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, Belle. 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 Frank Lonegro, 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's CEO, Frank Lonegro, 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, and the Mid-America Trucking Show. I look forward to seeing our Million Mile Safe Driver and Roadstar 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 Dannegger. 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, BCOs, 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 linehaul 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%-16% below the 2023 first quarter and overall revenue per truckload to be 8%-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 helped 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 trailer 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 and 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? Thanks, Frank. Frank has covered certain information on our 2024 first quarter, so I will cover various other first quarter financial information included in the press release and slide presentation. Turning to Slide nine, as Frank mentioned earlier, both the number of loads hauled by a truck and truck revenue per load each slightly exceeded the high end of our previously issued guidance. Non-truck transportation service revenue in the 2024 first quarter was 12% or $10 million below the 2023 first quarter. The decrease in non-truck transportation revenue was mostly due to a 58% decrease in air revenue per shipment. As to the breakdown in truck transportation, revenue per load on loads hauled via unsided platform equipment held up considerably better than revenue per load on loads hauled via van equipment and other truck transportation services. We consider revenue per mile on loads hauled by BCO trucks a relatively pure pricing number, as it excludes fuel surcharges billed to customers that are paid 100% to the BCO. Revenue per mile on van equipment hauled by BCOs in the 2024 first quarter was 7% below the 2023 first quarter. Revenue per mile on unsided platform equipment hauled by BCOs in the 2024 first quarter was 5% below the 2023 first quarter. It should be noted that although the market has softened significantly from a year ago, Landstar's revenue per mile on BCO van and unsided platform equipment both remain above the pre-pandemic 2020 first quarter by approximately 21% and 23%, respectively. We believe that rates will stay relatively higher than pre-pandemic levels, given the significant amount of incremental cost to operate a truck today as compared to five years ago. Revenue per mile on van equipment hauled by BCOs remained sequentially flat from December to January and from January to February, before decreasing 2% from February to March. These December to January and January to February month-to-month changes are stronger than pre-pandemic typical patterns, with the exception of the beginning of 2018, when rates were favorably impacted by the mid-December 2017 ELD mandate. However, the sequential change in BCO revenue per mile on van equipment from February to March underperformed these pre-pandemic historical patterns. As to revenue per mile on unsided platform equipment hauled by BCOs, revenue per mile decreased 2% from December to January, increased 1% from January to February, and increased 2% from February to March. The month-to-month sequential trends on unsided platform equipment are generally more unpredictable compared to that of van equipment. This relative volatility is often due to the mix between heavy specialized loads and standard flatbed volume. The 2024 unsided platform volume trends are somewhat favorable as compared to typical pre-pandemic trends when excluding 2018 for the reasons mentioned above. Heavy Haul revenue, one of our areas of increased strategic focus, was up approximately 1% year-over-year in the first quarter. Heavy Haul loadings were up approximately 2%, partially offset by a 1% decrease in revenue per load. This represented a mixed tailwind to our unsided platform revenue per load, as heavy haul revenue as a percentage of the category increased from approximately 25% during the 2023 first quarter to approximately 28% in the 2024 quarter. Turning to Slide 10, we provided revenue share by commodity and year-over-year change in revenue by commodity. Transportation logistics segment revenue was down 19% year-over-year, on a 13% decrease in loadings and a 7% decrease in revenue per load as compared to the 2023 first quarter. Within our largest commodity category, consumer durables, revenue declined 20% year-over-year on a 15% decline in volumes and a 6% decline in revenue per load.... Revenue in our top five commodity categories, which collectively make up about 70% of our transportation revenue, were down a combined 17% compared to the 2023 first quarter. Shifting gears from revenue to loadings within the remaining top five commodity groupings, from the 2023 first quarter to the 2024 first quarter, total loadings of machinery decreased 15%, automotive equipment and parts were relatively flat, building products decreased 2%, and hazardous materials decreased 14%. Additionally, Substitute Linehaul loadings, one of the strongest performers for us through the pandemic and one which varies significantly based on consumer demand, decreased 36% from the 2023 first quarter. Also, Landstar is a truck capacity provider to other trucking companies, 3PLs and truck brokers. During periods of tight truck capacity, those freight transportation providers reach out to Landstar to provide truck capacity more often than during times of more readily available truck capacity. The freight hauled by Landstar on behalf of other truck transportation companies include almost all our commodity groupings, including our Substitute Linehaul service offering. Overall, revenue hauled on behalf of other truck transportation companies in the 2024 first quarter was 36% below the 