Good afternoon and welcome to Landstar System Incorporated Second Quarter Earnings Release Conference Call. All lines have been on 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; Jim Applegate, Vice President and Chief Corporate Sales, Strategy, and Specialized Freight Officer; Matt Dannegger, Vice President and Chief Field Sales Officer. Now, I would like to turn the call over to Jim Todd. Sir, you may begin.

Thank you, Bill. Good morning and welcome to Landstar's 2024 second quarter earnings conference call. Before we begin, let me read the following statement. The following is a Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts 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 afternoon are Frank Lonegro, Landstar's President and Chief Executive Officer; Joe Beacom, Landstar's Chief Safety and Operations Officer; Jim Applegate, Vice President and Chief Corporate Sales, Strategy, and Specialized Freight Officer; and Matt Dannegger, Landstar’s Vice President and Chief Field Sales Officer. Frank and I will handle the prepared remarks with Joe, Jim, and Matt available for questions. I'll now pass it to Landstar CEO, Frank Lonegro for his opening remarks.

Thanks JT, and good afternoon everyone. First, I want to thank our million miles safe drivers and road star BCOs, many of whom were able to spend some time with us celebrating their accomplishments at the Annual BCO All-Star event held earlier this month. This outstanding group of owner-operators exemplify our shared passion and purpose at Landstar to safely deliver freight for our customers every day. It is incredibly energizing to engage with our network of entrepreneurial agents, BCOs, and carriers as we work together to align Landstar for future growth and continued success. As JT mentioned earlier, I'm pleased to be joined this afternoon by Jim Applegate and Matt Dannegger, the new leaders of our sales organization. Jim and Matt's coordinated approach to driving our sales efforts will serve Landstar and its agents well. As we move into the back half of 2024, 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 incremental growth. We also remain focused on our commitment to continuous improvement in the level of service and support we provide to our customers, agents, BCOs, and carriers each and every day. Turning to Slide 5, Landstar performed relatively well in the 2024 second quarter considering that the freight environment continued to be characterized by soft demand and readily available truck capacity. I believe our results speak to the strength and resiliency of the Landstar business model. Our balance sheet continues to be very strong and our capital allocation priorities remain unchanged. I'm a strong believer in the company's stock buyback program, and I'm committed to opportunistically executing on our existing authority to benefit our long-term stockholders. As noted in the release, we deployed…

Thanks, Frank. Turning to Slide 9. As Frank mentioned earlier, the number of loads hauled via truck came in at the low end of the Company's previously issued guidance range, primarily due to a soft fiscal May. Truck revenue per load came in slightly below the midpoint of our guidance. Non-truck transportation service revenue in 2024 second quarter was 7% or 7 million below that 2023 second quarter. The decrease in non-truck transportation revenue was mostly due to a 62% decrease in air revenue per shipment attributable to decreased high-value loadings from one customer. As to the breakdown in truck transportation, revenue per load on loads hauled by unsided platform equipment increased 3% year-over-year, whereas revenue per load on loads haul via van equipment decreased 5% year-over-year. 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 and van equipment hauled by BCOs in the 2024 second quarter was 4% below the 2023 second quarter. It should be noted that although the market has softened from a year ago, Landstar's revenue per mile on BCO van equipment remains above the pre-pandemic 2019 second quarter by approximately 15%. 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 band equipment hauled by BCOs sequentially decreased 1% from March to April, increased 1% from April to May and increased 2% from May to June. The March to April and May to June month-to-month changes underperformed pre-pandemic typical patterns, whereas the sequential change in BCO revenue per mile on band equipment from April to May outperformed…

