Good afternoon and welcome to Landstar System Incorporated year-end 2017 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 any objection, you may disconnect at this time. Joining us today from Landstar are Jim Gattoni, President and CEO; Kevin Stout, Vice President and CFO; Pat O'Malley; Vice President and Chief Commercial and Marketing Officer; Joe Beacom, Vice President and Chief Safety and Operations Officer. Now, I would like to turn the call over to Mr. Jim Gattoni. Sir, you may begin.

Thank you, Jo. Good morning and welcome to Landstar's 2017 fourth-quarter earnings conference call. This conference call will be limited to one hour. When we open the line for questions, I ask that each participant have a two-question limit. Time permitting, we can circle back for additional questions. 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, plan, 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 2016 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. 2017 was a great year for Landstar, highlighted by many new financial and operational records. Revenue in physical 2017 was an annual record of $3.6 billion and exceeded 2016 by 15% on the strength of increased loadings hauled via truck of 9% and increased revenue per load of 6%. Demand for our services was strong throughout the year. We had record loadings hauled via truck in 2017. The number of loads hauled via truck in 2017 first quarter, second quarter and third quarter exceeded the prior-year quarters by 10%, 9% and 13% respectively. The number of loads hauled via trucks in the…

Thanks, Jim. Jim has covered certain information on our 2017 fourth-quarter, so I will cover various other fourth-quarter financial information included in the press release. Gross profit, defined as revenue less the cost to purchase transportation and commissions to agents, increased 13% to $150 million and represented 14.2% of revenue in the 2017 fourth quarter compared to $132.8 million or 14.9% of revenue in 2016. The cost to purchase transportation was 77.5% of revenue in the 2017 quarter versus 76.7% in 2016. The rate paid to truck brokerage carriers in the 2017 fourth quarter was 88 basis points higher than the rate paid in the 2016 fourth quarter. Commissions to agents as a percentage of revenue were 16 basis points lower in the 2017 quarter as compared to 2016 due to a decreased net revenue margin, revenue less the cost to purchase transportation on loads hauled by truck brokerage carriers. Other operating costs were $6.2 million in the 2017 fourth quarter compared to $8.2 million in 2016. This decrease was primarily due to decreased trailing equipment costs and decreased contractor bad debt. Insurance and claims costs were $16.2 million in the 2017 fourth-quarter compared to $14.5 million in 2016. Total insurance and claims costs for the 20 17 quarter were 3.7% of BCO revenue compared to 3.6% in 2016. The increase in insurance and claims compared to 2016 was entirely attributable to increased net unfavorable development of prior-year claims in the 2017 period. We believe that insurance and claims costs will approximate 3.5% of BCO revenue, representing the historical annual average over the previous five years over the long-term. However, accidents in the trucking industry can be severe and occurrences are unpredictable. Selling, general and administrative costs were $47.4 million in the 2017 fourth-quarter compared to $37 million in 2016.…

We continue to attract qualified agent candidates to the model. Revenue from new agents was $27 million in the 2017 fourth quarter. As expected, we lost a minimal number of BCO trucks due to the ELD mandate. In fact, during the 2017 fourth quarter, we experienced the lowest truck turnover in 10 quarters and had the highest net BCO truck additions since the 2015 second quarter. And all of our active BCOs had installed ELDs by the December deadline. We ended the quarter with a record 9,696 trucks provided by business capacity owners, 257 trucks more than at year-end 2016 and 148 over the end of the 2017 third quarter. The number of loads on loads hauled by BCO truck capacity in the 2017 fourth quarter was 2% below the 2016 fourth quarter. BCO productivity was 4% lower in the 2017 fourth quarter compared to the 2016 fourth quarter, mostly from the extra week in 2016. The 4% decrease in productivity was partly offset by the 2% increase in BCO trucks. We had a record number of third-party broker carriers hauled freight on our behalf during the 2017 fourth quarter. Our network is strong and continues to attract third-party truck capacity. Our 2017 financial performance was outstanding. I'm extremely pleased with the way we closed out the year. 2017 fourth quarter revenue increased approximately 18% compared to the 2016 fourth quarter. This result reflected strong volume gains and elevated pricing throughout the quarter. During the first several weeks of 2018, strong volume and elevated pricing continues on our truckload services. Strong demand from the industrial sector, the ELD mandate, an extreme winter weather across the country disrupting freight flow have all contributed to a strong start to 2018. The number of loads hauled via truck is currently running in a…

Thank you very much, sir. [Operator Instructions] Our first question come from Amit Mehrotra of Deutsche. Please proceed with your question.

