Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to Landstar System Incorporated Year-End 2022 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; and 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 Bill. welcome Call. Earnings Landstar's Conference Fourth XXXX

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

plans, to strategies statements make expectations. During this Landstar's contain information business that we objectives, conference that relates and forward-looking may call,

could differ Such financial information section to subject the fiscal cause nature or Form to events reliance uncertainties not those limited uncertainties XXXX forward-looking and results, but from or in is on or by results our risks information. Risk materially Landstar's risks, obligation Factors to, and publicly unless in the Investors described information including, the historical detailed undertakes risks and should place for to operational, anticipated. actual other no such update XX-K These year filings legal not undue any from SEC time-to-time. revise forward-looking

Note the throughout included fourth the these financial record weeks included fourth fiscal Landstar XXXX. results XX again, operations. delivered XXXX of Once quarter operations of in remarks XX weeks quarter year that and XXXX

Our the higher Among achieved record $X.XX fiscal previous earnings increase record million of revenue for of many performance annual $XX.XX, or an our XX% record we $XXX in year $X.XX year XXXX. annual in share in record year record annual XXXX. in XXXX than Landstar an XXXX set XXXX, XXXX. Diluted followed prior was fiscal per $X.X of in new in records, Landstar above another record established annual financial of billion,

million. free generated cash Landstar a $XXX XXXX, fiscal During of flow record

dividend $XXX during for additional company's fiscal Board be January the In million purchased $XXX paid and declared year December, an $XX paid of in totaling million XXXX. the Additionally, stock. dividends million to Landstar XXXX,

first quarter peak proved quarters XXXX. in environment. The six record consecutive strengthening performance financial XXXX of following a to freight our Within in be macroeconomic the

supply and into began standards further cyclical strong environment. best freight move not ease by congestion in chain environment, the to weaken, experienced we freight historically, to the macroeconomic typical As unlike began year, domestic patterns, although, still historical relatively the

both Beginning a of second XXXX year in led both quarter over quarter, fourth ultimately Landstar the the revenue XXXX the in quarter. in truckloads and truck to number quarter quarter that via number the per rates below deceleration per experienced of truck growth load XXXX be to hauled prior loads and revenue the load truck for fourth

it was Heading into XXXX the continuing. were fourth conditions quarter, clear cyclical these

guidance XXXX XX, quarter XXXX X% volume The fourth of in to week quarter As billion, below range a truck such, extra X%. be in X% the we quarter revenue XXXX earnings X%, to $X.XXX of conference and decrease by the provided quarter the the quarter. guidance fourth per from truckload X% given revenue the to fourth below to even X% call, XXXX during our to billion October to fourth quarter fourth third $X.XXX XXXX XXXX revenue anticipated

historical and all-time and XXXX of number truck that, truckload hauled quarter strong fourth XXXX by quarter X% throughout Landstar fourth truckloads was fourth X% relatively hauled by the remain Note the fourth standards quarter, the revenue loads reached the quarter. XXXX. below level XXXX were below an in XXXX by per record

in estimated higher attributed to to as earnings guidance. came the operating the quarter, guidance, than a the and the below came the in amount low the margin with guidance. in fourth This contribution of in can end of projected, end other SG&A per the be compared revenue at variable along earnings low Although, share costs reflected XXXX lower

fourth XXXX $XXX fourth the fourth and by haul million quarter, was in As million other truck quarter. revenue XXXX the XXXX when extra $XX hauled And the via the quarter excluding million, XX% contributed fourth approximately $XX to was the truck XX% below almost quarter. via revenue week XXXX revenue below compared estimated or of modes

While quarter, to fourth demand with put of the drove of needs congestion truck strong we truck volume congestion the XX% decrease chain summer the to revenue and Since in XXXX demand along impact a and from to rates experienced pandemic-driven one historic supply highs. perspective. be and and supply the fair, XXXX, chain the of consumer end

time truck fourth during to in XX% quarter same was growth XXXX Truck that pre-pandemic two-year period. load XXXX of volume quarter Landstar's the fourth grew the record per from XX%. revenue

that as to returned very expect And disruptions eased become year-over-year when will challenging. comparisons was subside, and that going to happened, the freight industry. cyclicality chain supply We growth economic that

fourth aside than the of but the pre-pandemic million Leaving XXXX above the $XXX XXXX year revenue fourth in XXXX quarter fourth prior comparisons the truck experienced via hauled in over that lower XX% quarter equipment we quarter, XXXX was the still tough the million XXXX quarter quarter. fourth higher XXXX quarter. fourth $XXX was in than quarter, van Revenue fourth

the quarter, fourth than XXXX million fourth on-site XXXX was XXXX quarter, fourth the over was million the a equipment $XXX below only And quarter. about mostly yet services the a power-only services $XX $XX XXth above other Revenue million generated transportation the million $XXX in via flatbed hauled truck revenue and quarter. quarter lower via XXXX fourth

quarter the by XXXX were more quarter loadings quarter. market XX% quarter. fourth XXXX truck was than Van lower market the loadings the fourth in years. pandemic-driven and the impacted flatbed the unsided consumer below demand than past were fourth other below X% loadings were the XXXX favorably XXXX Unsided flatbed Clearly two transportation the van throughout fourth the X%

XX% loadings, quarter, week the substitute of van line Van the via number service was primarily the hauled decrease moves power-only and the below our XXXX and in on with XXXX. loads truck in After fourth other even transportation haul extra some offering, equipment

respectively from Additionally, the XXXX XX% products and durables, were building load count for X% food down fourth stuffs consumer quarter. and X%,

materials, volume XXXX the XX% over parts One fourth in growth grew which the quarter. few of areas and automotive was

the XXXX of after in of XXXX. XXXX. contributed as who agents company agent New in new we million fiscal which of define XXXX, beginning the of million on agents This revenue $XXX the $XXX with as of end contracted followed or revenue