Thanks, JT. As we progress through the second half year-over-year comparisons should begin to ease. Looking at historical seasonality from Q2 to Q3 pre-pandemic patterns would normally yield a 1% to 2% improvement in truck revenue per load, typically offset by 1% to 2% decline in the number of loads hauled via truck, yielding a similar top line sequentially. In 2024, as we move from June to July, our truck volumes have trended below normal sequential month-to-month patterns based on pre-pandemic seasonal performance trends. On the other hand, truck revenue per load has outperformed these pre-pandemic patterns. Turning to Slide 15. Our year-over-year expectations for the 2024 third quarter are the truckload volumes will be 6% to 10% below the 2023 third quarter, and truck revenue per load will be in a range of flat to up 4% versus the 2023 third quarter. On a sequential basis, our guidance for the third quarter implies a 2% to 7% decline in truckload volumes and truck revenue per load ranging from up 3%, up 7% versus the 2024 second quarter. We also expect revenue for our non-truckloads to be somewhat similar to what we experienced in the 2024 second quarter. Based on these assumptions, we expect revenue in 2024 third quarter to be in a range of $1.175 billion to $1.275 billion and earnings to be in a range of $1.35 per share to $1.55 per share. The 2024 third quarter guidance incorporates a variable contribution margin range of 14% to 14.3% and insurance and claims costs of approximately 5.5% of estimated BCO revenue. One last point before we take your questions, the 2024 second quarter benefited from the river parcel of a significant portion of the Q1 bonus accrual. That benefit obviously won't repeat in the third quarter and is a primary reason for the difference between the $1.45 midpoint of our third quarter EPS guidance range in the $1.48 of EPS we achieved in the second quarter. With that, Bill, we'd like to open the line for questions.

Thank you very much, sir. At this time, we will begin the question-and-answer session. [Operator Instructions] We have the first question coming from the line of Scott Group of Wolfe Research. Your line is now open.

This is Jake Clark [ph] on for Scott. Thanks for the time. hedging. So the guidance implies a pretty strong sequential improvement in rates, but a pretty large sequential decline in volumes. I guess, intensifying. Do you think that pricing starting to firm up for the industry or as a more specific to Landstar, and I guess, would be great to get your thoughts are on the reason for this divergence?

It was a little surprising to us as well as we looked at July's numbers. We were certainly excited to see a little bit of lift on the on the right side of the equation, but July was a little bit softer. Some of that could be the holiday and sort of typical seasonality there around the 4th of July and the time of the week that it hit there was some weather in the second week. So there were a couple of things I think that we look at and wonder whether or not those are some are going to stay with us at and, you can give you a little bit of color around how to how June to July and obviously July, August September as we as we progress through. But I think it's probably too early to call the ball on true inflection in the second half. I think we did that last year and I didn't happen. We did have this year, and it's maybe just come off the bottom right now. So a little reluctant to lean in and say happy days are here again. But I do think that we're seeing a little bit of lift on the revenue side. A lot of the things that we're working on. We mentioned heavy haul and the in the prepared remarks, I think that's exciting for us. But let me let to, let's Jake [ph] to give you some color on the on the month-to-month.

Yes, absolutely. Jake, we saw a pretty good strength for the end of June on both truck loadings and truck revenue per load. With the benefit of first four weeks of the third quarter, we typically drop off about 4% on a loads per workday, walking from June to July. We're underperforming that by about 300 basis points. On the other hand, truck revenue per load, we typically get about a 200 basis point to guide June to July, and we're about 300 basis points better based on four weeks of process revenue per load. So that's kind of the launch point for the guide.

Got it. That’s helpful. And then BCO count is below pre COVID levels and keeps trending lower while current inactive broker carriers and slightly above pre-COVID. Why do you think what we're seeing?

I'll kick it off and turn it over to Joe here in a second to give you some more color. We did some, I'll say, analysis encouraging on the approved carrier side last August. So you're seeing the impact of that on a year-over-year basis. On the BCO side, clearly the length of the down turn and the rate trough is really the largest impact on what's happening on the BCO side. What we did say on the prior call, it actually came to fruition was we thought that the rate of decline was slow and I did, and we're continuing to see that rate of decline less than overtime, and we believe that will hold true in Q3 relative to Q2 as well. But I'm going to let me Joe provide some color.

