Landstar System, Inc.

Good afternoon and welcome to Landstar System, Inc.'s 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 Frank Lonegro, President and CEO, James Applegate, Vice President and Chief Corporate Sales Strategy and Specialized Sprint Officer, Jim Todd, Vice President and CFO, 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.

Thanks, Arlene. Good afternoon and welcome to Landstar's 2026 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 relate 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 2025 fiscal year described in the section Risk Factors 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 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, Frank Lonegro, 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 Million Mile Safe drivers and Roadstar honorees at our annual BCO All-Star event earlier this month in Orlando and to celebrate their incredible safety accomplishments. It was my honor to preside over Landstar's 53rd truck giveaway, awarding Million Mile Safe Driver and Road Star honoree Herman Bergwano from Haskell, Texas, with a new 2027 Peterbilt 579. 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 dedication to safety, security, and service is one of the pillars of success at Landstar. They are exceptional business leaders and key to driving the continued success of Landstar's business model. I was very pleased with our revenue and variable contribution performance during the 2026 second quarter, but the quarter was not without challenges that required our focus and attention. We had a challenging insurance and claims quarter with approximately $10.5 million of net unfavorable adjustment to prior year claims estimates. The prior year development experienced during the quarter was almost entirely attributable to five specific claims Three of which were truck brokerage claims. We believe greater federal clarity around carrier vetting and selection standards would help support a more predictable operations, insurance, and claims environment for truck brokers, carriers, and shippers. Transitioning to overall performance, revenue was up 18% year-over-year. As noted in our earnings release, our second quarter revenue per truck load and the number of loads hauled via truck both outperformed pre-pandemic typical seasonality, and the net VCO truck count performance was the strongest quarterly improvement since the first quarter of 2022. In one continued major bright spot, I am extremely pleased with the performance of Landstar's heavy haul service offering. We generated approximately $164 million of heavy haul revenue during the 2026 second quarter, an 18% increase over the 2025 second quarter. This achievement was driven by a 9% increase in heavy haul volume and an 8% increase in heavy haul revenue per load. Notwithstanding the geopolitical uncertainty experienced thus far in 2026, our focus continues to be on accelerating our business model and executing on our strategic growth initiatives. We are continuing to invest in the foundational work that puts Landstar in a great position to leverage improving freight market conditions. 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. On the new agent front, we were thrilled to welcome an $18 million freight broker from the Midwest to our agent network earlier this month. This represents one of the largest new agent signings in the past 15 years. Inbound interest in conversations with potential new agents has accelerated since the Montgomery decision was released in mid-May. We believe the value proposition of becoming a land star independent agent has never been stronger. Turning to slide five, The freight environment in the 2026 second quarter was characterized by solid demand from a seasonal perspective, with the number of loads hauled via truck slightly outpacing normal seasonal patterns, the first time this has been achieved in the second quarter since 2021. This volume performance in the second quarter supports the ISM index readings from earlier this year, with the ISM index above 50 for all six months of 2026. Truck capacity tightened significantly during the quarter, as evidenced by the very strong sequential truck revenue per load performance coupled with a 129 basis point compression in our brokerage net revenue margin sequentially. Market conditions, which have favored the shipper since late 2022, have begun shifting rather rapidly in favor of the transportation provider. Considering that backdrop, Landstar's revenue performance was strong in the 2026 second quarter, with truck revenue per load 17% above the 2025 second quarter, and the number of loads hauled via truck up nearly 2% 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 slide deck during the 2026 first half, the company returned approximately $120 million to shareholders through dividends and share purchases and yesterday afternoon, Our board declared a regular quarterly dividend of 44 cents per share payable on September 9th to stockholders of record as of the close of business on August 18th. This quarterly dividend includes a 10% increase over the amount of the company's regular dividend declared following each of the prior five quarters. We continue to invest through the cycle in leading technology and AI solutions for the benefit of our network of independent business owners and have allocated a significant amount of capital this year for refreshing our fleet of trailing equipment with a particular focus on investing in new van equipment. Turning to slide seven and looking at our network, the scale, systems, and support inherent in the Landstar model helped to drive the operating results generated during the 2026 second quarter. JT will get into the details on revenue, loadings, and rate per load in a few moments. Safety is critical 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 support the critical importance of safety, security, and service at Landstar. I'm proud to report an accident frequency rate of 0.62 DOT reportable accidents per million miles during the 2026 first half, well below the last available national average DOT reportable frequency rate released by the FMCSA for 2021 and lower and the 0.67 DOT accident frequency we reported during the 2025 first half. The company's long run average 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. We remain committed to driving a best-in-class safety culture. I'd also like to take a moment to recognize Lansar's 457 million-dollar agents based on our 2025 fiscal year results, a number we would expect to increase in 2026. Importantly, retention within the million-dollar agent network continues to be extremely high. Turning to slide 8, on a year-over-year basis, VCO truck count decreased by less than 1% compared to the end of the 2025 second quarter, but increased approximately 80 basis points sequentially. As noted above, Our net 68 truck additions during the second quarter was the strongest quarterly improvement since the first quarter of 2022. Continuing that sequential trend, our BCO truck count has also increased during the first four weeks of the 2026 third fiscal quarter. We were also very pleased to see our trailing 12-month BCO truck turnover rate drop from 31.4% as of fiscal year 2025 to 28.3% at the end of the 2026 second quarter. This is a positive trend. that we hope will continue into the third quarter. I'll now pass the call back to JT to walk you through the 2026 second quarter financials in more detail.