2023 quarter, a clear indicator in our model that capacity is more readily accessible. Revenue hauled on behalf of other truck transportation companies was 14% and 18% of transportation revenue in the 2024 and 2023 first quarters, respectively. Even with the ups and downs in various customer categories, our business remains highly diversified, with over 25,000 customers, none of which contributed over 6% of our revenue in the 2024 first quarter. Turning to Slide 11. In the 2024 first quarter, gross profit was $113.9 million, compared to gross profit of $152.9 million in the 2023 first quarter. Gross profit margin was 9.7% of revenue in the 2024 first quarter, as compared to gross profit margin of 10.7% in the corresponding period of 2023. In the 2024 first quarter, variable contribution was $168.2 million, compared to $208.7 million in the 2023 first quarter. Variable contribution margin was 14.4% of revenue in the 2024 first quarter, compared to 14.5% in the same period last year. The decrease in variable contribution margin compared to the 2023 first quarter was primarily attributable to a decreased variable contribution margin on revenue generated by truck brokerage carriers, as the rate paid to truck brokerage carriers in the 2024 first quarter was 149 basis points higher than the rate paid in the 2023 first quarter, partially offset by mix, as an increased percentage of revenue was generated by BCO independent contractors, which typically has a higher variable contribution margin than revenue generated by other modes of transportation. Turning to Slide 12. Operating income declined as a percentage of both gross profit and variable contribution margin, primarily due to the impact of the company's fixed cost infrastructure, principally certain components of selling, general and administrative costs, in comparison to smaller gross profit and variable contribution margin bases. Other operating costs were $14.9 million in the 2024 first quarter, compared to $12.4 million in 2023. This increase was primarily due to an increased provision for contractor bad debt and decreased gains on sale of used trailing equipment. Insurance and claims costs were $26.3 million in the 2024 first quarter, compared to $27.6 million in 2023. Total insurance and claims costs were 5.8% of BCO revenue in the 2024 period, and 5.3% of BCO revenue in the 2023 period. The decrease in insurance and claims costs as compared to 2023, was primarily attributable to decreased net unfavorable development of prior year claim estimates and a decreased accident frequency, partially offset by increased severity of accidents during the 2024 period. During the 2024 and 2023 first quarters, insurance and claims costs included $1.1 million and $1.9 million, respectively, of net unfavorable adjustment to prior year claim estimates. Selling, general, and administrative costs were $56.4 million in the 2024 first quarter, compared to $53.6 million in the 2023 first quarter. The increase in selling, general and administrative costs was primarily attributable to increased employee benefit costs and increased provision for incentive and equity compensation under our variable compensation programs, and the impact of $1.2 million of CEO transition costs, partially offset by decreased project consulting costs. In the 2024 first quarter, the provision for compensation under variable programs was $4.6 million, compared to $3.3 million in the 2023 first quarter. We'd like to note, despite some moderate wage inflation pressure and selective human capital investment in certain areas, principally heavy haul, cross-border, and fraud prevention, total wages from the 2023 first quarter to the 2024 first quarter declined slightly, as the company continues to be very disciplined with respect to managing headcount. Depreciation and amortization was $14.1 million in the 2024 first quarter, compared to $15.2 million in 2023. This decrease was primarily due to decreased depreciation on the company's trailer fleet, partially offset by increased depreciation on software applications, resulting from continued investment in new and upgraded tools for use by agents and third-party capacity providers. The effective income tax rate was 23.5% in the 2024 first quarter, compared to an effective income tax rate of 23.3% in the 2023 first quarter, primarily attributable to larger net excess tax benefits from stock-based compensation arrangements during the 2023 first quarter. Turning to Slide 13 and looking at our balance sheet. We ended the quarter with cash and short-term investments of $530 million. Cash flow from operations for the 2024 first quarter was $94 million, and cash capital expenditures were $9 million.... The strength of our balance sheet is a testament to the cash-generating capabilities of the Landstar model. Back to you, Frank. Thanks, JT. As we progress through the 2024 second quarter, year-over-year comparisons should begin to ease. In the 2023 second quarter, the number of loads hauled via truck and truck revenue per load both significantly underperformed pre-pandemic seasonal patterns. In 2024, as we moved from March into the first few weeks of April, our truck volumes seem to have moved more in line with what we would view as normal sequential month-to-month patterns based on pre-pandemic seasonal performance trends. Truck revenue per load has slightly underperformed these pre-pandemic patterns, though the sequential week-to-week trends in truck revenue per load in the first three weeks of April have been favorable. Turning to Slide 15, our year-over-year expectations for the 2024 second quarter are that truckload volumes will be 5%-9% below the 2023 second quarter, and truck revenue per load will be in a range of flat to down 4% versus the 2023 second quarter. Looking at the 2024 second quarter on a sequential basis, pre-pandemic patterns would normally yield an 8% improvement in truckload volumes and a 2% improvement in truck revenue per