Great. Thank you, operator. Good morning, everybody. Thanks for taking my questions. I wanted to ask about the demand environment. You clearly touched on a little bit, but clearly the strength seems to be the driver of the strong performance. Correct me if I'm wrong, I don't think the company has ever achieved a revenue per load growth in the mid-teens percentage range. So, that's obviously very impressive. Clearly, a perfect storm of good stuff in the truckload market, but in that context, could you just break down the demand environment for us, whether there's some specific pockets of strength, particularly maybe in the unsided business with the energy prices up? And I know also visibility is somewhat limited, but your thoughts on maybe how much of the strength – the current strength do you think is sustainable based on just your experience from looking at past cycles and then what's going on now. Thank you.

Amit, this is Pat. I'll answer the question. In Jim's remarks, he talked about the broad-based nature of the opportunities and the broad-based nature of the revenue growth. And I think you see the kind of the power of Landstar on display there. So, because of our diversified network of agents, we're able to penetrate a lot of these different industries and accounts. And when those accounts and industries are up, again, it's just been a broad-based, across many industries and customers at Landstar that we see in the growth. If we could think of one industry that's maybe not growing, and that would be automotive alone. But, again, it's not growing, but it's not declining either.

Got it. okay, that makes sense. And then, just one follow-up from me. Just if you could talk about the company's ability to, I guess, increase the BCO count in the current environment. That's number one. And then two, given this gap between when the ELD mandate went into effect and the full enforcement, there is a percentage of capacity that may be is waiting for the last minute. Have you seen customers, shippers want to only do business with companies, with carriers that are now fully ELD compliant or is there some flux there? Just trying to understand if there's this temporary dislocation that's been created in the truckload market because of this gap between the enforcement and when the mandate went into effect.

Sure. Amit, this is Joe. I'll take that – take the question on the BCO count. Interest remains strong. And if you think about the environment we're in where pricing goes up, is on the rise, our BCOs are paid on the percentage of revenue. So, when rates are going up, they're getting a pay increase every time the rate goes up. So, that's a very attractive feature to the model. Fuel is moving higher. We passed through a 100% of fuel surcharge to our BCOs. So, I think from a recruiting environment and a retention environment, both of those bode well for growth as we move through 2018. Typically, in the first quarter, we're flat to down. Through the January, we're actually flat so far. But, typically, that's not uncommon. We usually see a flatness or a slight decline in January. But I think the prospects for 2018 are actually pretty good. On the ELD front, as Jim stated, we had just a handful of BCOs that we lost over the ELD mandate and another very small handful who have yet to install that are currently inactive. I think our customers do expect that ELD equipped trucks service them right to – and to that extent, we honor that with our BCO fleet. And I think that there is some delay in enforcement where you might have some operators in brokerage equipment that may or may not put ELDs in or are in the process of doing that. But, certainly, I do think that expectation is there, but I also think that there is plenty of opportunity and a mechanism for that to happen as we move through the first quarter.

Got it. Okay. That's all for me. Thanks. Congrats on the really strong results, guys.

Yeah, thanks.

Our next question comes from the line Jason Seidl of Cowen. Please proceed with your question.

Hey, thank you, operator. And good morning, guys. I also [indiscernible] some of your end markets and sort of flatbed side of things. Looks like you had a lot of strength in building products and in metals. Where do you think that was coming from? Was it sort of broad-based? Was it anything in particular? And what are your thoughts on an infrastructure bill if that gets passed and how that might affect Landstar's business going forward? Thank you.

Well, on the infrastructure bill, we generally – it tends to tighten up flatbed capacity, maybe not directly for us. So, it would tighten up a market that already feels a little tired, and it's been over the last two or three years. So, no direct impact that we would think from an infrastructure bill, but clearly an indirect impact a more flatbed gets sucked into any new project that they're working on.

And in terms of breaking out the end demand for some of your flatbed business and what you're seeing there?