Our drive customers is these agent and base to and volume strong continue new the into network. truck agent will new additions

XXXX, low. million-dollar there million Turnover During typically generated $X annual our is were XXX history. of revenue. and Landstar who This $X the number last is for million agents very of agents over highest agents

During turnover X%, million-dollar XXXX, million line with turnover agent rates. was in only agent historical $X

provided provided number the year ended XXXX was We number XXXX XX,XXX XXXX. BCO decrease trucks typical of by decreased XXX of trucks truck turnover in is of with revenue to by XXXX. A a XX% BCOs. BCOs Overall, X% in of The from per decreasing by compared XX% during BCOs provided cycle the trucks beginning trucks mile. or in fiscal

equipment XX%. X%. December December BCOs hold per BCOs mile In compared van December on hauled compared on-site decreased revenue by revenue XXXX, equipment decreased to and XXXX December XXXX, In by only to XXXX per mile

of revenue surcharges revenue XXXX. In to $XXX built each million, surcharge fiscal were to fuel XXX% case, year total per Landstar's fuel to billed of a the million few of paid excluded the fiscal mile impact from XXX% year XXX% $XXX hauling BCOs servers are compared excludes and BCO. In customers built customers paid XXXX, to to as shippers, in

metrics statement it now Jim fourth on additional Todd financial other Jim? few quarter and P&L to comment items. a to pass I'll

Jim Todd

profit Gross quarter, fourth compared G the margin of the fourth to fourth profit gross on revenue was will quarter, fourth XXXX. covered was Thanks, gross XXXX, profit the release. of to million XXXX in $XXX.X other in our of quarter. fourth in Jim. Jim margin I has quarter, compared financial gross XXXX, information XX-week profit cover certain In included corresponding the XX.X% information so million as various XX.X% in press period $XXX quarter XX-week of XXXX the

$XXX.X variable the million, was period Variable in to XXXX truck on margin fourth In XXXX the quarter quarter, compared last revenue quarter. XX.X% by fourth of fourth contribution to compared revenue XX% increase in carriers. quarter, to in contribution to increased primarily year. variable XXXX margin was the million margin the contribution $XXX contribution XXXX The brokerage same attributable generated an variable the fourth was in compared

As carriers XXXX lower quarter. to truck the paid fourth than the rate the XXXX in basis the XXX was quarter in points fourth brokerage rate paid

Other operating compared XXXX in trailing quarter, to due partially primarily maintenance to was were increase of This the offset sale fourth $XX.X increased gains costs, costs property. XXXX. on $X.X million increased million equipment in by operating

in partially to XXXX accidents XXXX Insurance offset claims decreased period insurance in and BCO costs were claims quarter, in severity to as XXXX X% Total decrease increased year costs primarily of and million the XXXX. claim XXXX million insurance and an $XX.X in prior estimates, The development period. of BCO during was unfavorable of revenue attributable net compared in XXXX and fourth revenue claims by X.X% the period. of compared the the to were costs $XX.X

During the XXXX insurance and net fourth $X.X claim of million to $X.X respectively XXXX prior and million, adjustments included claim and unfavorable cost estimates. year quarters,

decreased million equity general million in in for $X.X was for benefit decreased fourth were programs a selling, increased The Selling, compensation provision $XX.X the and XXXX. fourth administrative XXXX debt. primarily in costs and to XXXX incentive to compensation XXXX fourth quarter. to partially compared and bad wages for the $XX.X our increased offset employee In compensation in the general compared quarter, variable programs million, variable costs, under million provision attributable $XX.X costs and decrease and the provision was customer by an administrative quarter under

entirely effective effective increased amortization applications upgraded depreciation in in to continued was of investment rate fourth The Depreciation the $XX.X higher fourth from quarter almost by income quarter resolution tax by use of the on was points state million in XX.X% for tax capacity. $XX.X and to XXXX fourth effective new of XXXX was in million in tax due certain the software compared XX.X% was and favorably fourth quarter agents quarter tools tax rate XXXX. increase as resulting This and income the income than rate the XXXX impacted XXXX XXX in matters. the the basis

quarter XXXX effective deferred were drove the arrangements the a tax assets fourth each decline. impairment as related In to over quarter $X.XX of addition, performance the XXXX rate year-end. as of of impacted effective XXXX the the equity $X.XX unfavorably in as income of prior rates compensation in earnings in and to the The quarter tax by income conditions tax employee quarter year quarter attained fourth increase the being XXXX result fourth approximately compared

fiscal short-term at year cash more flow Looking than XXXX. with in the The we investments XXXX for double during quarter and cash was flow of balance $XXX and million. $XXX Cash expenditures flow million. million $XXX cash capital fiscal ended the $XXX $XX were record operating was million previous of of operating sheet, operations generation XXXX cash our year from annual million

Back to you Jim.

Jim Gattoni

Thanks Jim.

to relates to cyclical our believe recent load we quarter it As consistent we seen have revenue continuation return three indicate in guidance, a the per softer load and freight of truck volume quarters. trends with XXXX first last the the over marketplace environment trends

count, to the truckload volume generally X% we sequential decrease first to quarter. a from quarter As X% in fourth experienced the to

Excluding softening has beginning continued truckload the fourth rate a the extra week first volume from decreasing the XXXX range has than volume into assumption more the rapid the a demand historical at typical of XXXX quarter. slightly quarter, as

years. Revenue first quarter per past inconsistent trends several the quarter the over from have to fourth truckload the been

beginning were Over which several quarter. with the we additional in we drifted the approximately load January. to as revenue experience XXXX. down, decrease per of X% revenue case truckload often load first has an expectation in below XXXX XXXX We past XX% per X% finished could the revenue during And where our is the per of weeks, is