load. Our guidance for the second quarter implies a 4%-8% sequential improvement in truckload volumes and truck revenue per load, ranging from down 1% to up 3% sequentially. We also expect revenue for our non-truck modes to be similar to what we experienced in the 2024 first quarter. Based on these assumptions, we expect revenue in the 2024 second quarter to be in a range of $1.2 billion-$1.3 billion, and earnings to be in a range of $1.35-$1.55 per share. The 2024 second quarter guidance incorporates a variable contribution margin range of 13.9%-14.2%, and insurance and claims costs of approximately 5.5% of estimated BCO revenue. We also want to highlight some specific items embedded in the 2024 second quarter EPS guidance range of $1.35-$1.55 per share, compared to the 2024 first quarter actual EPS of $1.32 per share. First, SG&A in the second quarter is expected to be above the first quarter, due in part to the cost of Landstar's annual agent convention in April. Second, we expect variable contribution to be 20-50 basis points below the 2024 first quarter, which is in line with pre-pandemic historical sequential patterns. Third, the second quarter tax rate is expected to be approximately 100 basis points higher than the first quarter, in line with our normal tax rate assumptions, driving a $0.02 per share unfavorable variance compared to the first quarter. We also want to note that the company has widened the guidance range for both revenue and earnings per share. While these ranges reflect the fact that economic and freight conditions are still quite dynamic, we believe the strength and resiliency of the Landstar model position us well to successfully navigate this environment. With that, Belle, we'd like to open the line for questions. Thank you very much, sir. At this time, we'll begin the question and answer session. If you would like to ask a question, please press star one on your touch-tone phone. Once again, that is star one to ask a question. To cancel your request, please press star two. We do have the first question coming from the line of Scott Group of Wolfe Research. Your line is now open. Hey, thanks. Good morning, Frank, nice to speak with you again. Welcome back to transports. You guys gave more color on some of the monthly trends. That was helpful, but it was going quick. So it sounded like March deteriorated, and then maybe Frank, at the end, your comments around pricing in April were a little bit better. Maybe just a little bit more color on sort of what happened in March and what you're seeing in April. Hey, Scott, thanks, and good to hear your voice again, for sure. You know, we're watching this thing on a daily and weekly basis, as you would imagine, just given, you know, the desire to see an inflection. And so, you know, we—what we don't want to do is, over-index on a day or two. We want to look at the trends over time. And I think the point that I was making toward the end was, you know, the week-by-week view in April, on rate, was beginning to show some positivity. And so, you know, we're hopeful that that is the beginning of an inflection. It's not going to be a, kind of a rapid rebound as maybe we saw in the, you know, immediate post-COVID time period, but a little bit of sign of green shoots is always helpful. I'll let JT fill in some color there. Yeah, no, absolutely, Frank. So Scott, the good guy top line to the model really was a strong February. So February versus the model was about +8%, as both the number of loads hauled by a truck and truck revenue per load in February outpaced typical seasonality. March was about 3.5%, good guy to the model on the top line, but both loadings and rev per load in March seasonally underperformed typical February to March, again, off a stronger base, a starting point of fiscal February. And then any thoughts about April there? Yeah. To Frank's point, you know, we saw truck revenue per load probably peak in the middle of fiscal March, and then starting to slide on us a little bit. To Frank's point, in fiscal April, week one to week two, truck revenue per load improved, week two to week three, it improved such that, you know, we don't have April closed, but our best guess is we're going to be maybe flattish March to April, and that compares with a historical plus 100 basis points good guy on truck revenue per load, historically, March to April. Okay, that's helpful. And then, Frank, just bigger picture, right? You know, if you look, net revenue is coming back to where it used to be pre-pandemic, but the cost structure is just so much higher. Is there anything you could do, or any initiatives to meaningfully reduce cost, one? And then, you know, secondly, we've had a view that there should be an opportunity to, you know, meaningfully accelerate the pace of buyback here. Any thoughts on that in your new role? Yeah, for sure. And all good questions as always. So on the cost side, it is always going to be something that we're focused on. As JT went through, you know, the math, especially in the first quarter, year-over-year, I mean, we are very disciplined on headcount, and JT's got the laboring oar on that one in holding the organization accountable. So what you're really seeing are selective investments that are really, you know, driving the year-over-year change, and whether that's on the depreciation side or adding some selective positions in those strategic areas that we called out on the phone. Technology is always going to be an area that we continue to invest in. I mean, our job is to support, you know, the agents and the BCOs and the carriers out there. So there's, you know, there, there's no initiative to really go hard at cost right now. It's more around the growth side of the equation. We think we're going to come out stronger, you know, when we start to inflect. So I think we're in good position there. The sales organizational changes are going to be helpful there. You know, we do have some real focus on things