Landstar System Inc (LSTR) 2010 Q2 法說會逐字稿

Good afternoon and welcome to the Landstar System, Inc.'s second-quarter 2010 earnings release conference call. (Operator Instructions). Today's call is being recorded. If you have any objections, you may disconnect at this time.

Joining us today from Landstar are Henry Gerkens, Chairman, President and CEO; Jim Gattoni, Vice President and Chief Financial Officer; Pat O'Malley, Co-Chief Operating Officer; Jim Handoush, Co-Chief Operating Officer and Joe Beacom, VP and Chief Compliance, Security and Safety Officer.

Now I would like to turn the call over to Mr. Henry Gerkens.

Good afternoon and welcome to the Landstar 2010 second-quarter earnings conference call. This conference call will be limited to no more than one hour. In addition, please limit your questions to no more than two questions each when the question-and-answer period begins.

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 I and other members of Landstar's management may make certain statements containing forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies and expectations. Such statements are 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 2009 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 statements. And Landstar undertakes no obligation to publicly update or revise any forward-looking statements.

Landstar's results for the 2010 second quarter were outstanding. Overall, revenue for the 2010 second-quarter increased 31% over the 2009 second quarter. Revenue hauled by business capacity owners increased 20% in the 2010 second quarter versus the 2009 second quarter. Revenue hauled by all truck brokerage carriers increased 49% in the 2010 second quarter versus the 2009 second quarter. Revenue hauled by rail, air and ocean carriers collectively increased 24% in the 2010 second quarter versus the 2009 second quarter.

In addition, transportation management fee revenues generated by the supply chain solutions companies amounted to $6.1 million in the 2010 second quarter.

In the 2010 second-quarter 74% of Landstar's total revenue was generated at basically a fixed net margin percentage. Net margin percentage being defined as revenue less the cost of purchased transportation and agent commissions, divided by revenue. This compares to 76% in the 2009 second and 2010 first quarters.

There has been a lot of noise surrounding an increase in the cost of purchased transportation as it relates to Landstar's operating model. Let me briefly refresh everyone on Landstar's business model.

First, if a load hauled by business capacity owner, the BCO and the agent are paid on a percentage of revenue basis. 54% of the 2010 second-quarter consolidated revenue was hauled by business capacity owners versus 59% in the 2009 second quarter, and 52% in the 2010 first quarter.

Second, certain agent brokerage agreements contain a fixed Landstar retention percentage before the purchased transportation or agent is paid. This accounted for 7% of the 2010 second-quarter consolidated revenue versus 8% in the 2009 second and 2010 first quarters.

Thirdly, our substitute line haul brokerage business runs at a consistent 2% net margin percentage for customer contracts. This has always been Landstar's lowest net margin business. This accounted for 11% of the 2010 second-quarter consolidated revenue versus 7% in the 2009 second quarter and 14% in the 2010 first quarter.

Finally, there is no purchased transportation associated with our transportation management fee revenue. Only 26% of Landstar's 2010 second-quarter revenue and 24% of Landstar's 2009 second quarter and 2010 first quarter revenue was impacted by changes in third-party transportation costs.

Additionally, Landstar and its agents share in the impact of these purchased transportation changes, pursuant to contractual agreements commonly referred to as margin splits.

Back to the quarterly revenue. Not only did revenue for the 2010 second quarter increase over 2009 second quarter in every mode of transportation Landstar offers its customers, but revenue also increased in just about every commodity grouping.

The largest 2010 second quarter over 2009 second quarter revenue increase was in our substitute line haul business, which almost doubled, and as I said before, accounted for 11% of total consolidated revenue in the 2010 second quarter versus 7% in the 2009 second quarter.

As a future note, I continue to believe that our substitute line haul business as a percentage of consolidated revenue will trend down throughout the year. In the month of June of 2010 alone it represented 9% of consolidated revenue.

Some of the other 2010 quarter-over-quarter revenue increases were in the automotive sector, which increased 67%; in the chemical sector, which was up 25%; and in the metal sector, which increased 34%, to name a few.

Revenue per load continued to improve throughout the 2010 second quarter. Truck transportation revenue per load in April 2010 versus April 2009 increased 4%. In May 2010 versus May 2009 it increased 9%. And in June 2010 versus June 2009 it increased 11%.

For the full 2010 second-quarter revenue per load for all truck transportation increased 8% over the 2009 second quarter, and sequentially increased 6% over the 2010 first quarter.

For the second quarter truck transportation current year month over prior year month load volume increases were as follows -- April 2010 over April 2009, 24%; May 2010 over May 2009, 20%; June 2010 over June 2009, 19%;

Total loads hauled for all truck transportation increased 21% in the 2010 second quarter versus the 2009 second quarter. It was the highest quarterly load volume in any quarter in Landstar history, which is a pretty good indication that we have taken some marketshare.