Sure. So as Frank alluded to there, we've seen the cost pressures continue. The duration of the cost pressures clearly have a pretty big impact on the BCO front. What I think we've also seen and talked about is that the brokerage margins blips that we have had that our agents have enjoyed have been tightening overtime. They've tightened through and through 2023 and a continued to tighten. So I think you see agents leaning more towards BCOs, and that's going to help improve loadings there. One thing I would caution though is we look at our carrier accounts and active carriers, and we look at the same authority revocation data that everybody on the call probably looks at. I just don't think that when you look at us as a carrier, we have three carriers here and the truck counts within those carriers can move. But we're still three carriers. And as I think as an industry, we look at revocations and you're seeing this modest decline in replications were what you don't see it is the number of trucks that are not within the carriers that are in that mix, right? So we're still three carriers. We were three carriers a couple of years ago. What we don't get to see some from the macro data is what's the decline in truck count within those carriers ad we get to see some of that in our care database that we look at in our active carriers, e some significant declines and not only the number of carriers, especially the small carriers who were to participate in the spot market like we do, but also some of the larger carriers. So it looks to us just from our limited viewpoint that the smaller carriers are exiting the business, albeit slowly and the larger carriers are getting smaller as demand and increased costs and those kind of things take effect. So that's how we see it. And again, we've had some pretty good indicators of things leveling off. July was the lowest net decline. And we've seen since the second quarter of 2022 and the last week of July was a positive truck count weak for us, something that's been a long time and coming. So early indicators, but hopefully positive indicators for BCO count going forward, Jake.

Appreciate the time. Thanks.

Thank you. We will move now to the next question coming from the line of Jordan Alliger of Goldman Sachs. Your line is now open.

Hi, this is Paul Stoddart [ph] on for Jordan. I guess a question that we have is when we look at the percentage of variable contribution on EBIT coming into about 39%, up from the first quarter, I guess when can we start to see that getting into the high 40 percentage range that we started to see pre-COVID? Or is there just going to be structural costs such as a keep a ceiling on that?

Yeah, I'll take the first crack at it, and JT can fill in some gaps and some numbers. I mean, obviously, in a declining revenue environment is going to be harder to drop more to the bottom line. But what we're going to ultimately see as the rate environment turns and the volume environment turns, I mean, our fixed costs are not going to go up as a result of that. So you're going to get operating leverage as we as we pull that forward. A lot of that's going to depend on how much of it's volume related and how much of that’s rate related. But as we see both of those, we expected more fault of the. So the bottom line, obviously, we've dropped the last couple of quarters and we're looking forward to coming out the other side stronger. We've got some initiatives internally to really look at the cost structure, as JT mentioned on this call. And I think on the prior call, there's not that much opportunity in the fixed cost side of the equation. We have certain costs that are in the environment, whether we've got out of one million loads or 2.2 million loads of. So we're going to focus on that. What we're looking at every position that comes out open and making sure that we absolutely have to fill that position. And JT, sort of, the cost cutting cap in some respects and he’s doing a really good job of making sure that our cost structure stays at an appropriate level. JT?

Thanks, Frank. Paul, mid to high 40s, it's a good question. I mean, clearly, the pandemic highs. We've printed 55 and 56 OEM, respectively in 2021 and 2022. What I will tell you iks, I'm still a big believer in our ability to push through 70% of the incremental DC. dollars down to operating income. Ultimately, that is how we climb back from an OEM standpoint. To Frank's earlier point if the majority of that comes from price versus vols, it's easier to leverage that as price doesn't drive the need for more equipment and more for insurance exposure, et cetera, et cetera. On a positive note, our two big inflationary pressures that we've had here for the last and not unique to Landstar by the way, last seven years had been insurance and technology. We have two years in a row now of decelerating gross dollar premium on our excess casualty programs, which is good. I think our May 1, most recent May 1 renewal was about a 5% gross dollar increase. So as that pressure begins to hopefully ease a little bit and the tech side start growing at a more kind of normalized inflation rate, that should emphasize. And I would just tell you, Paul, take a look at the back of the baseball card. We've demonstrated over time, even pre-pandemic, our ability to achieve that 70% incremental pusher.

Great. That's great. And just as a follow-up, as you think about volumes kind of heading into the second half, obviously, and guiding for lower volumes in the third quarter, I guess, any view into peak season and kind of where you think volume could look at as we look out to the fourth quarter as well?

