Landstar System, Inc.

Good afternoon and welcome to Landstar System Incorporated second 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 Applegate, Vice President and Chief Corporate Sales Strategy and Specialized Riot Officer, Jim Todd, Vice President and CFO, Matt Daniger, Vice President and Chief Field Sales Officer. Matt Miller, Vice President and Chief Safety and Operations 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 2025 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 or 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 2024 fiscal year, described in the section Risk Factors, Landstar's Form 10-Q for the 2025 first quarter, and our 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 under 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. I'd like to thank our BCOs and agents and all of the Landstar employees who support them every day. It was great to spend time with our BCO Million Milers and Road Stars at our annual All-Star event in Savannah, Georgia recently, and to celebrate their incredible safety accomplishments. It was my honor to preside over Landstar's 51st Truck Giveaway, awarding newly inducted Million Mile Safe driver George Eason from Owensboro, Kentucky, with a new 2026 Freightliner Cascadia. The capability, resiliency, and level of commitment exhibited day in and day out by our network of independent business owners, is unique in the freight transportation industry. Their adaptability and dedication to safety, security, and service for our customers is truly impressive. They are exceptional business leaders and key to driving the continued success of Landstar's business model. Amidst the ongoing challenges in the freight environment, compounded by volatile federal trade policy and lingering inflation concerns, the 2025 second quarter included several important positive developments for Landstar. While overall revenue was down 1% year over year, truck revenue was up year over year for the first time since the third quarter of 2022. As noted in our earnings release, our second quarter revenue per truckload outperformed pre-pandemic typical seasonality, and the number of trucks provided by BCOs was approximately equal to the 2025 first quarter representing the best sequential net VCO truck performance in 12 quarters. Notwithstanding the political and macro uncertainty thus far in 2025, our focus continues to be on accelerating our business model and executing on our strategic growth initiatives. In one continued major bright spot, I am extremely pleased with the performance of Landstar's heavy haul service offering. We generated approximately $138 million of heavy haul revenue during the 2025 second quarter, or a 9% increase over the 2024 second quarter. This achievement was driven by a 5% increase in heavy haul revenue per load and a 4% increase in heavy haul volume. Turning more broadly to our core truckload service offering, the foundational work we continue to invest in puts us in a great position to leverage the freight environment when it eventually turns our way. We are also 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, the freight environment in the 2025 second quarter was characterized by relatively soft demand from a seasonal perspective, admittedly comping off a seasonally strong first quarter. The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending. Truck capacity continued to be readily available with small pockets of supply-demand equilibrium, and market conditions continue to favor the shipper amidst choppy conditions in the industrial economy, as evidenced by an ISM index below 50 for the entire 2025 second quarter. I would note, however, that the combination of sequential truck revenue per load improvement coupled with the sequential compression of our brokerage net revenue margins would indicate a market that we believe is working its way back toward being balanced. Considering that backdrop, Landstar's revenue performance was admirable in the 2025 second quarter, with truck revenue per load 2.6% above the 2024 second quarter, partially offset by a 1.5% decrease in the number of loads hauled via truck over the same period. Our balance sheet continues to be very strong, and our capital allocation priorities are unchanged. We will continue to patiently and opportunistically execute on our existing buyback authority to benefit our long-term stockholders. As noted in the release, during the first six months of 2025, we deployed approximately $103 million of capital towards buybacks and repurchased approximately 686,000 shares of common stock. We continue to invest through the site in leading technology solutions for the benefit of our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment, specifically on unsighted platform equipment. Turning to slide six and looking at our network, the scale systems and support inherent in the Landstar model helped to drive the operating results generated during the 2025 second quarter. JT will get into the details on revenue, loading, and rate per load in a few moments. As noted during previous earnings calls, Landstar's safety culture is a crucial component of 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 rate of 0.67 DOT reportable accidents per million miles during the 2025 first half, well below the last available national average released from the FMCSA for 2021. We continue to be committed They're driving down that number closer to the company's trailing five-year average of 0.61 or lower. This long-run average is an impressive operating metric that speaks to the strength, skill, talent, and dedication of our VCOs and provides a point of differentiation our agents are able to highlight in discussions with our freight customers. I'd also like to take a moment to recognize Landstar's nearly 500 million dollar agents based on our 2024 fiscal year results. Importantly, retention within the million-dollar agent network continues to be extremely high. Turning to slide seven in the capacity side, on a year-over-year basis, VCO truck count decreased approximately 6% compared to the end of the 2024 second quarter. On a sequential basis, VCO truck count was essentially flat, decreasing only nine trucks in the second quarter from the first quarter, representing the best net truck count performance in 12 quarters. It is typical to incur turnover in VCO truck count in a low rate for load environment. BCO turnover continues to be influenced by a persistent low rate for load environment combined with the significant increase in the cost to maintain and operate a truck today compared to before the pandemic. Directionally, we are pleased to see our trailing 12 month truck turnover rate drop from 34.5% as of fiscal year in 2024 to 31.9% at the end of the 2025 second quarter. Through the first four weeks of our 2025 third quarter, The number of trucks provided by BCO independent contractors has declined by 23, or approximately one quarter of 1% sequentially, directionally consistent with the trend in truck revenue per load experienced during fiscal July. I will now pass the call back to JT to walk you through the 2025 second quarter financials in more detail. JT?