like the cross-border Mexico, as well as heavy haul. And those are areas that, you know, we have a scale business already, and, you know, being able to focus on those areas that are more, I say, secular growth in nature rather than cyclical. And then on your buyback question, you know, obviously, we're just getting started, you know, joining mid-quarter. We've got a pristine balance sheet, as you know, and it's wonderful to inherit that from, you know, Jim Gattoni, and obviously, the board's had a big hand in that one. And the company's really got a kind of a long and successful history of returning cash to shareholders. That's not changing. The company's been very selective about when it's in the market, and we're going to continue to evaluate where we are in the market, you know, on a price basis, pretty much every day. Being patient clearly has its advantages. You know, you look at where we traded in the, in the first quarter between about 180 and 200, and, obviously, it's come down since then for a lot of different reasons, including what the Fed's going to do. And we want to be great stewards of the shareholders' money. So, you know, we're going to be selective in the market, but we are going to return capital to shareholders. Yeah, makes sense. Thank you, guys. Appreciate the time. Thanks, Jeff. Thanks, Jeff. Thank you. We'll move now to the next question coming from the line of Tom Wadewitz of UBS. Your line is now open. Yeah, good morning, and yeah, also, you know, kind of welcome back to the transports, Frank. Nice to talk with you again. How do you think about the dynamic on agents and BCOs? I think you said that, you know, the decline in BCOs is slowing a bit. So when do you... I mean, do you think that's just kind of like spot rates bottoming, you know, you'll see that bottom out? Or what do you think the dynamic will be and kind of, I guess, key levers for how the BCO count goes and also the million-dollar agent count, you know, if you think about that in, let's say, 2Q, 3Q? Yeah. Hey, Tom, and great to hear from you again as well. I think the first impression I would give you on the agents and the BCOs, I mean, these folks are awesome. They're out there scratching every day, you know, on the agent side to go sell the extra load of freight and the BCOs to haul an extra load, you know, for us. So it's been great to see just the resiliency of the folks out there. And, you know, the fact that, you know, they're all commission-based on the agent side and load-based on the BCO side. So these are folks who are putting dinner on the table, you know, by load by load. So it's really important to know they're not on salary, and these folks are out there fighting every day for us. In terms of the million-dollar agent count, I mean, it was down year-over-year just because of the rate environment. You know, I think as the rates inflect, that number will go up, you know, on a full year-over-full year type basis. Certainly, the exit rate, if the rates cooperate with us, the exit rate will be higher this year than it was at the end of 2023. On the BCOs, one of the things that's really important, and Joe can get into the numbers, but you know, even though the BCO count effectively declined in line with where volumes went, the actual productivity of the BCOs went up. They hauled more loads per person, you know, than they, than they were doing last year. So that tells us that they're out there scratching for, for every load. But, Joe, fill in the gap. Yeah, Tom. So in the first quarter, net declines were about 10% better than the fourth quarter, so we're seeing some improvement there. And to Frank's point, utilization of loads per truck per week for BCOs was up 3% in the first quarter. It was flat in January, 6% better in February, and then 4% better in March. So we kind of like the trend that we're seeing there. And, you know, that continues to, I think, move in the right direction through April. And again, it is a function of just loading opportunities and rate. And I think we'll see, you know, the BCO count come back as kind of the volumes and rate come back in line. Do you think that you'll see good responsiveness on that, or would you do you think it's going to be tougher to add BCOs as you, if you have kind of gradual improvement in rates? You know, I think that, I think they'll bounce back, and our history really speaks to that. If you look back in years where we've kind of come out of a trough in 2017 going into 2018, we added, you know, 250 trucks in 2017. We added over 900 in 2018. You know, we were down 130 or so in the first quarter of 2020, but we added a net 748 for the year. Added a bunch in 870 in 2021. So I think the model speaks to the fact that when there's opportunity, these guys really flock to Landstar, and I think they're, it's not different now. ... I just think, we're waiting for that inflection point, for that to happen. And I think, you know, as capacity comes out of the market and things turn, I mean, I think we're still the homeowner-operators who wanna have the freedom to make decisions and provide for themselves. It's gonna be a gradual thing in my opinion, as rates and volumes come back, they'll come back. There's just not a systemic issue, I don't think. But, you know, it's more about when and at what pace it happens, and as we're as anxious as anybody to see that happen, quickly. Yeah. Okay, so it's about kinda cycle duration and profile, not structural change. Okay. Thank you for the time. Appreciate it. Thanks, Tom. Thank you. We'll move now to the next question coming from the line of John Chappell of Evercore. Your line is now open. Thank you. Good morning. I wanna circle back to February and March, especially. Jim, you noted February, 8% good guy to the model, March, 3.5. I mean, that is very contrary to everything we've heard throughout this earnings season for the last week and a half. So is there any way you can kinda dig a little deeper on where the