Yeah. So I'll take a first shot at that one, and then Matt Dannegger, who's got field sales for us, will chime in a little bit in terms of some color that he's hearing from his folks in the field. Just from a calendar day perspective, this peak season's going to be compressed by a couple of days. So we'll likely see some elevated volumes on a per day basis. It may not be impactful in the grand scheme of things, but to me, it's going to come down to the consumer, and what is the consumer going to do with disposable income or credit card debt in the last couple of months of the year. We haven't really had peak in the last few years, though I think this year, certainly the GDP numbers would make you think that there's going to be some spending in the second half of the year, but ultimately, it's going to depend on what the consumer wants to buy, and honestly, how much the retailers and the wholesalers want to lean into inventory in this type of an interest rate environment. They certainly have peeled them back from where they were in the COVID highs, but I think there is, on the other side of the equation, just a general reluctance to build up a lot of inventory, not knowing where the sales are going to be. So I think right now, we're going to take a wait and see approach. We've got capacity that is sort of ready to dive in. We've got good conversations with our customers that Matt can give you some color on, but if it's there, we're ready for it. Matt?

Hi, Paul. This is Matt. Yeah, normally about June, we get down with our customers and really take a good look at what their needs are going through peak season. Here at Landstar, it's a relatively small group of customers that drive that e-commerce, parcels, substitute line haul. And the early projection is it's going to look a lot like last year, certainly not like anything we saw in 2021, 2022 decelerated a little bit, and of course, last year, there wasn't much of a peak at all. Right now, we're looking closer towards 2023. We'll finalize that up here in the next month or so as we get our final projections on that, but we're not looking for an overly vibrant peak season this year.

Great. Thank you. Appreciate it.

Thank you. We will move now to the next question coming from the line of Daniel Imbro, Stephens Incorporated. Your line is now open.

Hey, guys. This is Joe Enderlin for Daniel. Thanks for taking the question. Could you maybe provide an update on BCO productivity, how much room is there to go higher, and then maybe break out training procedures or how you help BCOs select loads better and maximize routes? Thank you.

Yeah, let me kick that one to Joe. He's front and center on that one, but it's a great question.

Yeah. Good question, Joe. Yeah. We were up 3% in the first quarter. We're up 6% year-over-year in the second quarter from a BCO utilization standpoint, which is a good sign. I think it's, again, kind of with the slowing terminations and that kind of thing, I think it's a good sign. From a utilization standpoint, we have a required orientation program when somebody leases on and we go through a two-day tutorial and hands-on exercise for them to use the tools that we have internally that helps them navigate our loading opportunities and it's either via a laptop or their app, and they can customize that to fit their business plan, so they can look at particular loads based on equipment type or origin destination, anything that can follow them around the country and feed them loads that they like to haul. And beyond all the technology, what we really do is emphasize the need to have agent relationships within the system. So we've got about 1,100 agents, and it's just critical for BCOs to make those relationships and introduce themselves and establish that trust back and forth between the BCO and agent as is fairly unique to our model and the BCOs that grasp that and take a hold of that and own that tend to do very, very well and stay here for a very long time. One of the things that we've seen in 2021 and 2022 when freight volumes were so high, you could live off the app. And as things have gotten a little bit leaner, those that didn't have those relationships have struggled a little bit. So we've redoubled our efforts there to make sure it's the technology which can pay great dividends, but it's also the relationships. And we're doing the same thing from a field perspective and going to our agents and letting them know that there's BCOs out there and helping make introductions, particularly with new agents to the BCOs that are in the fleet currently and trying to redouble those efforts to help both parties. And Matt, if you want to comment on that from an agent perspective, please feel free.

Yeah, Joe, that's been a big push for us here this year. New agents, they tend to come from a brokerage background, and a lot of times aren't really familiar with the BCO model and how that works. And so it's easy to fall into what you know, right? So that's a big push for us this year. We're working with Joe to come up with some new ways to get them grained in that BCO culture and the value that they bring to the customer.

That's helpful. Thank you, guys. As a follow-up, Manufacturing remains contractionary after a head fake in February. It sounds like consumer durables demand is underwhelming after a pull forward of demand during COVID. Are you seeing anything new within these end markets or anything increasingly optimistic from shippers on demand?