Our agent location count at the end of the 2010 second quarter was 1,343 compared to 1,372 at the end of the 2010 first quarter. Additionally, during the 2010 second quarter we added six agents who had a prior run rate of at least $1 million, bringing the total for the first six months of 2010 to 10.

Agent revenue from all new agent locations added over the past year amounted to approximately $39 million in the 2010 second quarter. This gets to the point that it is not so much the quantity of agent locations, but it is the quality, meaning productivity that counts.

As I said before, the Landstar team did an excellent job during 2009, and is continuing to do an excellent job in 2010 in adding new quality, productive agents to our system. Our pipeline of perspective, productive, quality agents remains deep.

Again, as I said in the first quarter earnings conference call, we continue to make progress in agent acceptance and customer awareness of all Landstar service offerings, from our traditional truckload services to our intermodal services to our international services to our warehousing services to the complete supply chain solutions services.

From a profit and loss standpoint operating income in the 2010 second quarter increased a healthy 34% over the 2009 second quarter. And diluted earnings per share increased 40%.

I will now turn it over to Jim for his financial review.

Thanks, Henry. Henry has already talked about components of revenue. I will just cover the costs of other parts of the income statement. Net margin, representing revenue less the cost of purchased transportation and commissions to agents, divided by revenue, was 16.3% of revenue in the 2010 quarter compared to 17.2% of revenue in the 2009 quarter.

Purchased transportation as a percent of revenue in the 2010 quarter increased 170 basis points compared to the 2009 quarter. As expected, the increase in the cost of purchased transportation as a percent of revenue was partly offset by an 80 basis point decrease in commissions to agents as a percent of revenue compared to the 2009 quarter.

The decrease in net margin was primarily attributable to increased less-than-truckload substitute line haul revenue, which has the lowest net margin of any of the Company's service offerings, and increased cost of purchased transportation from truck brokerage revenue hauled under contract at the agents under profit-sharing arrangements, partly offset by $6.1 million of transportation management fee revenue, which does not incur purchased transportation costs.

Other operating cost were 1.2% of revenue in the 2010 quarter compared to 1.5% in the 2009 quarter. This decrease was primarily attributable to the effective increased revenue, partly offset by $934,000 of other operating costs incurred in the 2010 second quarter by companies that were acquired in the 2009 third quarter.

Insurance and claims costs were 2.15% of revenue in the 2010 quarter compared to 2% in the 2009 quarter. The increase in insurance and claims as a percent of revenue was primarily due to favorable development of prior-year claims reported in the 2009 second quarter, and increased severity of commercial trucking claims in the 2010 second quarter compared to the 2009 second quarter.

Selling, general and administrative costs were 5.8% of revenue in the 2010 quarter compared to 6.6% of revenue in the 2009 quarter. The decrease in selling, general and administrative costs as a percentage of revenue was attributable to the effect of increased revenue, partially offset by the provision for bonuses under the Company's incentive compensation programs in the 2010 second quarter.

Depreciation and amortization was 1% of revenue in the 2010 second quarter compared to 1.2% in the 2009 second quarter. This decrease was due to the effect of increased revenue.

Interest and debt expense was $810,000 in the 2010 quarter compared to $973,000 in the 2009 quarter. The decrease in interest expense was due to lower capital lease obligations during the 2010 second quarter, partially offset by increased borrowings under the Company's senior credit facility.

The effect effective income tax rate was 38.2% in the 2010 quarter compared to 38% in the 2009 quarter.

Looking at our balance sheet, we ended the quarter with cash and short-term investments of $78 million. Trailing 12-month return on average shareholders equity was 29%, and trailing 12-month return on invested capital, representing net income divided by the sum of average equity [with] average debt was 22%. At June 26, 2010, shareholders equity represented 71% of total capitalization.

Back to you, Henry.

Thanks, Jim. I continue to be very positive and confident as we move into the 2010 third quarter. The freight environment remains robust. An improved economy and tightening capacity, coupled with the strategic actions initiated in 2009, are driving Landstar's growth. I anticipate that the current year month over prior-year month load volume percentage increases that we have experienced in the first six months of the year will level off at some consistent, double-digit increased rate. Additionally, I anticipate that pricing will continue to increase.

Given these assumptions, and assuming the current economic trends that we have experienced continue, I would anticipate the 2010 third-quarter revenue increase over the 2009 third quarter revenue to be in a range of 25% to 33%. And with that revenue estimate I would expect diluted earnings per share for the 2010 third quarter to be in a range of $0.47 to $0.52 per share, which will represent a 20% to 33% increase over the 2009 third quarter diluted earnings per share.