Jason, this is Pat. Again, very broad-based. You mentioned metals, building products, machinery. Those, again, I really want to emphasize the diverse nature of the model and then all the different end markets that we're penetrating and then the customers within that. So, if you look at those three segments, those three segments were up in the quarter and we anticipate a similar strength as we go through the first quarter here in those segments as well. I think it's worth repeating that in January what we've seen is a high watermark for the number of requests from customers for information related to Landstar. An RFI comes in. And typically, following that RFI is a request for quoting on business. And so, I think again it gives you an idea of just how diverse and broad-based the opportunities are and how our model is set up to take advantage of that.

All right. Well, gentlemen, thank you for the time and impressive quarter.

Our next question comes from the line of Matt Brooklier of Buckingham Research. Please proceed with your question.

Thanks. Good morning. So, just wanted to get back to the BCO growth in the quarter. You saw a nice growth even despite loads being down and obviously there was difficult comp in the quarter. I'm not sure if you have this information, but can you talk to the pace of additions through fourth quarter? If potentially you saw more BCO addition towards the end of the year? What I am getting at is, did you see any change in terms of your ability to add BCOs post the ELD mandate?

Matt, this is Joe. The ELD mandate, I'll take you back. We've been requiring ELDs for all new BCOs since the end of 2012. So, adding the BCOs into the network as a result of having to get an ELD really hasn't been anything new for us. So, the pace of additions continued pretty steady. Our retention, as Jim mentioned, improved in the quarter. And again, I think that's a function of the system that we provide, but also just the general environment for freight and some of the, again, rising prices that were in the quarter. It just makes Landstar a great place to be for owner-operators.

Okay. So, I guess, your sense is it's the model and an increase in pricing and freight opportunities, which was probably the main contributor to this nice growth that we're seeing –

Yeah. I think, overall, we believe we're the best place for an owner operator. We provide the level of freedom, the access to growth, the access to being a part of a system that provides freight that they can't get on their own or they can't get in so many other systems that are out there, and I think that advantage that we see just heightens in an environment like we're seeing today.

Okay. And then, Jim, I think you touched on your gross margin expectations for first quarter. We're seeing kind of continued compression. You talked about mix. You talked about rising purchase transportation costs. Any thoughts as to when we may see some, I guess, alleviation in terms of the headwinds from a gross margin perspective? Should we just be looking at spot pricing and getting through the bid season in terms of contract rate increases? Is there any other dynamic that's outside of those factors, which is maybe providing a little bit more pressure on your gross profit margin?

Yeah. Most of the pressure is probably coming more from mix because we expect more brokerage revenue in the first quarter as compared to the prior-year. I think when you look sequentially through maybe third quarter or fourth quarter, the other spread between revenue per load and PT per load on a brokerage actually got better coming into the fourth quarter. so, I think the revenue per load accelerated faster into the fourth quarter than the PT rate did because we closed that gap. So, I think we're there now on – when you just speak to the brokerage piece of our business, there's not a lot of compression left in there. I think we're starting at that point where pricing is now offsetting the increased pressure on the trucks from the tightening. So, it's more of a mix for us from our first quarter projection.

Okay. Good to hear. Thank you.

Thank you. Our next question comes from the line of Jack Atkins of Stephens. Please proceed with your question.

Hey, guys. Good morning. And congratulations on a great quarter here.

Thank you.

So, I guess, Jim, let me kind of go back to the macro questions for a moment because I think – when we look at sort of your guidance for the first quarter, obviously, very encouraging. And then, when we think about the signs that we're seeing from the economy, it seems like things are accelerating. And then, later on, the tax reform to that and ELDs. It just seems like we're potentially in a point where we could see an extended cycle this time versus what we saw in 2014 and 2015. And I'm just curious from your perspective, when you think about it, how are you thinking about the cycle playing out over the next 12 to 18 months?

I honestly don't see anything slowing us down. I mean, you've got the ELD mandate. You've got an industrial production in the US increasing. The demand, as Pat says, broad-based and it slowly came on us, right? It wasn't like it popped and we expected to go away. It started building in the end of the third quarter and flowed right through the fourth quarter. I think we're doing a great job on executing. Put more volumes. Pat's focus over the years has been to just focus on volumes, price will come. And I think now we're seeing that, the results of the efforts Pat is putting in and his team. I expect – do I expect this – look, we're coming in – the one thing is we're coming in a January, probably – it was probably the lowest drop from December to January in price in the history of the company. And the only question I have is will that price level elevate like it typically does throughout the year or we see more balanced pricing because we've already got the increase built in. That's the one question I have for the remainder of the year. But from a volume and demand standpoint, the environment feels great for us right now. I don't see any hiccups from the volume side and price is strong. Will it climb into the back half of the year typical or did we already get the price built in right now? That's kind of the question I have. I feel – we're executing on all cylinders. I think we all feel pretty good about what the year is looking like.