Yeah. I think on the manufacturing side, there's a couple of things at play. But when I try to back up and look at near shoring and American manufacturing and things like that. I mean I'm bullish on North American manufacturing on a long-term basis. There's going to be wobbles along the way. Obviously, the election is going to play a part in that as we go forward into 2025. When I look at where some of the highlights were in the quarter, I mean, consumer durables, I hear you, but it was good to see that it was actually in line. It's been a while since the consumer durables have been in line with the company average. So I'd say that's on its way back. Machinery is doing okay, auto balls are there, the rate environment is kind of over competitive. So it wasn't a volume play there. Building Products is doing well, and there's -- the data center business is embedded within that. So there's a lot of good business in there. It was really the super cyclical elements that JT called out in his prepared remarks that were one of the things that hurt us a little bit on the top line. I mean, GDP to me, is a question of what is the consumer going to do? What are they going to spend their money on? I think you've seen the pull forward. I think it's kind of well telegraphed, what's happening there. There is a point at which the durable that you bought three or four years ago needs to get replaced. So that cycle will be helpful for us when that does come back around. And again, I'm bullish on the American economy and the American consumer, the American manufacturing capabilities. And I think the election ultimately is going to put more people back to work, regardless of who the victor is and it's going to put more emphasis on US and North American manufacturing. So long-term, I see us in a good spot.

Yes, Joe, I would just add, even with the choppy ISM backdrop that Frank mentioned, I was pleased we grew unsided platform volume 7% sequentially. And on a revenue per load basis, that increased 4% sequentially. And if you dive in even deeper into the heavy haul component that we called out, the demand there really was broad-based across a whole bunch of customers, different industries. Jim, Jim can touch on that more.

Yes. And just a kind of to that Frank outlined a couple of the end markets that have been really strong like the building products, data centers. But something kind of encouraging, I think, that we're seeing over on the project side, we are seeing wind. We're seeing projects starting to kick back up for that. And we're also seeing some refurbishment of equipment for the oil and gas industry. And I think that's actually something that's pretty encouraging. It might be a sign of things in the future if that keeps up.

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 Elliot Alper of TD Cowen. Your line is now open.

Hey, great. Thanks, guys. This is Elliot on for Jason Seidl. Any idea on why May was weak in truckload. I thought I heard that in the prepared remarks. I just want to clarify that. And then did that bounce back in June?

Yes, Eli, a good question. May we typically get about a 3.3% tailwind from April on a per workday basis, and it's almost always positive. We were down about 0.5%. The weakness we saw a couple of our automotive accounts were a little softer in May. Some loadings from other transportation companies was a little soft in May as well. Coming off in April that we felt good about it. It was a little bit surprising. From a volume perspective, May and June, we increased 150 basis points, admittedly off a low starting point, which was pretty close to the plus 240 we usually get May to June.

Okay. Helpful. Thanks. And then you brought up cross-border Mexico as an area of focus in your prepared remarks. Would love to hear maybe any more commentary around that.

Yes. I'll give a shot here and then kick it over to Joe. So cross-border, obviously, is an important thing for us. It's a great long-term play in terms of nearshoring initiatives. And so I think it's absolutely the right strategy. It's getting more competitive, not surprisingly, as other people see the same thing that we are seeing -- I think we were a first mover clearly, certainly in the Laredo Gateway. We've got a great facility down there, great folks down there. So continuing to introduce agents into that. So I do think it probably wasn't our best quarter on a year-over-year basis for cross-border. It's absolutely the right thing to do. I'll let Joe provide some color on that.

Thanks, Frank. Yes, our volumes were actually off a little bit greater than the company average. Isolated to a handful of accounts, a lot of consumer goods, consumer durable kind of accounts that are down. We don't believe that we've lost the business. We just believe that they're slow at the moment. So we're on top of that, looking for any rebound when that occurs. But to Frank's point, we've got our slogan and our strategy around Mexico made simple to really provide the necessary tools, facilities and capabilities, whether it's on the border with our facilities, which are across a number of gateways or with the carriers in the interior of Mexico that we've had for years, all CTPAT certified. We really think we've got a great framework. When things bounce back, we think we'll be in a great position to do that. We've added some dedicated salespeople that are in the interior. So, if an agent has an opportunity, but doesn't want to make the trips out of the border, we've got resources there to help them along. So, we think that we're in the right place with the right strategy going forward and just kind of waiting for a few things to turn our way.