Landstar the February revenue Note truckload in at levels much without throughout of that experienced first and historical reached all-time quarter. per XXXX precedent high its XXXX

XXXX the revenue established per the quarter difficult truckload year-over-year a an comparison. quarter record to for extremely comparisons XXXX the makes revenue the for first As result, compared per first truckload from

variable XXXX in per contribution Overall, we margin be a to to diluted the of ranging expect estimate range share earnings XX.X%. XXX% in billion to in $X.XX. to range revenue This quarter of first $X.XXX and the anticipates $X.XX to billion be $X.XXX

for full do plan market, nature. XXXX, year we fiscal and more earnings due guidance in year will fixed Jim on are unpredictable Although, our providing of predictable Jim? expenses the estimates they cover the nature and as of not spot to cost

Jim Todd

sales offset increase of to my Landstar's for provision assuming XXXX used full debt, million bad other on to estimate gains costs, increased costs operating equipment increased by a normalized rollout as million, Jim. With other contractor partially respect increased trailing I would for costs $X trailing operating are associated year maintenance by and with costs software Thanks the expectations equipment. transaction $X

to With to assuming anticipated tailwinds is from the measure quarter. selling, I the administrative is million company's revenue costs continue for utilize general we in assumption BCO respect debt. $X million provision case to insurance that $X programs. approximately reevaluate is costs believe on base claims to Included appropriate of each assumption, My bad million will customer to of case a and base and but a potential increase continue compensation year-over-year, variable decreases in $XX normalized X.X%

equipment. the hypothetical revenue a XX% scenario million expect costs increase amortization million on to $X decrease timing and could and I administrative trailing ultimate to In cost grow $X tailwinds depreciation decline million which and of to million a acquisition in will $XX year-over-year. those $XX in to selling new result depending closer general slight year-over-year costs

line headwinds to IT spend portion shift digital work periods maintenance and Back from in-service the also is to and development to information initial as in this expected in enhancements I our that recede recent a XXXX, on you, we greater have tools begin experienced existing Jim. will of of expect to technology products.

Jim Gattoni

In truck fourth revenue mentioned, drove and XXXX Landstar's macro freight truck XX% XXXX above XXXX previously XXXX quarter strength from closing, historic late-summer to was as environment highs. the through fourth the gathered revenue pre-pandemic quarter. and

The prior and the truck fourth first followed quarter year-over-year by XXXX rates was decelerating peak in and in revenue volume second the upmarket cycle load XXXX beginning in XXXX per and reaches quarter. growth quarter

of pressures the and year-over-year business and of variable flow robust generate challenging significant financial costs Landstar and continues resiliency model comparisons the less to insurance cost of the freight Regardless free returns. cash equipment labor, a inflationary environment

year Landstar income variable a or XX% could we of billion For operating operating to experience were a generate fiscal example, XXXX margin, the of over if still from decrease we XX% revenue representing reported more. believe an $X.X revenue contribution in

of XXXX that company before. that historic performance Landstar's achieved We to scenario. balance historically becoming under resulted in and exceed cash Landstar, than even also record stronger XXXX flow and new free at expect $XXX were years million levels the which during business strong financial sheet

have levels. cycles historical XXXX has environment annual Nevertheless, comps less to still and prior its start and well nothing due a with year. less than year a we work we above year cut been the standards XXXX to it, tough expect the out anticipated through revenue robust business the before for by freight being to terrific many pre-pandemic

we Bill, that, with And questions. will open to

Operator

sir. from Market. the much we have coming very Fowler Todd KeyBanc of you question Instructions] Thank the And line of [Operator first Capital

Your open. line is now

Todd Fowler

quarter, revenue Hey. from Hi. Great. load Good the morning everybody. it And coming Jim, a mid-teen of I in I a guess of a that comparisons to see typical got think that commentary to start on first you like per easier with what X% implies the you've the quarter. like of off line is basis But standpoint. year-over-year bit little the sounds it down for X% kind fourth on seasonal decrease. a

is pricing of just load a the where on per maybe move we in a how of, feel or during your year? kind comment you flows reflecting little XXXX per revenue you through for that then, lag market the side load expectations just and the on that's Can as do some revenue through bit

Jim Gattoni

Yeah. it's today agents I do market coordinating weeks that typically I the more three, market are lag substantial. the in say say and in that, kind the would a wouldn't I at the we bit But little of so, climb time generally, little based that market our true shippers we're reaction or of by on we trends the four than seeing pricing. business. would a see say probably

anticipated we seeing the not wouldn't the have that down we that trend into we're marketplace right way dynamics was now to lower did continue would experiencing through We the the down little that. go trend December, we're into less January, we drop a in a drive with in did I'm sure We January. that but December fact not but and than

pretty we're still think So, I comfortable.

quarter. that in off see to from X% the X% quarter We're the first drop. being be with plus the We'll drop going to that first another quarter below in normal fourth mid-teen XX% drop

would been little flipping it's But back have unpredictable it four we're and of pretty seeing don't to again been a several -- but I I We're than stable it say over the last because not I call little last a stable, has or weeks. three want quick more seeing guess months. forth pretty still the things bit over

business I and two we're capacity contract and As it in if go the would spot to to last spot that the is -- people need go market always pandemic, years, and loosens back to And I going tightens say to climb and it still the -- and spot versus relates to think year, we you cycle regardless would cycles markets contract then of going happen. the you drops. believe I

think the I down. you we're believe went We It February, quarter. XXXX. like improve climbs peak-to-trough you seasonality that to in would I believer was as that August things cycle that two XX in saying right? was start we'll in of months back if for years peak months last being about third will project that a you was and XX of February going to more what XXXX cycles of get into summer. somewhere puts it And trough-to-peak. in cycles, bit from the rate say another from little was a And And to our would the fourth and if I

rates I'm into tremendous, QX market the talking up QX drive rates Again of half expect QX. here where we in not normal that we've be guess to like see and It's back seasonally would happen we about I'm and bit. is not but the the my we're is what So, in increases kind actually to talked maybe talking spot from that little QX, headed. a what

