Good morning, and welcome to Landstar System Incorporation's First Quarter 2019 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; 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, Prema. Good morning, and welcome to Landstar's 2019 first quarter earnings conference call. Before we begin, let me read the following statement. 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 2018 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. Landstar had a successful 2019 first quarter as we set numerous first quarter financial records including gross profit, operating income, net income and earnings per share. This performance was achieved even as the overall freight environment softened from the exceptional freight environment of 2018. As it relates to revenue, we ended 2018 with decelerating growth rates in truck revenue per load and truck loadings. This deceleration in growth rates along with a difficult year-over-year comparison attributable to 2018's very strong financial performance resulted in 2019 first quarter revenue to be slightly below revenue in the 2018 first quarter. Nevertheless, the company's 2019 first quarter results were generally in line with the expectations that were communicated in our first quarter guidance as provided during our 2018 fourth quarter earnings conference call held…

Thanks Jim. Jim has covered certain information on our 2019 first quarter. So I will cover various other first quarter financial information included in the press release. Gross profit defined as revenue less the cost of purchased transportation and commissions to agents was $155.6 million and represented 15.1% of revenue in the 2019 first quarter compared to $155.5 million or 14.8% of revenue in 2018. The cost of purchased transportation was 76.6% of revenue in the 2019 quarter versus 77.3% in 2018. The rate paid to truck brokerage carriers in the 2019 first quarter was 177 basis points lower than the rate paid in the 2018 first quarter. Commissions to agents as a percentage of revenue were 45 basis points higher in the 2019 quarter as compared to 2018, due to an increased net revenue margin revenue less the cost of purchased transportation on loads hauled by truck brokerage carriers. Other operating costs were $8.2 million in the 2019 first quarter compared to $7.6 million in 2018. This increase was primarily, due to increased trailing equipment costs, partially offset by decreased contractor bad debt. Insurance and claims costs were $15 million in the 2019 first quarter compared to $17.4 million in 2018. Total insurance and claims costs for the 2019 quarter were 3.3% of BCO revenue compared to 3.7% in 2018. The decrease in insurance and claims compared to 2018 was attributable to decreased net unfavorable development of prior year claims in the 2019 period, and reduced severity. Selling, general and administrative costs were $41.3 million in the 2019 first quarter compared to $45.3 million in 2018. The decrease in SG&A costs was mostly attributable to a decrease in the provision for bonuses under the company's incentive compensation plans and a decrease in stock compensation expense, partially offset by increased…

Thanks, Kevin. With that Prema we'll open to questions.

Thank you very much, sir. At this time, we will begin the question-and-answer session. [Operator Instructions] Our first question comes from Jack Atkins of Stephens. Your line is now open.

Hey, guys. Good morning. Congratulations on a good quarter in a tough operating environment.

Yeah. Thanks, Jack.

Good morning, Jack.

So, Jim let me start with you and I guess ask a bigger picture question, but I guess when people think about Landstar they tend to think about you guys as a spot market player and that's correct to a certain degree, but you guys are certainly outperforming the spot market both from a rate and a volume perspective. And I guess, when I look at your volumes truck volumes were up 2.5% year-over-year in the first quarter, when spot market loads generally were down for the rest of the market. So can you kind of help us think through what's allowing Landstar to really drive these market share gains because we saw it in the 2016/2017 down cycle and we're seeing it again? Just I think it would be helpful to kind of walk through sort of what's driving this outperformance?

I think it has to do with the mix of business that we offer and some of the specialized things that we do. Jack, if you remember back 15 years ago people referred to us as an overflow business, where things started slowing down and routing guide and everybody would be -- all the traffic would be going through routing guide there'd be no fallout freight. So there was none of that overflow stuff. But that's not necessarily how the model works today right. We have 30% of our businesses flatbed of which 30% of that is heavy haul. So the special handling that doesn't really fall under that spot rate dynamic. When we drop-and-hook trailers, a van trailers is about 30% of our businesses. We have equipment sitting out there that needs to be loaded and moved. So that is a little bit -- this is more sticky there. So there's other dynamics within our business. So it relates to the mix within our business that of spot business. Now yes. Are we attracting and do we pay all the capacity in the spot market? Are they paid on spot? Yeah. We negotiate rates daily. But on the shipper side, we do have some agreements that aren't necessarily locked up but kind of tend to hold in an environment like this, because we have committed trailing equipment into a location or we provide specialized services flatbed or it's an expedite move. There are so many different variations to what our spot business is. I think that's what makes us a little different than the true spot market world. Q – Jack Atkins: Okay. That's great. And then, I guess just kind of following up on that for a moment, can you kind of walk through some of your different…