And Matt, we've got agents down there that we're introducing, obviously, to the cross-border initiative, maybe folks that haven't really engaged in cross-border or have done a long time ago. So, tell us a little bit about what you're doing there.

Yes. It's been a big push for spring. We really need to get the agents familiar with Mexico. You've got the customs down there, going over borders. It can be a little bit scary if it's not something that you're used to doing. So, we're really trying to take that fear away from them. So, the field is out there. We're meeting with agents. Here in the spring, we got them with, I guess, a round robin of agents, agent meetings throughout the country, talking about Mexico and how we can help them grow their business down there. It's a tremendous opportunity that I think everybody in the industry is looking at right now and jumping into. So, we're really just trying to get them comfortable with them and lead them to the table and take that fear out of it. We've got Mexico 101 classes, getting coached up on what the operating expectation is down there, how to sell it, getting in front of their customers. So, it's really been a full push throughout the entire sales team to get in front of the agents. And we've identified a little over 150, I think, right now of agents that were really pushing and were coming up with opportunities. And I wouldn't say the market is great right now to be chasing those, but crawl, walk, run, we're really starting to crawl right now. So, I think as the economy pushes back, we should be in really good shape to take advantage of that.

Appreciate all that. Thanks guys.

Thank you. We will have the last caller for today's conference from the line of Stephanie Moore of Jefferies. Your line is now open.

Hi, good afternoon. Thank you. I wanted to maybe touch back a little bit on just kind of where we are in the cycle and the overall freight environment? I appreciate your color, the color you provided about seeing some improvement, but not going to call a full inflection. I'd love to hit your thoughts on the -- answering the -- what's it going to take question, meaning does capacity need to keep living [ph] lower at the rate that we're seeing now? Or does it need to accelerate? Is it the demand shock? I know we all have our own crystal balls, but I do appreciate your opinions on what you see? Appreciate it. Thank you.

Yes, sure, Stephanie, thank you. I think it's ultimately a couple of the things that you referenced. I do think capacity needs to continue to come out. To Joe's earlier point, it's hard to know the exact number of trucks that came in during the COVID-induced era. If you look at the -- just the number of new authorities that were granted during that period of time, it was significant. We also believe that it was largely smaller carriers coming into the business that we're able to buy a used truck and get into the business given the fact that the rate was so significantly greater than it had been in the pre-pandemic period. And so folks made a lot of money during that time period of kind of second half of 2020, 2021, 2022, even into the first half of 2023. So, there is some staying power in that capacity. We do think there is a significant amount of truck capacity rather than authorities that is almost five months and appropriately so, given the operating environment that we're in. Continuing growth, whether it's on the good side of GDP or IDP is certainly going to be helpful, not that we wish for hurricanes or other things like that, but you could end up with something that helps us a little bit on the demand side that's unexpected. But I think it's going to be continued growth of the economy, and it's going to be a return to a good preference by the consumer and then continuing to have capacity come back out of the equation. And while all of that's happening, we're going to remain very, very focused on the strategic initiatives that we have and other things that we're talking about internally that are more secular in nature rather than cyclical in nature. And we're going to continue to push for that agent BCO relationship that you heard Joe and Matt talk about. And we're going to continue to keep an eye on costs. And as I mentioned, I think, in the last call, we're going to be stronger as a result of this trough and come out the other side, really good.

Got it. No, I appreciate that. And then just to follow-up from the conversations that you're having with some of your large customers, do you feel like it's overall lack of confidence kind of just holding on the sidelines in a lot of cases because you're right, I mean, I think we all can speak to the secular challenge ahead of us. So I'd love to maybe hear some of the commentary that maybe they're hearing in this environment or on the demand side.