Todd Fowler

of would sense. all does makes that No, like And been cycle feels sometimes surprising it even when it's that that out it Yes. it doesn't. that say turn I a

slowing. and quick any of you of a between where relatively -- holding know of industrial general some on and the strength some markets kind last like now? year end the the follow-up well. still I seeing a consumer just But your end going It feels detail you just more markets lot looks in So, difference seeing went durable comments you're any It markets, end but through are kind on like through of are Thanks. softness? was side

Rob Brasher

this is Todd, Rob. Hey

we're on heavy-haul the lot equipment seeing seeing We're on projects. direct. trending equipment of up Specifically, output pick heavy the lot us positive really a manufacturers plan, a of from for

Now, couldn't that they they're be half. that the and filling supply fact due that over chain year now could again to past the that orders constraints a

not it's that up equipment specialized the to we're some more the more not going which and on seeing of winter and time, freight, moves cycling that a come an lot But down, a the north, right? there's season cycle warms upward continue the is point cycling of anticipate because a and that we metals up exactly basis. the on up typical those when on. as projects lot year ground will freezes open are to But There's that so do in that down,

but at any going and Automotive to don't continues talk up been time this us. perspective I flatbed where to van you the from predict, for suppliers doing, doesn't it look year. a you know be they're a caught they That's like look it's really we're both and hard to if are. be that about the business automotive When

that that in trend. So, will continue

Todd Fowler

this for Got morning. along. it. the pass I'll it time Thanks

Operator

you. Thank

Wolfe Scott from the line We question coming of next of have Research. Group the

line now Your is open.

Scott Group

Morning guys. thanks. Hey

cycle. rates I of you're the like get So, just bottoming QX, to hopeful perspective wanted more QX. that just on It your sounds yes, Jim

to what and history that to on from you cycles XX% does prior of trough-to-peak long a that or this if from close in -- rates in sort a hold have most look Does that plus trough increases? So, you've you pricing the seen we're increase can we of XX% sort so of drop a getting drive we these peak-to-trough. with got or

Jim Gattoni

to XX XX% never growth. time make had say would peak-to-cycle a months I of of But we've of the kind that trough-to-peak kind XX of the line sense.

one And -- So, down the I to your little sitting rate to bit trough today XX% is XXXX I go XX%. what's back or to we're think I levels. a go discussion of is you're don't then clearly. where is down going not the peak-to-trough. seeing going don't XX%, of believe, the

because cost rates with can't, much move more the don't to just so in You level. bring costs, that inflation I system the how and see can -- insurance industry back

what not or January, comfortable driving of and slowly kind down the us heading of got XX% three with seeing down into drop has a first four in I'm weeks we're off.

little we there is. I'm And in with maybe commentary quarter. for continue that improvement So, then pretty comfortable I'm more improvement we not would drop the the into say, spot to from second better get of get the sure, we kind markets I second that quarter. a seasonal.

Scott Group

Okay.

have you a ... do So,

Jim Gattoni

over The like trough. last it from that, far back just Before far, or And highs. think high grew the because as XX% to I structures. it two said, crazy, XX% the drove as moved peak right? lows that of it pulls don't cost new it to And just pandemic I years have been not

Scott Group

view some broker trending up, capacity? to big and right? in drop what how just of for Right. much on are in costs update carriers Any terms about, that's on you're We BCO then, approved -- a And count maybe Do you just saw seeing the in your where we QX? point spot? are how have the contract

Rob Brasher

bit. perspective, the From pressures are. real pricing know, rates are a market where huge point, To And we are Rob. spot those there drop starting I is in I This right Jim's think, on don't still to stabilize pressures of now. rates. they're Yes. a because

at start a increased those costs back a and rate there's from I perspective, and contract weakening. little their to system standpoint put into from because they pushing think that relaxed some contract. spot rates, of and starting think I the stabilization carriers of so the bit to their we're do some the those our -- don't been to a operating pricing know for it's a know long see are But don't pressures. increases have time Assets succumb to bottom. we I I

Joe Beacom

Yes. Joe. capacity I'll Scott, question. take and this BCO the is

-- we've what's it lot driving quarter doesn't a really we're change. -- net like It's So will the decline. quarter bit our first that a side far going little if as ad we're can't that used we're if the you kind is to then that model, of the -- get predicting really think it systems interest trucks fourth here. seen look of a And them is about on but hard really to identifying other out a and guys come it of come Landstar still lot for as truck. makes predicated strong, The and on a interest finding in

broadly fix trucks that that rational, as of So as used different and systems ad begins the more availability the that and I to see, feeds those then kind see market. price to you'll itself. truck market, you into come think get thing the as into And put newer be

equipment about retention and the really the side, running. labor it's existing keep parts on And to the

on BCO you've prepared and side, XXXX. that continues know of timely probably inability. utilization seen inability seen We've all and trucks affect equipment. get And to you they're XXXX really repaired the and As throughout the into the our running used

last is the also road, think equipment helps So stabilization of BCO then, tax a for a it's been pretty to can big used quarters. deal demand, because on And -- the parts improves, as the few side. I think back into get and market that disruptive the you shops factor on that get and as we truck great ability get really

really we've dramatic from where difference currently greater over a and a Once our access and lot off, everybody to BCOs price supply-related, discussed, seeing, they're brokerage which on of less else those about interest back I than think just business, trucks lot same challenged carriers that XX you with cost-related inflation of challenges I guys are carriers levels a sidelined. that see of is think into is. the equipment-related in my in these a XX% you'll of as see the are coming And view don't fleet,

truckers these It's fight think going And of I trying some of condition, -- lot through a out in today. so they're bounce we'll back come are lot really just I be think think things of to But to control, that them quarters. it. tough a a of the marketplace their I as think, their And very I that's back. of for a are control in couple

Scott Group

Thank time, Appreciate you it. for Okay. guys. the

Operator

question next coming the of Stephens. line Jack from of the have We Atkins

now is open. line Your

Jack Atkins

Thank great. Okay, Good time. for the appreciate Really you morning. it guys.