Thank you. Our next question comes from Bascome Majors of Susquehanna. Your line is now open. Q – Bascome Majors: Hey thanks for taking my question here. Based on the projections you shared for the second quarter today. Can you share, how the business is tracking versus the annual planning you set for yourselves in 4Q? A – Jim Gattoni: I would say it's tracking relatively close. I don't think we anticipated the March drop-off the way it did. As I said, we projected -- I think we projected rates in the first quarter to be down 0% to 3% or in the low single digits I would say. Compared to prior year March was down 7%. That was not anticipated. So I'd say based on our annual the rates were a little bit lower than we anticipated, where volumes are probably coming out above where we thought they would. And that continued into April. So from an annual projection I'd say it's probably a little softer. In our heads what we were thinking about our annual number was, I'd say we're a little bit softer where we thought we're coming out annually. Q – Bascome Majors: Great, I appreciate that. And translating that I mean, clearly the incentive comp is a pretty big tailwind. Are you still accruing on an annual basis? It sounds like you are. I just wanted to get a sense for kind of where the lever is to that on the margin line?

Yes, Bascome. We put up $1 million in Q1. If we really thought we were going to hit right exactly on target, we would be at $2 million in the quarter. So we'll see how the rest of the year progresses. If we make up that difference, obviously we'll have another $100 million we put into either Q2, Q3 or Q4. So...

Is there any flex lower, if things deteriorate below the plan? I'm just trying to think if that is pretty clear at this point?

Well. It can flex down to zero. We could take that. We're going to have a little bit of incentive comp that's not tied directly to the company earning. It's more of a sales type incentive. So by region, we'll have a small amount in there regardless, but the overall comp could go to zero, yes.

Thank you. And lastly, you bought back a lot fewer shares in 1Q versus 4Q. Can you just share I mean, the thoughts around that? Is it price-driven anything else going on there and do you think it will be in the market, as we get deeper into the year?

Yes. In the first quarter, generally we have most -- the first quarter has more closed shut opportunity than most other quarters. So the number of days and there was a little volatility in the stock during the quarter. So we jumped in to be opportunistic and then we got locked out. But our philosophy is unchanged on providing back to shareholders through share buybacks. That hasn't changed. And if they if we see the price hovering in this range it stays here for a while yes we'd be in.

Thanks and congrats on the results.

Yes.

Thank you. Our next question comes from Jason Seidl. Your line is now open. By the way Cowen and Company. Thank you.

Yes. Hi, guys. Hope all is well. Couple of quick things. I wanted to touch on some of your commentary on the flatbed side of things. Could you talk a little bit about your outlook? You mentioned sort of overall truckloads to be flat. Do you expect a little more strength in the flatbed division?

Jason, this is Pat. Yes. I think if you think about the capacity market writ large, the barriers to entry in that side are significantly greater than they are on the van side. So I think you see the capacity is coming into the market, not a lot of it's going on the platform side. So I think that's one thing. Secondly, from an execution standpoint, I don't think that there is -- we have few peers as it relates to our ability to execute in that platform business. So we remain very optimistic as it relates to that segment of business at Landstar.

So as we think about the overall load growth that you added to, it would be a little bit weaker in the van division and stronger in the platform side?

Yes. I think the challenges on the van side relative to capacity coming in the marketplace are significantly different than on the platform side.

Should we assume the same for revenue per load?

If you look historically, revenue per load has been on the flatbed side, platform side higher than on the van side. I think the pressures again just thinking about the marketplace, thinking about the number of competitors I think that the impact will be different on the platform side than the van side. I think the van side is subject to greater volatility on the pricing side than the flatbed side, but I do think some of the cost factors that have come into play for everybody in the industry are going to raise the floor on what the bottom price is going to be from a van or a platform side.