relative outperformance came from, how things changed to the positive when it seemed to be changing the negative for most of the rest of the industry, you know, post the January conference call? John, I'm happy to. So in February, the biggest good guy was truck revenue per load in February 60 basis points higher than January. That compares to a down 220 historically, if you look at 2019 to 2015 pre-pandemic patterns. In addition, truck volume you know beat on seasonality as well. And I would tell you, John, we saw this too in not just on the revenue side, but we saw it on the net revenue side, on the brokerage side of the house. So from the fourth quarter of 2023 to the first eight weeks of the first quarter of 2024, we saw our net revenue margin compress 105 basis points. And then from the first eight weeks of first quarter 2024 to the last five weeks, it widened back out 85 basis points, right? So I think that's consistent with kinda that underperformance on the top line that we saw relative to pre-pandemic seasonality off that tougher launch point in February. Okay. And then I don't wanna, you know, again, extrapolate the last couple of weeks or whatever, but if, if you were kind of a real good guy in, in February, March, and, you know, people are kind of looking for green shoots, sounds like, you know, maybe February was a little bit worse in the back half, but to typical seasonality, but April, a little bit better. Are there any signs that you're seeing that there's really a more sustainable uplift in demand, or a more accelerated removal of capacity that's putting a floor below rates? Or do you think that this is pretty specific to kind of your business, your business model, and, you know, your customer base? Yeah, John, let me take a shot at that one, and it a little bit harkens back to the conversation we were having with, with Scott a moment ago. We are watching this thing very, very closely. You know, we've got, as we said in our prepared remarks, we've got areas which are doing quite well relative to the broader market and, and relative to the corporate average. And then we've got other areas like the power only and some of the 3 PL businesses not, not doing as well. And you would expect that kind of super cyclical side of things to be really good in good times and, and more difficult in more difficult times. When I look at the commodity groups that are performing well in April, you know, there are things like the automotive business, you know, metals, electronic packaging, building materials, the government business. I mean, these are things that are more on the industrial side of the economy and, and more that have, you know, kind of a secular item of things. I mean, data centers, wind energy, you know, electronic vehicles, things like that. And, and we're, you know, very well positioned to do well in those markets. I mean, these are sort of our sweet spots, so we're seeing those things, you know, do well. I think that they are reflective of early cycle. How early is a good question to ask. The consumer durable side is still not where we'd like it to be. You know, our view, and many, I think, share this view, there was a fair amount of durable goods that were pulled forward during the pandemic, and that's got to kind of get back to equilibrium before we see that, you know, turn positive for us. JT, if you got any more color on some of that. No, Frank, I think you hit the nail on the head. We're watching very, very closely. We got a little bit of Easter impact that was a headwind at the end of the first quarter, tailwind to the April, and we're carving that out and we're looking, John. And, you know, from our vantage point, they're reasonably in line on the volume side and revenue per load is just ticking a little bit below. Okay, appreciate it. Thanks, Frank. Thanks, Jim. Yep. For sure, John. Thank you. We will move now to the next question coming from the line of Bruce Chan of Stifel. Your line is now open. Yeah, good morning, gentlemen. I appreciate the time here. Just wanna come back to some of the comments that you made around cross-border. I know it's, you know, still early days there, but, you know, maybe you can help us to quantify the size of that business now relative to the opportunity or maybe, you know, what kind of growth you've seen there. Yes. Hey, Bruce, on cross-border, I think the important thing is we were an early mover in cross-border. You know, we built the facility we call LMO, which is a facility, a cross-docking facility and, you know, a yard. And, actually, we have a big crane down there we call El Jefe. So, you know, it's a really slick facility. Our customers and agents really like that. We've got a shuttle service that goes across the border. We've got a small intra-Mexico carrier called Metro. So we're well positioned in that environment. Clearly, we're trying to capitalize on nearshoring. You know, so we've got a good facility down there. We're gonna continue to look for opportunities to grow that business, to introduce more and more agents to help us sell across border. So we, we think it's, we think it's a good business. And again, as I mentioned in my opening remarks, and I'll turn it over to JT for numerical color, but you know, we're already a scale player here, so it's really about taking a business that's already performing well and really thinking about ways to grow it. JT? Yeah. No, thanks, Frank. I, I would just, in terms of revenue performance, it was down about 14.5%. Our cross-border revs, 1Q 2024 versus 1Q 2023, was about 400 basis points better than what we saw here at the core. And then- ... Joe, if you got anything to add? Yeah, no, I'd just say, you know, in last year, we did a little over $600 million. We're looking to move to almost 200,000 loads across the border this year. And it's a, you know, tremendous facility that serves us well. It provides for a great transloading environment to allow us to take advantage of that imbalance