So, I things. one I two sort macro you industrial parts. divided one for guess But of on about maybe that's side, accelerating -- question think you then kind guess, of you any need a that capacity the the Rob. into exit I as for a but up pressure Joe, on guess the those I think is to there's to following a on would capacity just last given potential concern been or anything on lot months know way? fleets, small be potential about seeing do consumer I retail signs market guess be exiting curious the about Scott's in that we've seeing about And Similar of of industrial or that? telling is capacity, what just your any customers side. both about are maybe question I'd long question inventories. the the for so nine destocking curious over just the if are I

Joe Beacom

Jack. I'll Yes, start,

first XXXX on And the weeks carrier the to some week of it's the based quarter. data net reading, XXXX. been of revocations really a several well count like last into just stuff the yes seen XXXX for FMCSA think we're and our authorities of approved we've – carrier has as I the decline

continue you're to think going So see to that. I

Scott of side trucks with comfortable I predominantly healthy just trucks level their to referring getting think I and consistency feeling drivers to floor was again it's and see things a where fixed and is. some keeping the just until of whether predictability, labor some or conditions the of kind getting find of environment start with the

is you're a standpoint fleets. larger bit contract market particularly to to see in small a that XX and from a lot realm, one think little truck I to the which continue going capacity the carrier of

Rob Brasher

And we're aerospace place those lot is that comment. in destocking the have projects come a the of experiencing see Rob. the of something nature. address not back over We're last is the that lot constraints government the energy, and due to of taken automotive, starting in that Jack, things to or That To the a have again this two years. really conversations,

couldn't forward. fruition to before actually to they going come or projects or and couldn't we're they starting those fulfill where So continue get their see orders supplies now

Jack Atkins

No I the that springboard about guess hope if Jim Okay. a you you I'd kind talk to maybe of love engine as questions sort Blue for this today. the prepare Gattoni, a that that? Landstar part Landstar XXXX, that's guess from But you plan – plan think curious would Todd, in could the call of about And in that Jim your I for helpful. Rob as I another for what really is into you to get XXXX? think what year? at of XXXX on And Rob, accomplish sorry. you we're I what's on growth and question business No thoughts for be just to sort as looking Blue me do guess of but the potential

Rob Brasher

see putting freight partnerships. Blue the because hearing we looking Landstar are as is we're others, They're their you're looking a opportunity, time And this for That's growth it. from absolutely. for there solutions. companies out what for. sure mechanism. as volume Companies for Yes I'm are of

of into business the haven't a opportunity is they're to it different back is doing rates down were Now rates gives grow reasons their that into but drive to sections to in into an lanes that. the it us why they mind continue places their to we where been of or get lot

customers of talking an front needs look we at So we're look to their The in in chains, opportunity. at more their benefit that it to that as company. a trying about solutions, as supply provide that I

Jim Gattoni

because I organizational know question. you an a I going had I to ask standpoint From know jump me Jack weren't to in

So jumping I'm in anyway.

dispatch get crazy, stuff systems that. all trying into We automation are like working automate – for his to Rob to capacity the like

on we anybody back say we're to there it growth pulling – supply until don't properly I disturb So we want there's don't automated. we want to get say chains but holding I are don't doing we're and

Jack Atkins

That thoughts, it. makes and for Okay. time again Thanks Appreciate All the right. sense. guys.

Operator

next from Chan Stifel. the of the coming Bruce have line We of question

is line now open. Your

Bruce Chan

maybe Hey, guess good a Gattoni, follow-up automation on morning, Jim that everyone. time Appreciate Jim, I here. comment. the just

the and talked those looks along maybe of going give lot and new investments as the you're just as that on are Can start like? what rollout automation all about process year. the far far making an are update you and what how to You you technology a to ramp this that how down in us that's

Jim Gattoni

a not dealing contract and dispatch experimenting of Once the We're at off more worlds. for kind all bit dedicated is two agents. requires in started Blue agents Blue, that. lane little we're we automated can that out of the build Blue different right a to it type And business use tools

delivery really core system the is but good a it monitor use or is, just workflow. the to TMS. TMS to a dispatch monitor to the that truck the out the orders to On to six years seven the the a side, order which put transaction not provide took certain is in agents to the And – the build a the agent

On out is our so building – spend – biggest one that's that's that top of TMS. new that

identify Trailer actually move they're out. -- that's are or the maintenance Trailer maintained. years. technology up Those which two those trailer to So to the we've credit off lead visibility balance running A -- too. can part into All the had connected separate the get tool new components that tool tools more the trailers year freight B a point our Clarity our pricing attached proper get when or rolling it. We've they've trails right? track of are spend roll and a tool freight. over they're app point -- moved asset always the we've of of more biggest So which in, all successful communications. last as we're in the we of to you a the an they're how out request last with over sitting starting But to six starting and sheet where maintain from to -- easy easily help five attached drivers is is

them. we rolled Now, out since they're depreciate

say, roll getting The is our XX% along. all far out. getting up probably very for year. it's shooting to truckloads ramped So, stuff would made it, are a rollout The of TMS starting -- it's is that but probably this I quicker. in is we're lot that

agents the of most speak first to hard. the some So you be XX is change on And agents it. when of our days in

that been do XXX the in has feedback So to on efficiencies the get it don't that they and XX the into you'll to business. talk that favorable very for built talk I way been for are their guy has days, guy a