Okay. That's fair enough. And a follow-up question the BCOs, you guys are doing a pretty good job at a truck. Can you talk about this current environment and what you expect going forward?

Yes. Jason, this is Joe. It's -- we as you know grew 38 BCO trucks in the quarter and we're looking to do something similar in the second quarter, the way it is looking here at the end of April. There is a strong pipeline of candidates that we're looking at continuously, but there's a little bit of churn going on and you kind of get that anytime there's this demand/supply dynamic change, pricing change so that tends to occur. So our growth will be a little bit slower than it was in the last couple of years, but nonetheless growth probably in that 25 to 50 range in Q2.

Okay. I appreciate the time as always gentlemen. Thank you.

Yes.

Thank you. Our next question comes from Amit Mehrotra of Deutsche Bank. Your line is now open.

Thanks, operator. Hi, everybody. Thanks for taking my question. Jim, I guess in the past or more recently, you've been willing to comment on earnings expectations for the company in terms of your confidence in meeting those expectations. Obviously, the pricing environment you mentioned, March not being as strong as you would've thought, and incrementally weaker pricing environment. I’m wondering if you could comment on expectations have come down a little bit, they are $6.40. How do you think about the company's setup in that pricing environment relative to those expectations?

I think -- the pricing is down, but I don't think it's down where we wouldn't be within -- I think the Street estimate is $6.41. We're comfortable with that $6.41.

Okay. Great.

Yeah, we're comfortable.

All right. Thanks. And then, with respect to, I guess the Landstar model, one of the hallmarks is the variable cost structure. You might not capture all the upside or do not as much operating leverage in the good times, but there is obviously not as many issues with the decremental margins on the weak environment. There is some noise this year with respect to stock comp incentive-related expenses. But if you just kind of normalize for that, I guess this is going back to Jack's question, but how should we think about the EBIT margin? Should the rate of change in terms of decelerating revenue accelerate, maybe revenue down, if you can just educate us on kind of how the model is positioned in that kind of environment from an EBIT margin perspective?

So you're talking about on a downward trend, and how it impacts us? I think what we talk about is if we hit our targets, there's about an $8 million ICP payout. Our plan works it if we hit -- there is a lower level where we can actually pay half of that if we hit, which is slightly below target.

I'm sorry. I'm not asking about that. I apologize. I'm really asking about just the overall consolidated profitability of the model in a down gross revenue environment, and that's really what I'm looking at here.

What is the question?

Whether the gross revenue stop?

That's what I understood.

I'm sorry. Maybe...

We're not following your question.

I apologize. If gross revenue, if volume and pricing are negative, how should gross margins and EBIT margins trend given the variability of the cost structure?

It depends on how far pricing goes down obviously, but we do have the cost tailwinds that will offset that to a degree and the share buybacks.

Okay. I'll take it off-line. And then just lastly from me, wondering if there were any headwinds on the quarter from lower business, from customers that operate in the e-commerce arena. There's been some developments on re-sourcing or in-sourcing. Wondering if you felt any of that in the quarter that you want to call out or something like that?

Amit, this is Pat. I think -- I know what you're referring to, and that is not an account that we did a lot of business with and so the impact was not felt in the first quarter at all.

Excellent. Okay. Thanks, guys. I appreciate it.

And Amit on to your question there, I mean this feels a little like 2016. You can see how that operated, and what kind of margins we pushed through there. Clearly, the revenue number will be larger than 2016, but 2015 to 2016 it's kind of we're feeling that a little bit.

Yeah. I guess that's what I was talking about. Like one of the great things about your model is that, you might not capture a lot of the upside from a margin perspective. Your margins are pretty stable, but they're also quite stable on the downside, and that's really what I was trying to get at.

Yeah. Like with the gross profit decline of $10 million operating income can still go up, because we have the variable cost compensation programs, and we could have favorable insurance. So you could see operating income grow in a down gross profit environment, right. That's the reality of the model. And like I said, 2016 was a good number to look back at to say, because we saw a little shrink from 2015 to 2016 and how that held up.

And you'll just buy more stock as well? That’s appreciated.

Yeah.

