Landstar System, Inc.

Good morning and welcome to Landstar System first 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 Frank Lonegro, President and CEO, Jim Todd, Vice President and CFO, Joe Beacom, Vice President and Chief Safety and Operations Officer. Now I would like to turn the call over to Jim Todd. Sir, you may begin.

Thank you, Bill. Good morning and welcome to Landstar's 2024 first quarter earnings conference call. Before we begin, let me read the following statement. The following is a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts are forward-looking statements. During this conference call, we may make statements that contain forward-looking information that relates to Landstar's business objectives, plans, strategies, and expectations. Such information is by nature subject to uncertainties and risks, including but not limited to the operational, financial, and legal risks detailed in Landstar's Form 10-K for the 2023 fiscal year, described in the section Risk Factors and other SEC filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information. With me this morning are Franklin Negro, Landstar's President and Chief Executive Officer, and Joe Beacom, Landstar's Chief Safety and Operations Officer. It's my privilege to pass it to Landstar CEO, Franklin Negro, for his opening remarks.

Thanks, JT, and good morning, everyone. First, I want to express my sincere gratitude and excitement to lead this great company. I've had the pleasure of meeting so many of our network constituents these past several months. At our annual agent convention in early April, I had the opportunity to interact with hundreds of agents, with the entrepreneurial spirit that helps make Landstar successful. While they are all unique, these agents take great pride in what they do every day, helping move the freight that drives the American economy. They are a talented group of business owners, and I'm proud to be working alongside them to help Landstar grow. I've also been out on the road meeting with many of our BCO owner-operators in Florida, Georgia, and Kentucky at our monthly safety meetings, field operations center visits, in the Mid-America Trucking Show. I look forward to seeing our Million Miles Safe Driver and Road Star BCOs at the annual All-Star event in July, and know we share a common passion to safely deliver freight for our customers every day. I'm incredibly energized to work with our agents, BCOs, and carriers through our proven business model to continue Landstar's track record of success. I've also inherited a strong executive team at Landstar, and we've been actively working together to drive Landstar forward. I'm excited by the recent changes we've made in our sales leadership with Jim Applegate and Matt Daniger. This combination of strategy and execution will serve Landstar and its agents well as we align for growth. While JT, Joe, and I will handle the call today, we'll be sure to showcase Jim and Matt on some of our future earnings calls. We are laser-focused on executing on our strategic initiatives. Cross-border Mexico and heavy haul are two areas we have identified where we already have scale and believe we have significant opportunities for growth. We also remain committed to continuously improving the level of service and support we provide to our customers, agents, VCOs, and carriers each and every day. Turning to slide five, Landstar performed well in the 2024 first quarter, considering that the freight environment was characterized by soft demand and readily available truck capacity. I believe our results speak to the strength and resiliency of the Landstar business model. I am fully committed to fostering and safeguarding this unique model moving forward. Our balance sheet continues to be very strong. We remain committed to investing in leading technology solutions for our network of small business owners, and we'll be refreshing a significant portion of our trailing equipment fleet this year. Our capital allocation priorities remain unchanged. I'm a believer in the company's stock buyback program and am committed to opportunistically executing on our existing authority to benefit our long-term stockholders. In the 2024 first quarter, the freight environment continued to be soft. Manufacturing levels trended below the level of the corresponding prior year period, and inflation continued to have an impact on consumer spending on goods. We remain in a loose truck capacity environment when measured by historical standards, and market conditions continue to favor the shipper. Even with that backdrop, Landstar's 2024 first quarter top line results were better than expected and our earnings performance was generally in line with what we expected. I was pleased to see heavy haul loadings, which as mentioned above is one of our strategic growth priorities, grow 2% year over year. On the other side, our substitute line haul service offering declined more than the company average and continued to be soft after an incredibly strong run during the capacity constraint period coming out of the pandemic. Our first quarter guidance set forth in our 2023 fourth quarter earnings release called for the number of loads hauled via truck to be 14% to 16% below the 2023 first quarter and overall revenue per truckload to be 8% to 10% below the 2023 first quarter. The actual number of loads hauled via truck in the 2024 first quarter was 13% below the 2023 first quarter, slightly better than the high end of our truckload volume guidance. Actual revenue per truckload in the 2024 first quarter was 7% below the prior year quarter, again, slightly better than the high end of our guidance. The slightly favorable variance on revenue compared to guidance was mostly driven by a stronger fiscal February, as fiscal January results were in line and fiscal March came in slightly above our expectations. Turning to slide six and looking at our network, the scale, systems, and support we provide help drive the operating results generated during the 2024 first quarter. JT will get into the details on revenue, loadings, and rate per load, but I wanted to take a moment to touch on our agent community. I was very excited to meet many of our 524 million dollar agents in Orlando earlier this month at the annual agent convention. This group of million dollar agents collectively generated approximately 95% of Landstar's consolidated revenue during the 2023 fiscal year. Their relentless drive for results in any business environment is impressive. I've been in the transportation sector for most of my career and realize how important Landstar's safety-first culture is to our continued success. Our safety performance is a direct result of the professionalism of the thousands of Landstar BCOs operating safely every day. Our continued investment in safety technology and trailing equipment and our recruiting, qualification, and maintenance practices I'm proud to report a 0.52 DOT accident frequency per million miles in the first quarter, which decreased approximately 12% as compared to the 2023 first quarter. This is an impressive operating metric that speaks to the strength, skill, talent, and dedication of our BCOs and provides a point of differentiation our agents are able to highlight in discussions with our freight customers. Turning to slide seven in the capacity side, BCO truck count decreased by 399 trucks in the first quarter on a sequential basis and has decreased approximately 13% since the end of 2023 first quarter, consistent with the year-over-year decline in truckload volumes. It is typical to incur turnover in BCO truck count when truck rates decrease. BCO turnover continues to be influenced by the significant increase in the cost of repairs in the extended period of time trucks are out of service awaiting repairs. We would expect the BCO count to continue to decline in the coming months, given the rate environment, but at a slower pace than we saw in the first quarter. I will now pass the call back to JT to walk you through the 2024 first quarter financials in more detail. JT?