Bruce Chan

great. appreciate follow-up. maybe just And all then Rob, color. Really That's Okay. that one

heard You Reduction about industrials calls this related a glimmers mentioned side. positivity few on on projects flatbed some year, to chips of Act. of the We've conference Inflation that's some whether mega the discussion of or the

to Just business on positivity wanted unsided that attribute there? any of you're to to know, able if the project that side

Rob Brasher

aerospace To is lot the seen a heavy what business. government. equipment Again, project of I've

I projects I it actual an question to to I anytime want that impact if while that, we an talk So, side. people with wanted. any the want exactly answered But time feed about in about side can't I see manufacturing don't say directly. the from can your that have you directly them. impact it infrastructure, the talk I that those project the But we we way more than we do know, from yourself have I that that say

Jim Gattoni

the materials the hired the from getting We're opposed person lower it running projects getting the and Right, by chain, as in. the supplier supply -- chain, the those into project. you're hired raw equipment seeing the the we're supplying stuff down supply going the by to not

Bruce Chan

it. Got enough. Appreciate Fair it.

Operator

from Majors coming line next the question We of have from Bascome the Susquehanna.

open. now is line Your

Bascome Majors

hypothetical where thing they were that at to is decline the be walk over about through Is scenario just did inflation? rate all Jim, have or little talk volumes present the to and perspective good fall or commensurate downturns. were would with it Can a a we that? if thinking print really about decline but your for scenario, in been revenue to done, XX% market a haven't protecting you've is would that, of revenue us lot really and you downside Like if XX% you more really reversion it one XX% the model? a bit rate would outgrowing surprised something do you of Can have not a a volume years most where close break that's just you revenues to that the XXXX? itself where Thanks.

Jim Gattoni

our revenue the quarter had we in Well, revenue a is above decline that. if XX% Surprised, first decline.

the I So, mean, build what we into year.

street and see think that quarter, seasonal see into means at pretty the First the quarter the to at have that, has off, clearly, say the And we're have off we're of going the first the and street the what we if to you coming we let pricing is look we half me that back And off first I us about as out seasonally. has what what look to at trending then and what norm. for normal quarter, when putting volumes revenue. first improve strength

it moves to I wouldn't do said the the our kind anything, term that quarter-to-quarter. if degree of model is of and consistency. end difficult. bit I how surprises The sometimes the piece now than that unpredictable consistency you out we but month-to-month, in it It's year-over-year because know us the expect pricing the the more be -- we do a until and very maybe year. I the spot and project the there's or as see and of month-to-month really that moved from long short Never a surprised up surprising term. see lot volume one move, of down size just XX% you is and as typically little

was figure happened at rates industry is. thing, look down Typically, dive. volume-driven you So, think the and and dropping out looking when -- we if were industry we'd ourselves to and do trying I though, XX% a that more what more a we see deeper be what it than than we're drop the at not

volumes saw if industry the was surprised concerned. down, So, we what I'd down and be than more

Bascome Majors

And for one through that. Thanks more clarification. walking just

year I it peak-to-peak XXXX on basis. revenue looks a You full at lot talked for XX% from look rates a it's earlier. If like truck, about per up

function is thinking about Your up really the Thank you. net same. force load going your per rate conceptually for diverge the on Is bottom to anything revenue net obviously the revenue there pretty or we about that there of Should down business? is that tranche the that of from indicator as well? would unique rate, important load line drive that per look a anything is is be way would exactly really at model, the -- to the just

Jim Gattoni

there It's broker. right? mix or there's a in Well, BCO

at much and broker, the if reasons One quarters if you're that the not BCO been utilization things we've driving of not truckload combined last looking looking they're over with you're of at we've one we their looking the actually they're as where on on BCOs would three you're because probably -- one thing cover contribution drive per versus BCO costs been our insurance drive other the -- relates line. losses actually a have contribution that the so struggling under separate higher variable down, and because per there's the -- load, that's -- mix that to clearly would we load below variable a -- that as it is

a in broker So hauling load there's BCO on revenue. as mix who's percent versus relates based it to of there the

tight Right half spread in we're load expect continues The least thing in the a other all spread third-party to mode and is at in between a our loose. relates clearly market -- capacity first we as as market and freight. it the to variable market soft as the relates probably the clearly typical stays per contribution it that now expansion trucks

business a our on move fixed model the drive in that broker the But those it. So our as about things thing play, as see it know necessarily because of are you'd XX% much is as doesn't the like margin. pure you

BCO, also on would margin So down. load that per right? down that So the our if goes load drive VC by same amount, down revenue per goes the

capacity. margin Our based having of expectation going be XX that's now for more were that we points, a dynamics sitting in where the XXXX on available to is bps XX VC probably we're above XXXX XX on market right just to basis

Bascome Majors

time. the for you Thank

Operator

you. Thank

coming Stephanie question Moore next Jefferies. from the have of We

now Your open. line is

Stephanie Moore

Thank Hi. you. Good morning.

Jim Gattoni

Yes.