in the cross-border business. There's a lot more northbound than southbound. We've got a very solid core Mexican group of carriers that help us service the interior. and then to the earlier emphasis around cross-border, we've got a dedicated sales team now working on, on developing opportunities south of the border, as well as some agent development initiatives, trying to train up and bring agents up to speed on the core capabilities that we have at a multitude of crossing points across the border. And that's really, I think, going very, very well. So again, a strength that we have and have had that we'll just continue to, to lean on to grow in what we think is a great opportunity, not only in 2024, but into the future. Yeah. Okay, great. Appreciate it. Thank you. We will move now to the next question, coming from the line of Stephanie Moore of Jefferies. Your line is now open. Hi, good morning. Thank you. I wanted to maybe circle back on a prior question, talking about maybe the cost structure and some select investments that you've called out. If you could maybe kind of expand a little bit on those. You know, you called out some sales organization changes. You just mentioned having a dedicated sales team to go after cross-border. If you could kind of, you know, maybe expand on that a little bit more, and just key areas of investments, which, you know, I think are clearly you're trying to position yourself well within the upturn. But would love to get a little bit more color there. And then same, maybe on the cost side, areas where you're taking, you know, making some, you know, probably quick actions to take costs out of the business. Thanks. Hey, Stephanie, thanks for the good questions. Let me, let me do them in reverse. You know, I'd, I'd say we are looking hard at every position that comes open, whether we need to fill it, whether we need to fill it right now, can we wait until we see additional volume inflections? And again, I give a lot of kudos to JT in terms of how he manages things, and really, the whole leadership organization. Everybody understands that we're in a freight recession that's been, you know, a couple of years, in difficult circumstances. So, you know, we're being very, very judicious about filling positions that have some level of volume variability to them. In terms of strategic investments, I'm a believer that, you know, when a company embarks on a strategy, it's got to align a lot of things, including, you know, capital and human capital resources, to be able to bring those to fruition. So when we talk about strategic initiatives like cross-border and heavy haul, you should expect that we are going to invest, both capital and people into those areas to make sure that, you know, what we're saying is followed through with real action and can deliver the value that we think is there. So we, you know, and we're not talking large dollars or large numbers of people, but the fact that we're adding salespeople into cross-border, we're adding salespeople and some leadership positions in heavy haul, like, these are important decisions for us. Remember that, you know, the headquarters environment, the core environment within Landstar is quite small relative to the agents. So we're investing there to educate them and to provide them the tools that they need and kick open some doors with customers that can help us get into that business in a more fulsome manner. But, you know, we've got 1,100 agents or so that, you know, we're trying to introduce into heavy haul and into cross-border. They're not all going to want to do it, but there are going to be some who have wanted the opportunity to try that business out. We know there's a bunch of freight out there. We know we're good at it. We know our safety and our service capabilities and the performance that we put up, year in, year out. You know, give a lot of credit to Joe in terms of the way that he's running the operation. It's important for us to keep those as great selling points, and it takes a couple of people extra, in order to really go out and sit with the agents and help them understand how to go out and sell that piece of business. Joe, anything you'd add to that? Yeah, and Stephanie, we've kind of got a mantra that we attribute to cross-border, and that is Mexico Made Simple. And I think that, you know, over the years, we've really worked to make it that way, so that agents aren't intimidated or aren't at all reluctant to bring it up with a customer. We've got over 500 agents of our 1,100 that will do a cross-border shipment, last year and going forward. And so what we're trying to do is just deepen the understanding, increase the confidence to do so. And from an investment standpoint, we continue to put shuttle trailers down there that allow us and our Mexican carrier partners to utilize those trailers and provide seamless service and timely service across all the gateways. So we're just trying to do a lot of things. You know, the sales effort on the interior, you know, not every agent wants to go into the interior and make sales calls. So Landstar provides resources that'll be embedded in the interior, making calls, uncovering opportunities, that will then be managed by those agents and our, and our teams at the border. So, I think it's a good recipe, looking forward. And then... Thank you. Appreciate the answer. And then just one follow-up here, maybe on the technology side. You know, I think, I think for years, a lot of the technology investments were geared towards upgrading some legacy systems. Are we at the point now where, you know, maybe some of these investments are, are positioning you guys to play a little bit more offense? Yeah, you know, internally, Stephanie, you know, we sometimes say, well, we were the original tech-enabled, you know, logistics provider. So, you know, we're going to continue to stay on the leading edge of that. I think we have to. It's really table stakes these days. So, you