Thank you. Our next question comes from Todd Fowler of KeyBanc Capital Markets. Your line is now open.

Hey, thanks. Good morning, everyone. Hey, Jim or Kevin, just within the second quarter guidance, maybe if you can help with some expectations for a gross profit margin percentage. I think Kevin, just with the SG&A and with the incentive compensation, is it right to think about SG&A is around that 26.5% in the second quarter or for the rest of the year as it was in the first quarter?

Yeah. This is Kevin. Yeah, the gross profit margin range probably we're looking at 14.8%, 15.1% for Q2. We're going to have similar -- I've modeled similar decrease in brokerage buy rate, which was 177 bps lower in Q1. Yes, the SG&A similar. If we got our numbers right in Q1 on the incentive comp, it will be another $1 million in Q2. That compares with $5.4 million that we booked in 2018. And then the only other cost item is our annual convention, which annually runs in the $2 million to $2.5 million range. That's in Q2, but that was also in Q2 of last year. So does that answer your question on the SG&A?

Yes, that's very helpful for both of those.

Okay.

And then just I guess a couple of other questions. Jim, can you talk about where you're at with the technology the IT rollout to the agents? And if that's on track with kind of what your expectations were on kind of how many agents at this point have had the rollout? And what the timing is or how long we're going to see that go I mean, into the next couple of years?

Yes. There's a lot of things we're working on, whether it'd be the TMS, which is really the operating system to better build efficiencies within the agent offices and actually within our office too. So, there's efficiencies to be gained with a new TMS, which we have about 150 agencies using it today. Now, we'll keep rolling out over the next three years is my estimation. But the other things we're rolling out, within the last 12 months to 18 months, we've rolled out brand-new pricing tools new load boards, a new Landstar Maximizer, automating our credit process. So it's just not focused on the one thing. So we've already delivered on a significant number of the things we started talking about two years ago. So the spending there is -- now we're back more paying on license fees and stuff as opposed to build outs. But we still have some things we're working on that should build -- make us a little more effective with both the agents and the capacity. But the TMS is the big one, that's the one where you have most of the costs rolling through the P&L. And like I said, we spent about $8 million to $10 million incrementally over what we would have spent without doing this and that will continue.

Okay. Very helpful. Got it. But it sounds like though, I mean, just from rolling it out from reception from the agents, I mean, all of that is on track, and then the benefit is that the agents ultimately become more productive. The cost would roll off at some point, but then you've got more productive agents with better technology?

Yes.

Okay. And then just my last one and I know this is not something you'd go head-to-head with given kind of the nature of the freight that you're moving, but just with the fact that we've seen some of the financials from some of the technology startups, Uber Freight in particular, do you have any comments about the marketplace? Have you seen anything different from some of -- from let's say, Uber Freight specifically, any impact with that or just kind of any thoughts on how that could impact the marketplace? Thanks.

Well, every -- we just came from our agent convention it's probably 300-plus there. Very, very, very small number of our agents, very small number have seen any Ubers or Convoys or those guys in their accounts and there is not a lot of discussion from their accounts about those entities. And you know what I think. Look, you can't let technology be the differentiator. And I don't know if that's really the differentiator, help move a shipper from us to a Convoy or -- because we already have all the stuff that they are pitching to the public, right. Do we keep an eye on it? Yes. But it's -- and the technology can be built pretty rapidly. It's getting your business process built around it, getting the shippers to accept it, and getting the carriers to accept it. Our carriers still want to call us. They still want to make the phone call to talk about the load. They've never been in that location before. We live in a spot world. They want a little more knowledge before they go pull into a location. So there's a lot that goes on hauling freight from point A to point B other than the tool. We have the tool, we can do it, but a lot of our stuff goes via phone call and communication between the driver and the shipper or the driver and the agent.

Yes, no. Understood. I was just looking for some of the color and that was helpful from both the agents and then just also a perspective on the market. So, thanks for the time. Good quarter guys.

Thank you. Our next question comes from Scott Group of Wolfe Research. Your line is now open.

Hey, thanks. Good morning guys.

Good morning.

Good morning.

So, wanted to just get your perspective. Jim as you think about your views on the market and just thinking about comps, do you think this high single-digit decline in rate? Do you think that's about as bad as it's going to get?