Okay. That's helpful, Jim. Thank you. And then, when I think about the impact from a tax reform bill, obviously, it's going to have a positive impact to your cash flows. And so, I'm curious if you could comment on sort of your thoughts on capital allocation, the buyback – you guys have 3 million shares authorized, but I don't think you have executed on any of the buyback in 2017. Do you anticipate that changing in 2018? And then, how do you think about cash flow distribution? But then, secondly, on the tax reform bill, does it change the calculus for some of the owner-operators looking to affiliate with Landstar's BCOs? Could you possibly see your BCOs perhaps adding trucks because of some benefits around the immediate expensing and depreciation that will flow to them through the tax reform bill?

Go with the last one first, is I don't see that the impact on our BCO network as much because 98% of our trucks is one guy. I don't see that group jumping in and buying a second truck. Maybe, but from my perspective I don't see that happening, especially when, like I said, of our 9,600 trucks, 9,200 of them are probably single owner operators, or 9000. From the question on – the philosophy hasn't changed on our stock buybacks and our small dividend, buyback. We prefer the buyback program. And, yes, we didn't buy any stock during 2017. We look at market multiples, as we look at our multiple, we also look at – the tax reform was speculation at the time and you had the sense it was driving some of the market multiples. And until reality set in with the tax reform being – so, we were kind on the sideline throughout 2017. But our philosophy hasn't changed. We still want to focus on buybacks. And it clearly will have – in 2018, will have an increased cash flow based on the tax reform. And as part of that, we added a nickel to our quarterly dividend. And every year since 2004, we've – ever since we started doing dividends, we also look at – during the second half of the year, we've increased the dividend. So, we left an opportunity to take a look, see how the year is going and see if we want to increase our quarterly, but we've still got the same philosophy.

Okay, that's great. Well, thanks again for the time.

All right.

Thank you. Our next question comes from the line of Bascome Majors of Susquehanna. Please proceed with your question.

Good morning. And congratulations on the results. I wanted to talk a little bit on the SG&A side with the incentive comp around $7 million for the fourth quarter. It looks like the full year probably came in around $20 million. Can you just confirm that number and walk us to what and sort of expected accrual would look like in 2018, if that came down to more target levels? And when within the year you'd expect to maybe revisit and want that accrual up if results were coming in above plan like they did last year? Thanks.

Hey, Bascome. This is Kevin. I'll take that one. Yes, the number was $20 million for 2017. And like we said in the past, if we're going to hit targets, our incentive comp number will be $2 million a quarter. So, $8 million annual. So, there's, I guess, you could say, $12 million tailwind there. We would revisit it at the end of each quarter and try to get our best estimate for the annual number and try to get whatever we think the annual number is going to be into each quarter equally. So, every quarter, we're going to take a look at that.

Thanks for that.

$20 million is probably the best number to put in for your model for the annual number for 2018.

I appreciate that. Is there anything positive or negative on the SG&A side from your agent technology project this year versus last year? And could you kind of tie that altogether? You've got these long-term margin targets out there for 70% plus incrementals on net revenue growth and in reaching a 50% operating margin on net revenues. Are those in your sights for 2018 given the results you expect?

Clearly, I think the incremental margin, based on what Kevin just said, in that tailwind of our bonuses should help us get to that 70% to 80% incremental push-through of – any incremental gross profit growth should push through 70% or more down to operating income. Also, you've got to look at the fact that our 2017, not that this is the perfect for insurance, but we're at 3.8% of BCO revenue and we're projecting 3.5. So, you've got a little bit of hopeful tailwind there as long as we're safe. And that should help us get us to that incremental margins. Our spending on tech continues at about an even rate between $8 million to $10 million a year and that will continue over the next couple of years. That'll put a little pressure on that 50% margin. So, we pushed that 50% goal into 2020. To be 50% operating margin by 2020.

