Landstar System, Inc.

Good afternoon and welcome to Lancer System Incorporated's second quarter earnings release conference call. All lines will be in 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 Lancer are Frank Linegro, President and CEO, Jim Todd, Vice President and CFO, Joe Beacom, Vice President and Chief Safety and Operations Officer. Jim Applegate, Vice President, Chief Corporate Sales Strategy and Specialized Private Officer. Matt Daniger, Vice President, Chief Field Sales Officer. Now, I would like to turn the call over to Mr. Jim Todd. Sir, you may begin.

Thank you, Bill. Good afternoon and welcome to Landstar's 2024 Second 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 Lansar undertakes no obligation to publicly update or revise any forward-looking information. With me this afternoon are Frank Linegro, Lansar's President and Chief Executive Officer, Joe Beekham, Lansar's Chief Safety and Operations Officer, Jim Applegate, Lansar's Vice President and Chief Corporate Sales Strategy and Specialized Freight Officer, and Matt Denninger, Lansar's Vice President and Chief Field Sales Officer. Frank and I will handle the prepared remarks with Joe, Jim, and Matt available for questions. I'll now pass it to Landstar CEO Frank Linegro for his opening remarks.

Thanks, JT, and good afternoon, everyone. First, I want to thank our Million Mile Safe Drivers and Roadstar BCOs, many of whom were able to spend some time with us celebrating their accomplishments at the annual BCO All-Star event held earlier this month. This outstanding group of owner-operators exemplify our shared passion and purpose at Landstar to safely deliver freight for our customers every day. It is incredibly energizing to engage with our network of entrepreneurial agents, VCOs, and carriers as we work together to align Landstar for future growth and continued success. As JT mentioned earlier, I'm pleased to be joined this afternoon by Jim Applegate and Matt Daniger, the new leaders of our sales organization. Jim and Matt's coordinated approach to driving our sales efforts will serve Landstar and its agents well. As we move into the back half of 2024, 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 incremental growth. We also remain focused on our commitment to continuous improvement in the level of service and support we provide to our customers, agents, BCOs, and carriers each and every day. Turning to slide five, Landstar performed relatively well in the 2024 second quarter. considering that the freight environment continued to be characterized by soft demand and readily available truck capacity. I believe our results speak to the strength and resiliency of the Landstar business model. Our balance sheet continues to be very strong, and our capital allocation priorities remain unchanged. I'm a strong believer in the company's stock buyback program and am committed to opportunistically executing on our existing authority to benefit our long-term stockholders. As noted in the release, we deployed over $56 million and repurchased approximately 316,000 shares of common stock during the 2024 second quarter. We also announced today a 9% increase to our quarterly dividend. We continue to invest in leading technology solutions for our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment. In the 2024 second quarter, overall demand in the freight environment was soft. The impact of accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending. Industrial output was inconsistent throughout the quarter, as evidenced by an IFM that fluctuated just barely above and below 50. We remained in a loose truck capacity environment when measured by historical standards, and market conditions favored the shipper. Even with that backdrop, Landstar's 2024 second quarter bottom line results exceeded the midpoint of our guidance range. I was pleased to see heavy haul loadings, which is mentioned above as one of our strategic growth priorities, grow 3% year-over-year, incrementally improving from the plus 2% year-over-year growth experienced in the first quarter. On the other side, and as expected, given the capacity environment, our substitute line haul load volumes declined more than the company averaged and continue to be soft after an incredibly strong run during the pandemic. Our second quarter guidance issued in conjunction with our 2024 first quarter earnings release called for the number of loads hauled via truck to be 5% to 9% below the 2023 second quarter and overall revenue per truckload to be flat to 4% below the 2023 second quarter. The actual number of loads hauled via truck in the 2024 second quarter was 9% below the 2023 second quarter at the low end of our truck load volume guidance. Actual revenue for truck load in the 2024 second quarter was 2.6% below the prior year quarter, slightly below the midpoint of our guidance. The softness in truck loadings compared to guidance was mostly driven by a disappointing fiscal May during which loadings were below fiscal April for only the second time in nearly two decades. Turning to slide six and looking at our network, The scale, systems, and support we provided helped to drive the operating results generated during the 2024 second quarter. JT will get into the details on revenue, loadings, and rate per load. As noted on our first quarter earnings call, 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. and the agents and employees who work to reinforce the critical importance of safety at Landstar. I'm proud to report an accident frequency index of 0.57 DOT reportable accidents per million miles during the first six months of 2024, an improvement of approximately 2% as compared to the corresponding period of 2023. 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 sequentially in the second quarter from the first quarter by 230 trucks, consistent with our expectations of BCO declines slowing in Q2 relative to Q1. On a year-over-year basis, BCO truck count has decreased approximately 13% since the end of the 2023 second quarter. 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 and the extended period of time trucks are out of service awaiting repairs. We would expect BCO count to continue to decline in the coming months given the challenging operating environment faced by many truck owner operators, but at a slower pace than we saw in the second quarter. I'll now pass the call back to JT to walk you through the 2024 second quarter financials in more detail.