Yes. We've seen a -- we've actually seen a little bit, I would say, slight a slight uptick into April from March on the rates, which is a positive sign. As we saw March decrease from February, we're starting to see April be a little – look, very slight better, when it's not continuing to decline. So I would say, we might see this high single-digit through about August or September when rates actually start to slow down a little bit after that.

Okay. That's helpful. And then you made the comparison to 2016. Now if I look at 2016 revenue was down 5% and earnings were down 5%. So you're doing better than that now because revenues down 5% or 6% and earnings up 5% or 6%. So is the real difference just what you've talked about a bunch on the incentive comp or if there anything else that's different this time around relative to 2016?

Well, 2016 was a very low -- it's just the way the model performed right. But it wasn't necessarily the percentages. It's talking about year-over-year drops right. And that was the year that we didn't hit our target. It's a very little -- very low incentive comp in 2016. Insurance was I think I remember being about $57 million, which was in a range and kind of how the model performed is how the operating margin would roll out in that environment from a margin-EBIT perspective.

Okay. And then maybe just last question, I see the number of active broker carriers actually fell from the fourth quarter and to your point like the BCO is not really growing much anymore. Like are -- is the environment bad enough where supply is really starting to leave the market? Do you think there is a case that we could start to see a lot of supply exit?

Scott this is Joe. Our active carrier count did drop just a little bit. I attribute that just to being a function of the fact that there is a few less choices out there. The demand in the spot market is a little bit less than it used to be versus last year, which was obviously a record year. So it dropped slightly. I'm not sure that really means a big exodus. As much as it just means that we didn't require their services to the degree of growth that we did in the prior couple of years.

I guess, what I'm trying to ask is, do you think like that is enough to like help retighten the market?

No. I don't think that's necessarily the case. I think the kind of a less tight, little more readily available capacity market is going to hang with us for at least the balance of this year.

Okay. Thank you very much guys.

Thank you. Our next question comes from Ben Hartford of Baird. Your line is now open.

Hi, good morning guys, Pat I just wanted to come back to the comment you talked -- you made with regard to capacity on the dry van side. And just to clarify I think a quarter ago you'd said that the softness in spot felt more like a demand than a supply issue. Just to be clear, have we seen incremental supply particularly on the dry van side enter the market over the course of the past three months? Pat O’Malley: I would say to you, Ben that I believe that the demand -- the supply/demand mix was probably similar in the fourth quarter. I would say it was more of a 35% demand, 65% capacity. I would flip that here in the first quarter and again that's unscientific, Pat O'Malley gut feeling report Ben. So you can take that for what is worth but it is -- but I do think the thesis that we rolled out earlier in the call concerning platform and the barriers to entry in van and the barriers to entry there, but I think there is more incremental capacity coming on the van side than on the platform side.

That's helpful. I hope you publish that index going forward. That would be good. Pat O’Malley: I'll do the best I can, Ben.

Jim in the context of some of these technology tools and the discussion about 2016 versus today, obviously, net revenue growth is up meaningfully in that in the opening you talked about some of the changes in the business and it being a little less spot like. So could you talk about maybe the sources of share gains in the market over the past three years and then add onto that as you look down the pipe the next two or three years as you develop these technology tools, can that be an accelerant to the share gains that your agents seemingly have realized over the course of the past two or three years?

Well, one thing that's been over the last three years is just see where -- just speak to the drop and hook part of our business in the vans. We used to -- when we were recruiting BCOs into the market three or four -- into the company three or four or five years ago, 60% of the guys coming on needed one of our vans where 40% would come on with their own and now it's about an 80-20, right. We have more and more guys looking to do that. That's clearly a market shift for us where we're picking up some gains there. In the flatbed side we always tend to be one of the first guys in when there's a special project going on, on the flatbed special heavy stuff. And as it relates to the technology, look we've been doing this for a very long time and we've had the technologies that these people are pitching. We're tweaking them and building them out. We did not use to have a pricing tool for the agents to use, so that was something that was new. We had a lot of manual processes around here that now have turned into -- we're doing it automated instead of -- we're doing digital and automated as opposed to manual. That's what we're doing. But our business has always been the sharing of information in the best and fastest way you could do it. We went from pagers back in the early late 1990s, 2000s to now you're on iPhones, laptops and tablets. So all our stuff has been converted into being able to -- we have the apps to access loads, we have the Maximizer to access multiple loads for one round trip and we have the pricing tool to pull it all together. The one thing that -- the one big thing everybody is talking about is tracking and visibility. Everybody all of a sudden wants to see where their freight is regardless whether you picked it up and delivered it for the last 20 years on time and safe. So that's another thing that we have rolling out. That should rollout sometime this summer where we have for any agent who wants to see exactly where the freight is at any point in time. We're building that out. So those are the things we're working on to building the automation that we -- some of was used to be manual before, but we're just automating those -- the entire process the way that it is getting pitched from these digital freight guys.