know, we may not have marketed nearly as much to the investment community as others have done, but, you know, we think it's not a single-legged stool, right? It's not just technology, it's the brand, it's the scale, it's the relationships, it's the safety, it's the security, it's all of those things wrapped up into one. It's not just, you know, a bunch of people sitting in front of a computer, you know, trying to do business in a digital manner. That is clearly something that we do, but it's not the only thing that we do. One of the things that we will start looking at is technology, I'll say, inside the building, you know, where we, you know, still do some things that are more legacy related inside the building. You know, call center modernization would be an idea there that we're talking about, and, you know, the building and settlements area for us inside the building. So we've got some things that are going to generate, you know, I'd say, better levels of support and maybe some efficiencies over the next couple of years. I think we've done a lot, and I give Jim Gattoni a ton of credit. You know, one of the hallmarks of his tenure has been, you know, putting great technology and tools in front of the agents and the BCOs. And I think, you know, we're sort of coming to, you know, more of a maintenance mode for that over the next couple of years. And again, we'll start to reinvest inside the building. Thank you. Really appreciate it. Yep, you bet, Stephanie. Thank you. We will move now to the next question coming from the line of Daniel Imbro of Stephens Incorporated. Your line is now open. Hey, guys, this is Joe Enderlin in for Daniel. Thanks for taking the question. Just wanted to ask about the cadence of variable contribution margin. Could you maybe talk about how the exit rate compared to the beginning of the quarter, and then where have you seen that trend during April? Yeah. So we put out, Joe, a VCM guide for the first quarter of 14.5%-14.7%, and clearly, with the revenue beat, a little bit more brokerage in there and spreads compressing on us a little bit more than we would have anticipated, you know, missed that low end by 13 basis points or so. As we move into the second quarter, you know, with that call for sequential load volume, that's going to be handled, you know, by third-party trucks, right? Given what we're seeing in truck count. So you've got kind of embedded mix headwind, and then we did bake in a little bit more anticipation of spread compression, similar to what we saw third quarter, fourth quarter, first quarter. As such, the guide calls for a very, very close to normal seasonality with respect to VCM expectations for 2Q. Got it. Makes sense. Thank you. As a follow-up, it sounds like you guys are seeing an improvement in industrial end markets and commodity groups. Do you have any thoughts on when you expect consumer durables demand could pick up, or have you seen any green shoots of improvement there? Yeah, it's a good question. I mean, it's. It is getting a little bit better, but it's off of an awfully low base. So I'd hate to call a ball on that one. I think it's going to come down to, you know, the consumer has had a lot of opportunity in the last couple of years as COVID has, you know, kind of relented. And, you know, you spent the first two years of the COVID period spending money on things at home and renovating things, that you couldn't go out, you couldn't travel, you couldn't do the things that otherwise you might want to do, out and about, just given the concern around, you know, contagiousness. So, I think we're now in that period where folks are pivoting toward more of the services and, you know, going out to dinner rather than eating at home, or taking a vacation instead of, you know, buying a new dishwasher or something like that. So, you know, I just think we got to go through the pull forward a little bit. I still think we're, you know, several quarters away from seeing that come back into equilibrium. Got it. Thank you, guys. That's all for us. Thank you. We will move now to the next question coming from the line of Bascom Majors of Susquehanna. Your line is now open. Hey, Jim. In your current outlook, can you just tell us how much is embedded in the full year accrual for variable comp, including the share- based piece? And, you know, if you return to growth in 2025, how much needs to come back to, uh, to get you back to that level? Thank you. Hey, Bascom. Based on my nine plus three kind of best estimate, as I sit here today, I, I'd anticipate about a $15-$17 million headwind, full year 2024 versus 2023. If you're looking at 2025 versus 2024, I'd say, kind of at, at kind of threshold, you'd expect about a $1 million tailwind, given some of those transition costs are included in the first quarter of 2024 that won't, you know, won't repeat in FY 2025. Thank you for that. You know, Frank, welcome back. At high level, I know you've only been here less than three months, but this is a business that has done really well for stakeholders and shareholders by doing things pretty similarly for a very long time. And obviously, the cycle has challenged things, at least from the peak, in a way that we haven't seen before. But structurally, as you come in with a fresh perspective, do you see any pieces of the model that could maybe be tweaked, I don't know, in how they relate with agents or how you compensate BCOs? Just really anything where you might be able to turn some knobs around the dials and generate, you know, the kind of growth we've seen historically for the next 10 years. Thank you. Hey, Bascom, and nice to hear your voice, and look forward to connecting with you later in the year. I'd say the early impressions, and again, it's only been a little less than three months. I mean, the model is an extremely powerful model. It's unique, it's resilient. It obviously has attributes which are, you know, are wonderful and have been wonderfully successful. You