standpoint, I that's I load? a impact end here here? having if morning, all anything you per market geographic wondering

Jim Gattoni

much revenue of any mean spread Texas issues pretty geographically. any coming per change and the Florida that there's load. all. I clearly, a Like our the we I major not hubs. geographic moving don't in - all don't drive in think at But out I have We're think those out and That's revenue California per that mix load. there's concentrates would don't been shift in the needle and

Bruce Chan

one there? on just just No, but that's or get kind Is here else Okay. drop continuing cheaper spread. small, that of know happening off Got intermodal. maybe clear. fluidity there. it's truck it. volume then And rail Anything to quick I one steeper

Rob Brasher

us. Yeah, right? and two a our of different mean, goes small this and I is with trust really food our It's kind things one it decline it's based, the couple main is constitutes for of electronics and is is It consumer Rob. customers, that's kind it of - been One very agents. the spending, two of Bruce, there.

Bruce Chan

sink that off? leveled that kind Or Okay. of has do kind continue to expect to little you And a further? then of

Rob Brasher

it, don't now, we different how and for that off kind the I electronics I anticipate leveled those than piece But for it's accounts think I don't of market. in present. see two of ebbs at it flows the food, work anything

Bruce Chan

Okay, perfect. Appreciate the time.

Rob Brasher

Sure.

Operator

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

Jim Gattoni

Thank you.

current the what for forward, inflation quarters of three experienced Looking thus challenging environment freight during a Nevertheless, the be economic with consumer 'XX and demand the far we mix fourth our slowing exceptional. anticipate we year. performance been high has will during this than more quarter environment XXXX first

Xnd. Landstar's higher generate Going forward, model I February for conference costs Have inflation to continue - of a resiliency forward fourth to and driving and business good day. you, the again equipment cash insurance, flow Thank variable expect free on tied look significant with and cost labor, to with currently quarter financial call Thursday, year-end will that we even and our XXXX driving returns. scheduled cost speaking you

Operator

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

Landstar System (LSTR) 20 Oct 222022 Q3 Earnings call transcript