Yes. And so a couple of things maybe. We certainly have others around the table that can chime in on this one. I mean being a spot market player, we're generally going to be on the cyclical end of things. As folks went through the bid cycle, I think there was a lot of commentary about holding the line and then prices dropped and people locked in the volume. So I do think that the contract piece of the market probably took some rate decreases and that would be consistent with the commentary that we've heard publicly from folks. And if you think about where we are, we play in a bit of a different element of the cycle. We are beginning to see it come off of the bottom. The rate inflections that we've talked about are helpful there. I think customers are beginning to come back to us. We've had instances both on the areas that Jim Applegate handles as well as the areas that Matt handles, where maybe we were, I'll say, underbid in the competitive process back in the spring. Folks are coming back to us, which is nice to see. I think that is almost directly related to our service product and how good we are at what we do and the professionalism of the BCOs and the approved carriers that we have, like we do a really good job, and we make sure we do a really good job. But that good service comes at a bit of a premium. And so we've got to make sure that we stay true to that, and we don't bottom fish in terms of rates. And that's been a real hallmark of the Landstar model and it's not something that I intend for us to change. But Matt and Jim, you guys have thoughts on this?

Yes, I'll jump in real quick. As a part of normal business here at the start of July, we take a look back at the first part of the year and kind of level set for the next back half of the year and then kind of an early on 2025. And through that, we go through all of our top agents, all of our $1 million agents, and get some input from what they're hearing from their customers and what we can expect. And I still think there's still quite a bit of pessimism out there. You've got the election coming up. There's still talk of pending recessions coming up. So I think going through the backside of this year, we're not overly optimistic for that big tide to come and switch the cycle. It can't come soon enough for all of us. But I would say in the near term through this year, most of the general feedback is they're not overly optimistic.

And I'd echo that. And I'd say specifically, the consumer side of it, very rate sensitive right now, very right driven to Frank's point about valuing service versus rights. However, I do think some of the end markets over in the spot market, specifically around the heavy haul area, we're starting to see some of those end markets with some encouraging signs. And I think our agents do a nice thing about our model. Our agents are very incentivized to find that. And typically, they find it first. And I expect our model to kind of continue to kind of identify those quickly and get us out in front of some of those markets.

Got it. You said I was last -- I have one last question because no one else asked it, buyback appetite. I'd love to get your thoughts here at this level and they'll be quiet. Thanks guys.

Yes, so it was really good to reengage in buybacks. And I think as I mentioned on the prior call, we were a little bit blocked out from the market given the CEO transition at the end of the fourth quarter and the beginning of the first quarter. So give us a pass on Q1, but obviously back in the market and did well. I mean one of the things that is the hallmark of the Landstar model on capital returns is we're very patient, and we're very opportunistic. I think we bought well in the quarter, and you'll see in the Q that we bought sub-1.80 on an average basis. So I think we did really well in terms of doing that, and we'll continue to have that opportunistic and patient appetite as we go forward into Q3. We have the authorization to do it, but we're not going to have the money burn hole in our pocket, so to speak, and we're going to be really thoughtful around how we engage in buybacks. It was nice to raise the dividend 9% today, and that's another way to return capital to shareholders. We're excited about being able to do that. We're confident vote from our perspective in terms of the future.

Appreciate it. Thanks, everybody.

Thank you. We have the last caller for today's conference from the line of Scott Group of Wolfe Research. Your line is now open.

Hi. This is Jake last time again. Just one follow-up. Airing [ph] ocean cargo pricing looks like it took a big step up in 2Q. Do you expect that to continue in 3Q? Does it trend even higher just as ocean rates picked up through the quarter? Would this be good to get your sort of near-term expectations there?

Jake, look at you a lead off man on the call, finishing up. To your point, we had a 39% uptick in our ocean revenue per load from the first quarter to the second quarter. I think we had a couple of rounds of GRIs pass and stick. Ours is project based. There's probably 10 or a dozen so agents, Jake playing in that space. We will see the guidance calls for the multi-mode revenue to be relatively flat 2Q to 3Q. So there's not a debt embedded in the guidance on the continuation of that ocean report.

Got it. Thanks, again guys.

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

Thanks, Bill. In closing, while the freight environment remains challenging, we do see some positives in the near term, we are encouraged that truck revenue per load seems to have stabilized and is moving higher, 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 afternoon. We look forward to speaking with you again on our 2024 third quarter earnings conference call in late October. Thank you.

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