know, the tech enablement, the asset light, the strong cash flow. You know, you're harnessing the power of literally thousands of people who are, you know, putting food on the table every day through the agent and BCO community. So, you know, there's certainly a do-no-harm to the model mantra. You know, in terms of the future, I'd say it's evolution, not revolution. It's how to take advantage of an already, you know, really good company and, and try to make it better. It's a fresh set of eyes, you know, on everything that we do, and sort of no preconceived notions of, you know, that we do things as, as good as we can do. So, you know, clearly, I'm going to be looking for opportunities to, to improve things, again, from an already, already good base. And I think that the two themes that maybe you're hearing come through is, one, how can we accelerate the model? And then how can we really focus on some of the strategic investments? I mean, you heard us talk about cross-border and, and heavy haul. Like, those aren't going to be the last two areas that we focus on. Those are just the first two areas, you know, and I give the board and Jim Gattoni a lot of credit. I mean, they started down this path maybe a year or so ago. And so I'm the beneficiary of that work and firmly believe that those two are real opportunities for us. You know, I'm going to be looking at the secular shifts, you know, in a bit of a follow the money type of a strategy. So, you know, as you think about things like nearshoring, that's clearly an area that we want to play in. You know, infrastructure, whenever that money unlocks from the government, I mean, that's an area that really fits well with heavy haul, so we're going to be able to do a lot more work in that area. Green energy would be another area. You know, the power generation needs of the country, especially with, you know, AI and data processing and you know, mining for cyber currency and things like that. I mean, it's just there, there's a gargantuan amount of power that's required to do that, which means we've got to have alternative sources of energy and data centers for all the computing power that's necessary. Like, those are all things that we do really well in. And I think you're going to continue to see us look for those secular opportunities and then invest, you know, the capital and the people in order to unlock those. Thank you. Thank you. We will take the last question coming from the line of Uday Khanapurkar of TD Cowen. Your line is now open. Hi. Hi, thank you. This is Uday on for Jason Seidl. I guess, can you talk a little bit about the rate environment, specifically in the unsided market? I believe flatbed spots had a better quarter than van. I guess I'm wondering, are we seeing a different, you know, capacity dynamic in that part of the market, or any color there would be helpful? Yeah, Uday, I think one of the things that we talked about was that the platform environment is holding up better than the van environment. Some of it is simply the, you know, the supply-demand dynamic in that area. There's fewer flats out there than there are vans out there. It is an area that supports heavy haul as well, so it's an area that we've been, you know, focused on. So I think there's part of it there as well. We don't, you know, we don't bottom feed. You know, we're certainly looking for premium freight and a lot of the platform, you know, items are a little bit higher revenue per load. But I'll let JT fill in again. Yeah, no, absolutely, Frank. And as I mentioned, there was a bit of a mix good guy there. So, you know, we saw increased demand for that heavy haul service offering, +2% on loadings, and down 1% rev per load. If you kind of strip out the heavy haul mix good guy from the unsided platform category, you go from a down 1.7%, as reported year-over-year, to a down 4.2%, kind of unsided platform ex the impact of heavy haul. All right. That's very helpful. I guess just as a follow-up, just on the year-on-year truckload guidance, just I'm looking at the model. It implies a modest sequential uptake or, you know, even slightly down at the low end. I guess I'm wondering, how does that guide measure relative to normal seasonality on a sequential basis? I'm sorry, can you... The guide with respect to anticipated operating margin for second quarter? The truckloads down 5%-9% year-over-year. Relative to seasonality. Oh, year over year. Just slightly, slightly below. So I think it on a sequential basis, we called for 4%-8% tailwind, 1Q to 2Q, so call it 6 at the mid, and that's lagging by a point or two of what we would, you know, call defined normal seasonality. All right, great. Thanks a lot, gentlemen. Thanks, Uday. At this time, I show no further questions. I would like to turn the call back over to you, sir, for closing remarks. Thanks, Belle. In closing, while the freight environment remains challenging, we do see some positives in the near term. We expect the 2024 second quarter to deliver Landstar's first quarter-to-quarter sequential revenue increase since the second quarter of 2022. Also, we are encouraged that truck revenue per load seems to have stabilized at a level well above pre-pandemic norms, and truckload volumes appear to be trending reasonably in line with pre-pandemic normal seasonal patterns, which is potentially a positive sign for the rest of 2024. Regardless of the economic environment, the resiliency of the Landstar variable cost business model continues to generate significant free cash flow. Landstar has always been a cyclical growth company, and we are well positioned to navigate these dynamic times and look forward to higher highs when the freight market turns our way. Thank you for joining us this morning. We look forward to speaking with you again on our 2024 second quarter earnings conference call in July. Thank you. Thank you for joining the conference call today. Have a good morning. Please disconnect your lines at this time.