Okay. So as you think about the model over the next few years, the bulk of the net revenue growth, do you think it will come from just making your existing agents bigger more productive as you talked about and just growing loads on a per agent account basis? Or do you think you can attract and/or convert new agents onto the Landstar platform?

It's both, but I'd like to -- look we have 1,200 agents in the network. I'd like to grow each one of them 5% and you do that by giving them better tools and making them more efficient. And then we still have a big charge bringing new guys on. Our goal for the new guys coming on is $100 million a year. When you're a $4.6 billion company, that's good and that's good to say I do $100 million a year. We take those $100 million guys and turn them into $200 million guys, but take our existing guys and turn them into they're averaging $7 million a year in revenue per existing guy turn them into a $10 million guy, so it's both. We're focused on both. But clearly the spending on the technology should not only build efficiencies of the existing agents, it should help us draw additional agents into the business.

Sure. That’s great. Thank you for the time.

Thank you. Our next question comes from Scott Schneeberger of Oppenheimer. Your line is now open.

This is Daniel on for Scott. Thanks for taking the question. Could you talk about free cash flow a little bit or cash flow in general how you see CapEx and cash flow project this year?

Yeah. This is Kevin. We did a free cash flow of $117, million $116 million in Q1. Our model works. When revenue slows a bit we generate a lot more cash. And I expect that same volume to be the rest of the year. So my guess at this point would be $200 million, $250 million. And what was your second question there?

On the CapEx.

Yeah, CapEx. We probably do $10 million a year in cash CapEx. That would be the best number there.

Got it. Thank you. On the flatbed side, are you showing any metrics on how the cadence -- the monthly cadence on volume and revenue per load throughout the quarter and what you're seeing into April?

We can. On the flatbed, if you look at the -- Kevin will confirm it as I read it. So if these are wrong, he'll come back and say that's not right. But on the load count on platform growth over prior year was 13%, 1%, and 2%.

That's correct, Jim.

And on the rate was flat up 2%, down 3%.

Got it. That’s helpful.

Thank you. [Operator Instructions] And our next question comes from Bruce Chan of Stifel. Your line is now open. Q – Bruce Chan: Good morning gents. Thanks for the time. Just a quick question on the capacity side. You talked about some of the loosening that you've seen in the environment and that's certainly something that we've heard elsewhere. But when you look a little further out into the year we've got a few things going on the regulatory front. Maybe a little bit less on the final round from the ARB to ELD conversion, but you've also got the drug and alcohol clearinghouse looming in the horizon and the hair follicle drug testing adoption. And I'm wondering if you anticipate any meaningful capacity tightening as a result of these issues and what your experience has been in terms of testing and experimenting with some of these measures yourself? A – Joe Beacom: Yes, hi, Bruce this is Joe. I'll kind of hit those in the order that you mentioned them. The AOBRD to ELD conversion internally we're well on our way to making that conversion and we anticipate no speed bumps in that regard. How the larger industry will perform? I would just say that it does require a software upgrade with most vendors and I'm not familiar with a lot of the vendors that are out there but it does require an action on behalf of the small truck owner or the large truck owner for that matter in order to make that happen which is why you're seeing the DOT strongly encourage people to get on that process because they are worried that the vendors won't be able to react in time which could create a little bit of a speed bump as you get into the…

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

Okay. Thank you and we look forward to speaking with you again on our 2019 second quarter earnings conference call currently scheduled for July 25. Have a good day.

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