Landstar System, Inc.

Good afternoon and welcome to Landstar Systems Incorporated's 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 Franklin Negro, President and CEO, Jim Todd, Vice President and CFO, Joe Beacom, Vice President and Chief Safety and Operations Officer, Jim Applegate, Vice President and Chief Corporate Sales Strategy and Specialized Fright Officer. And Matt Daniger, Vice President and Chief Field Sales Officer. Now I would like to turn the call over to Mr. Franco Negro. Sir, you may begin.

Thank you, Bel. Good afternoon and welcome to Landstar's 2024 Third 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. I'll now pass it to Landstar CEO, Franklin Agro, for his opening remarks.

Thanks, JT, and good afternoon, everyone. First, I want to thank our BCOs and agents and the Landstar employees who support them every day. It is unbelievably energizing to engage with our network of entrepreneurial agents and capacity providers as we work together to align Landstar for future growth and continued success. As I've traveled the country meeting with agents this year, I've been thoroughly impressed with the capability, the uniqueness, and the resiliency of each agency, as well as their collective commitment to Landstar's success. In the third quarter, I also had the opportunity to meet with hundreds of BCOs at our July All-Star event and September Appreciation Days, where we celebrate the accomplishments and professionalism of our VCOs. They are the best in the industry and help drive the success of Landstar's business model. As we move towards the end of the 2024 fiscal year, we continue to be laser-focused on accelerating our business model and executing on our strategic initiatives. We want to be in the best position possible to leverage the freight environment when it turns our way. We are also focused on our commitments 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, the freight environment in the 2024 third quarter continued to be characterized by soft demand and readily available truck capacity. Accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending Industrial output was soft throughout the quarter, as evidenced by year-over-year declines in manufacturing, with ISM fluctuating in the mid-40s. Truck capacity continued to be readily available, with only small pockets of supply-demand equilibrium, and market conditions continued to favor the shipper. With that backdrop, Landstar performed admirably in the 2024 third quarter, delivering top- and bottom-line results within our guidance range. Our third quarter guidance issued in conjunction with our 2024 second quarter earnings release called for the number of loads hauled via truck to be six to 10% below the 2023 third quarter and overall revenue per truckload to be flat to 4% above the 2023 third quarter. The actual number of loads hauled via truck in the 2024 third quarter was 7.7% below the 2023 third quarter, slightly above the midpoint of our guidance. Actual revenue per truckload in the 2024 third quarter was 0.7% above the prior year quarter within the lower half of the guidance range. Our balance sheet continues to be very strong, and our capital allocation priorities are unchanged. I'm a strong believer in the company's stock buyback program and am committed to patiently and opportunistically executing on our existing authority to benefit our long-term stockholders. As noted in the release, we deployed over $22 million of capital toward buybacks and repurchased approximately 121,000 shares of Comstock during the 2024 third quarter. We continue to invest through the cycle 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. Turning to slide six and looking at our network, the scale, systems, and support inherent in a Landstar model helped to drive the operating results generated during the 2024 third quarter. JT will get into the details on revenue loadings and rate per load in a few minutes. As noted during previous earnings calls, I've been in the transportation sector for most of my career and realize how important Landstar's safety 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 Lansar. I'm proud to report an accident frequency index of 0.56 DOT reportable accidents per million miles during the first nine months of 2024, an improvement of approximately 10% 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 provide the 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 third quarter from the second quarter by 153 trucks, consistent with our expectations of BCO declines slowing in Q3 relative to Q2. On a year-over-year basis, BCO truck count has decreased approximately 12% since the end of the 2023 third quarter. It is typical. to incur turnover in BCO truck count in a low-rate environment. BCO turnover continues to be influenced by the significant increase in the cost of repairs and the often lengthy period of time trucks are out of service awaiting repairs. We would expect BCO count to continue to decline in the fourth quarter given the challenging operating environment faced by many owner-operators at a pace somewhat similar to the pace experienced during the third quarter. I will now pass the call back to JT to walk through the 2024 third quarter financials in more detail.