All right. Well, appreciate all the color there on the G&A side, guys. Thanks.

[Operator Instructions]. Our next question comes from the line of Todd Fowler of KeyBanc Capital Markets. Please proceed with your question.

Great, thans. Good morning. Jim, maybe just a follow up on your comments to Jack about expectations for the year. If I look at your first quarter guidance and I adjust for the tax rate, it almost feels like that you're expecting first quarter to be comparable with fourth quarter, which is atypical for normal seasonal trends. And I know that we're seeing strength here in January. But would your expectation at this point be that 2018 is going to be more linear from a quarterly standpoint? I know there's a lot of variability with ELDs and what could happen. But from a starting standpoint, does it feel like we should think about things being more linear through 2018 or would you expect more of a ramp as we move through the second quarter and into the back half?

Yeah. My thoughts are a little bit more linear because I think the first quarter anomaly is driven by a couple of specific things, right? Anybody who put on an ELD late in the year is new to it, right? And I think that probably affects productivity in the short term or trucks sitting, getting the ELDs put in are down a couple of days and then they've got to learn how to use them. So, that's kind of a phenomenon that's going on right now and it could continue until April 1. The weather, even though it wasn't a lot, for a couple of days, it was – which would keep spot market rates up. Any kind of disruption like that would keep the rates up in January and the strength of IP. I, sitting here today, coming on from a real strong first quarter, I would – on the pricing side, do I expect it to elevate into the back three quarters the way it has historically? To some degree, but not to the extent that it has in the past because I think we started so strong. So, from a comp basis, sequentially, I don't know if it will elevate as we had before. But it's early in the year. We're dealing with only four weeks of results. So, I think we're a little conservative on what I'm saying about the year. If it continues as is, we could have a very strong year, the strongest in the history, clearly. But we will see how it rolls out after the first quarter.

No, that makes a lot of sense to me. And I think that that's probably the right framework to work from. And maybe one of the things just to help clarify your model versus maybe some of the asset-based carriers, correct me if I'm wrong, but I think about you just having maybe less contract exposure. So, some of the asset-based names that are talking about seeing rates improve as they sign the new contracts. That shouldn't – you maybe have less of a benefit from seeing contracts resetting in the second half of the year versus some of your asset-based truckload peers, is that correct?

Absolutely, yes. We have contract rates with a lot of our customers, but when the market gets tight, the agent renegotiates the price. Our contract rates are a lot like spot market rates. And it happens the other way too. If the shipper senses that there is rates going down, our agents react and bring the rates down. So, we're a little bit more subject to change in coming off contract rates than – because it's a day-to-day, transaction-by-transaction kind of – lot of spot type business.

Okay, good. That's helpful. Just for my quick follow-up, do you have – and maybe you gave these for the fourth quarter, the monthly volume comps for October, November and December? And then, do you also have the 2017 January, February and March comps, so we understand what you're comping against on a monthly basis for truck volumes?

We do. And Kevin can. But I'm going to disclaim on the December 2017. Just because October is clean, but this year, I believe, November had Thanksgiving, but it was in December last year, and so there's a little confusion in the number. And then, we had the extra week in 2016, but you didn't ask for 2016, did you?

No. I was hoping to get what you saw in the fourth quarter of this year? And I understand that that makes sense about –

Yes. Volumes, October, November and December – this is just for truck – year-over-year, 13%, 5% and then negative 5%.

And then, what about January of 2017? So, what are you comping against in January, February and March this year?

The first quarter was 10%. Give me a second. I can find the other first quarter numbers.

Jim, maybe while Kevin looks at that, and if this isn't – do you have a CapEx number for 2018? I don't know if you had that in the release or not.

About $40 million.

Okay. And that's mostly trailing equipment?

Yeah. About 30 of that is trailing equipment. So, $8 million to $10 million on that – you know the true cash CapEx.

Truckload count, January over January 2016, Todd?

2017.

The 2017 January, February and March volume growth, 15%, 7% and 9%.

Okay, good. Okay, great, guys.

Remember, last year, January had the quirk in the calendar. So –

Okay. But the quirk was, there was what? From a holiday timing?

The timing of Christmas.

January 1 was a Sunday. So, we almost had a full week of productivity in the first week of January in 2017. So, that's how we end up with a 15%.

So, what you're seeing in January right now is up against actually a more difficult comp in January of 2017?