Stephanie Moore

abnormal Jim February. just very of so general to cycle And normal the activity we're period here on the cycle see intersect color us this at in an right your just on appreciate if US you it think the recovery kind kind your some How somewhat freight of of and a of to normal curious cycle additional COVID? you what or how really of And back now kind clear the environment of and you. peak with how in I'm fits has love and half of puts a bit of you together? how very at cycle a here the and is Just that economic thoughts unwind the with timing give much that improvement what of half? from can on about point cycles kind at would Thank year. macroeconomic in than can what deceleration based point that February XXXX. your if happened just think the years do thoughts you second deteriorates I was that two transpired kind an just think trends more in into the I normal since look a of in just on

Jim Gattoni

read reading about to be about an got others you When Yes. economic word are dire soft lot I'm talking economists that's landing. there's by the not -- about going say economist some that recession and a huge I've and a way. you've a been hard to the

forward believe billion us street next in the going with to back over all you half in the because has that $X.X what to struggle contributes revenue. anticipated, map economists the normal this $X.X then say, if today now. get billion to year not should the even XX% $X.XX than a of hitting first [ph] the to -- was the quarter that And generally revenue. I'm revenue [ph] with we there more So number, if clearly that from our about going billion, as which right to billion to is take $X.X XX% you going look annual go what soften the point anything we're what out because But economy they're if

I a it But in do economy kind to question. a the any Now grows I don't us normal those that's first environment quarter. there's where if seasonality the where hit out think little think on doesn't numbers. pressure more there's bit of of that your

happen think did those to that would would to hard. say tougher -- going predict there's trying if be line. happen But it's I numbers on question. don't is what's any a little top So I that the

Stephanie Moore

economic No, last down carrying you side back particularly of hear really helpful. you consumer from I'd the about like COVID what know thinking were weird that's love a customers what was the again it really slowdown on they more commentary and Right. resection, your an February. the were this markets end from feel the that like you your customers bit in environment? over And of there and I to has just like or were feeling a make saying then end were was call environment? as just seem happened of they it kind how go let's come will kind Do it your the in already

Jim Gattoni

was that a eventually were cycles. slow see Well, that and fact lot think I wrong I it going to customers right? we they the going anticipate down think overstock, and business of got to normal

moving trying drop back spending that's started worried inventory started And with pulling on they're And that's stuff So I then I us issues the to stuck think of of about right? off. and with what they end inventory around. customers to inventory and that kind a our down. see They got levels. of bunch brought when dealing caught things And out of think XXXX, coming still

they early just summer. been to customers that been think reading that customers game it a all and have say of -- But we've inventory been to them not production. the that they I have would admit since slowing having buy might happens, problems about little And I of late but might sooner on it. once the a the their inventory little think down some started were than I

Stephanie Moore

that. Well, Absolutely. you Thank it I’ll Great. much. leave

Operator

the of the have coming question line Oppenheimer. from next We Scott Schneeberger of

open. line now Your is

Unidentified Analyst

the item. on across seeing think should categories you. been we please? Daniel Scott. how in quarter you've What line for Curious Thanks on those recently and our other first about here. Good It's Thank that questions transportation taking the beyond morning. for truck and maybe

Jim Gattoni

Well, it's more would through It's dropping that -- else's that's might anticipate haul substitute drop-off And slows pulling there of other halfway a flatbed. power of softening going that and trailer. onto it so off. the the to to actually -- last pandemic. line coming were We expect the and down. the in is business. growers up before, was That someone And year. the only one van took there be transportation in through truck or is that I fastest trucks high trail was it that one lot really than someone other down I like It slow that because started

was Just based really we're on being doing that line which the within category that the consumer-driven. business substitute haul,

Unidentified Analyst

Thank the I you. And cadence SG&A, how Anything but think we mean on helpful unusual? color this earlier, about should year?

Jim Todd

SG&A Anything unusual XXXX? in in

Unidentified Analyst

as Yes, as goes. cadence far the

Jim Todd

earlier, and customer bad mean pressure kind all Yes. on compensation bit in debt The the there's inflation Jim's the a the the scrubbed inflation. could of But line programs. softness that to variable benefits earlier. little wage with unusual reversion guide of would sticky under point part the was general still bit. economy, of little And a be But that

Jim Gattoni

costs, other maintenance but which experiencing inflation is really think per piece didn't operating one too the areas is on I trailer. the the smaller like to mention trailer we're one you XX% XX% a of

trailing some there's labor inflationary to is and availability between now trying the factors some just going have maintain of right we the on SG&A the equipment inflationary not parts. line, So in biggest of our

Unidentified Analyst

Thank Got much. so Thanks it. you.

Operator

of next the of Cowen. from line Seidl have We Jason the question coming

open. line now is Your

Jason Seidl

but come Are Hey. get Thank to way. into a guys. that? us you different from from seasonality here other we you, Is sort bit of a X%? needs assume how and So operator. XQ market of think the out XQ capacity little to morning, back oversupplied equilibrium? the X% marketplace at question normal in a Hey. want we in right it is it bit little continue to just to Jack's now? here come back much Good of circle to to more I If than do words, how

Jim Gattoni

That's a to very hard would question like. answer. it's say I

Jason Seidl

guys. I'm for asking you That's why

You guys are experts. the

Jim Gattoni

I was going by say know. it’s to X.XXXX%. oversupply I

Jason Seidl

X.XXXX% but.. that's probably Well, what thought. I was I

Jim Gattoni

because we the been. clearly quarter, And the paying at fourth back when it's the were look probably PT think In look obviously, all, the XX in oversupplied, rates you it's I years. was trucks we lowest it

how how clearly to there's hard say percentage more much that So put -- it's the over on capacity.

are I'm too, a of trucks so so believer freight. they and get that people a own also through just in can when get cutting everybody floor a bit start falling scared, their the little little up getting momentum starts rates rates scared because putting the they on start

there's momentum So some there too.

going not keep the that a mentality. of So there's much I'm -- hey, need little -- load, I I and capacity demand rates a then think because get bit to enough scared dropping to are

almost to us pretty measurement We're trucks many anybody to still of is And three to figure out charging that off it the rates that's tighten how -- that trucks for to around. a As takes for months hard us. seeing trucks We're getting now. good six so up. such still right the typically

I are trucks. give would all how that's many to excess I is how many as in period I market, the opposed think time you can say So a that, tightens it of where up trucks

not market XX,XXX to into you move the big that that trucks if believer, the it's going add much. a I'm needle

a demand-driven more truck than driven I a environment environment. of think, it's