Absolutely.

Yes, yes.

Okay, very good. Very helpful. Nice quarter. Thanks for the time.

And our last question comes from Scott Group of Wolfe Research. Please proceed with your question.

Hey, thanks. Morning, guys. So, I think I heard BCOs flat so far in January. What about the number of approved and active broker carriers? And then, do you have a view on, at this point, how many of your brokers or what percent of your brokers have ELDs?

I'll take the last question first. We really don't have a way to have a true sense of all the carriers and whether or not they have ELDs. If you think about it, it's a very difficult thing to validate. We rely on them following the rules around ELDs, just like they follow the rules around any other compliance-related item. And if there is a reason to believe that they don't have it, then we won't keep them as approved, but that's kind of how we think about that. And then, Scott, what was your first question? What was the other part of your question?

Just if you've seen any trend in the change of the number of approved broker carriers since the ELD mandate went into effect? I know you said BCOs flat. I'm wondering if broker carriers are flat or growing.

Carrier count continues to grow in the quarter.

And so far in post ELD?

Yeah.

Okay, okay. Thank you.

You're welcome.

Was there any notable FEMA revenue in fourth quarter?

$17 million. Disaster services.

Okay. I know your incentive comp, there was a question earlier, I think it's tied to earnings per share. That target resets higher with the tax rate, correct?

Yes.

Okay.

We've tried either way, but we couldn't pull it off.

Okay. And then, just lastly, real quick, did you give a January volume number? I know you said full quarter up high-single, but what's January?

I think that's probably where it is just based on that. I think it was high single. We're looking at high-single-digits for January.

So, I guess, my question is, you talked about the demand, if you think about some of the other transports so far, Robinson talked about slower volumes in January; Arkansas Best, rail volumes a bit worse in January. Why do you think you're seeing just something different than what some other carriers have said? And they've been blaming weather, I think.

Well, it's superior management, clearly. Just kidding. I think that's a hard question for us to answer because we're looking at daily load volumes coming through the system and we don't break it down until the month is over and really pull it apart to see how we did and what commodities, what customers, what agents are driving it. As you said, for us, it's kind of broad-based. But whenever there's weather disruption, we tend to get an elevation – and maybe the other guys don't see that because, in our model, right, we got small business all around the country. And if there's a disruption, right, and the shipper knows that Joe Agents [ph] right next door, he can call them, we'll get him a truck. So, it might just be a little different relationships that we have. Well, Robinson is moving a lot of freight and they get disrupted. We're the guys that's stepping in when things get disrupted. So, that's why I'm saying weather might have had a little bit to do with that volume driving in January, and maybe that'll subside a little bit, we're not seeing it as of last week and the weather's been over for three weeks. I think it just comes from the different business model and the fact that we have a local presence and we can react quicker if there's a little bit of disruption in freight patterns.

Okay, thanks so much for the time, guys. Appreciate it.

Sure.

Thank you. And our last question comes from Ben Hartford of Baird. Your line is now open.

Hey, guys. This is actually Zack Rosenberg on for Ben. Thanks for taking the question. Just had a quick one. The other revenue line item had a decent spike this quarter. I'm just wondering, it doesn't seem like that was the insurance. I'm just wondering what drove that and what we can for a run rate going forward.

The only other thing in the – this is Kevin. The only other thing in the other revenue are our premium revenues related to the insurance and then we've got a very small amount – we're putting the Metro – the Mexico acquisition, that number in there. But that's very small. The only other thing in there is premium.

Okay. So, it is all premium. And is that a good run rate going forward? That $16 million that we saw?

I think there's $2 million or $3 million of Mexico in there.

$2 million or $3 million? Okay.

Yes. So, you've got to pull that out. I would go with about a $12 million run rate on that line. And then Mexico is a million a month, $2 million a month, something like that. Our Metro entity is probably a million, $2 million a month.

$2 million to $3 million, right.

$2 million to $3 million a month.

Perfect. Thanks, guys.

Thank you. At this time, I show no further questions. I would like to turn the call back to you sirs for closing remarks.

Thank you, Jo. And thank you. And I look forward to speaking with you again on our 2018 first quarter earnings conference call, currently scheduled for April 26, 2018. Have a good day.

Thank you for joining the conference call today. Have a good day afternoon. Please disconnect your lines at this time.