I four climb, where level people But December, record and sales like the in swap trucks out. high being I been right? they're I saw think thought -- starting sales last remember, over to to were older pretty that's seen it's You've them just But are on -- sales years. or sitting at three a compared

if the replacements into there's the then, I And mean, know the system. access to It's additions. drivers. about I how know even being how don't all not always -- those many sales we talking of getting many are drivers of versus

we many how come going it your it's about, trends And more on to how what's many feeling plays this, of and are into kind trying the trucks and more identify need out. on. So to road all

the are all out and can I and just licenses there, are government how look difficult truck out like into counts but a mean, they driving? the are that of stuff very that coming It's many you question. CDL

to the the than fourth I say in But that, second little it going quarter, it's tighten while been quarter. anticipate quarter such continue very little looser a and in based a for get long I once on would the we're the was paying bit rates loose to that's swing maybe the -- trucks. first in through through up, up And the we time a would then,

Jason Seidl

good. been sounds seeing Are from we've getting stories we storms these any all south of Because down That truckers sweeping stranded impact weather? about hearing through. big

Jim Gattoni

trucks up with get them us, waiting the Texas, loadings just were we like won't because our the it's they today. loads happens But a day what like, you’re see on, if probably pick we'll road Yes. were in pretty that. like low the they same yesterday, -- on going But throw that now is, loads that's on then dispatch

and doesn't contract quarter, loads shuts plant short get very didn't the does So a see, they you're quarter XX sudden a the much. you'll affect us. day, if those all and What running business someone of its produced. for It term affect so that

did lose there's moved the in freight. to don't day. lose necessarily you It's really just freight. So different a But we our -- world,

Jason Seidl

always. I as Gentlemen, fair. appreciate Sounds the time,

Jim Gattoni

if use first I'll I'll of true, -- not excuse wrong have weather maybe, if there, the the quarter. And some that's in I'm agenda

Jason Seidl

forward I it. to look

Operator

Group next Scott Research. the have from the coming of question line Wolfe We

Your line now open. is

Scott Group

Hey, guys. the for follow-up. Thanks

XX%. be look So SG&A think I’d but go XXXX just you revenue I'm in could XX% and back SG&A revenue following. Explain up? down why me, XX%, to down was not was where down just and again,

Jim Gattoni

would Why SG&A up? be

Jim Todd

Yes, thinking.

Scott Group

down mean, a lot. SG&A last I drop the Well, revenue, in had time we big was like a

would this so year different? why So be

Jim Todd

Yes.

And Scott, like wage -- the and of line, I the that I benefits really heavier. isolated little line the inflationary The two huge inflation. row to then, under tech a on a the that variable you on insurance we've So, in program post-pandemic, were whereas would is line inflation wage XXXX, million. pre-pandemic comp got years tell $X pressures think, snapped

Jim Gattoni

low. very was It

Jim Todd

got that low. on base very And some based example. recent was lower years, like, are we've for equity tranches XXXX It

won't get XXXX XXXX. So we'll as going we get of we're but XXXX to XXXX -- on a softening of get those into much lines a not much as and softening, versus

Jim Gattoni

The -- we're believe line the It's I now. that $XX-something other piece is SG&A. insurance not million million right just was $XXX running and

XXXX. That's $XX XXXX right there's there a big million piece. from pressure into So of

Scott Group

buybacks. the this did thought guys the I didn't you What's dividends. know, see year? on I buyback Jim, any

Jim Gattoni

I It's buy But -- our the is, didn't other to we're we the stock in favorite work. thing thing this year, going buy quarter, continue fourth to because watched than we run here our to back. do back up.

ended XXX. -- in we about quarter third was stock think I I the trading think at the like

the by to compete time we don't time buyers got the time open -- quarter it up XXX. the the the with to window by we by and the went And end -- of XXX -

get for We're just didn't So settle. in. that's to we why it really waiting

stability next be couple same in. volumes the at it's bit. see opportunistic that some We'd it's and see stabilize today the in stabilized market stays we'd stabilize price little the and in and be if the -- mean, see thing. the months pricing over Look, a it we range of I

February. we're we confident think get I the currently through trends was comp. and we're best into tough such our to volume too going a see last got determine It the quarter year. February to little we early month first that see in a in the to we're whether rates whether stabilization is not

buybacks. but favor watching changed we We all them. process we're on those thought so And haven't signs, our

Scott Group

about contractual you comments now. then And have heard I right made that profitability you missed it may talk haven't about last on over of I some sort Okay. spot just way before. thing,

just think I it. that I could missed you because expand on If

Jim Gattoni

Blue blue don't small. but pretty is -- small. We the of is doing contract most -- work, of so most like it's

rates rates running the like our a So us shippers that we the they rates We there. a spot comes like looks -- even of the rates. and I contract with it's mean, don't contract core. don't lot really really the have of much us on at profitability. comparisons run the but it, base it's the dedicated freight data right? -- some agent out of But in are we're something still shipper and our like start if almost If to drops contract world run lanes dropping back have

just contract have So don't we rates. They hold.

little works the spot So almost world piece blue. other in over our than whole world the at

get the don't out who as We I was answer think know question figure to don't rates. today. they data where it. I the we think good we're because think trying compared had to a contract get stand we our I where very just spot rates today like from people it you publish And

Scott Group

Okay. Appreciate it. guys. Thank you,

Jim Gattoni

Yes.

Operator

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

Jim Gattoni

you. Thank

achieved year. putting I of agents BCOs thank another success sign apart all all people in what sets unique truly capacity agents, I XXXX, or The employees Landstar's Landstar on network together. in of and for the enables record up Before we and price Landstar's want employees off to industry our

look quarter again our good call I currently April XXXX a Have and with XX. day. speaking earnings for forward conference scheduled first you on you Thank to

Operator

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

Landstar System (LSTR) 2 Feb 232022 Q4 Earnings call transcript