To repeat what I said on the 2010 first-quarter earnings conference call, I believe Landstar has positioned itself to take advantage of all opportunities.

The consolidation of the carrier group and the global logistics field and administrative organizations, the 2009 acquisitions of our supply chain solutions companies, and our refocused marketing and sales efforts should provide the platform for continued future growth.

Additionally, these strategic moves should only augment our ability to recruit new agents.

With that, I will turn it over and open it up for questions.

(Operator Instructions). Chris Ceraso, Credit Suisse.

A couple of questions. Can you talk a little bit about the fee business, the supply chain solution business? Any update on new contracts? What is your expectation for fee revenue in the third quarter implicit in your guidance, and then maybe longer-term where do you think that can get to next year or year

I expect the third-quarter revenue to be somewhat similar to the second quarter. I am actually pleased to announce that today we did sign the one contract that I had been talking about since February.

I'm not going to name the customer. We will talk about that later on when -- we are going through integration process right now. But the contract has been signed, and hopefully we will bring this customer up in the fourth quarter. And we do have a very deep pipeline of additional potential supply chain solution customers. But one is down.

What sort of run rate does that bring you to?

I am not going to discuss the revenue on those things at this point in time.

Then just the last question, what was the load volume growth in July year-over-year? Where is that running now?

The revenue per load I know is running higher than the revenue per load that we were running in June, and the load volume is a little bit lower than we were running in June.

On a year-over-year basis?

On a year-over-year basis, that's correct.

Justin Yagerman, Deutsche Bank.

I wanted to get a sense -- it is not major, but you've gone from 76% to 74% net margin shift, a fixed net margin business as a percent of the total. When you think about how the business is transitioning as more of the revenue is generated from brokers versus BCOs there is obviously little more opportunity for some of that variable business to creep in there. Do you think that 75%/25% is a good rule going forward or do you think that you will see further pressure on that?

That is an interesting dynamic. Last year you go back we had low freight demand. So what was happening BCOs were grabbing most of the freight, and that is why last year, if you figure it, it was 59%. This year you've got a lot of loads in the system, so what is happening is more of those are being hauled by brokers.

Now, again, I anticipate the substitute line haul business to go down. But you've got to also understand what I said, that the pricing element is now going to be, I think, a more important factor as volume increases -- and it there will be increases -- level off at some double-digit amount, the pricing continues to increase. So what that means is that from a BCO perspective, and that retention on the broker agreements, that is much more impactful to Landstar, because I don't have rising costs on the other side of that.

That makes sense. So you don't need more capacity --.

Right. And that is what we are starting to see now is the fact that rates are starting to come up rather dramatically, and that has a much bigger impact on that 74%, 75% of our revenue. That is a good estimate to go forward to answer your question.

Then just following up, you just said it, and you said it in your prepared remarks, you said substitute line haul should start going down. Is that a seasonal factor that we have peaked out in the LTL market or did you lose an agent that did that business?

No, it is one agent basically that does most of that. I have been saying it for a while that they're going to pull some of that stuff in-house. And it is just that the business has been so large that they haven't gotten that completed yet. I still anticipate that to happen. But as that comes down from -- when you look at an operating margin percentage, for example, you start pulling that 2% business out, that has a positive impact on the margin.

What I like about that business it is -- it might be 2%, but it is a 20 day pay cycle. We know who the customers are; they are very reputable. And I take that business every day. Yes, but I would expect that to change down. Not because of a loss of agents or anything, just because of an active internal move on their part.

Okay, so consistent good business, but from a customer action standpoint (technical difficulty) some of that.

That is correct.

Thanks for the time, guys. I appreciate it.

Tom Wadewitz, JPMorgan.

I wanted to see -- I think you gave us monthly numbers on -- I believe volumes, and I think you gave maybe on -- yes, revenue per load for the total. Can you give us those numbers for revenue per load by BCO, because I think that is -- I guess, that takes out the noise from field surcharge changes?

Jim, you got this? I don't have that at the top of my fingertips.

Do you have the number I gave you before, so I can get to the right number -- the first-quarter number, then I can just tie back to it so I'm looking at the right line item?

I am not sure if I have that at my fingertips either.

I think (inaudible) [is flat]. So I'm just trying -- did I give you a combined number or did I give you (inaudible)?

I think maybe you gave a combined number, but I am not 100% sure about that.

Because I don't think I have that right here available.

Do you have it by van and flat, that should be -- that would be helpful as well. I just was looking for a number that would be X the impact of fuel surcharge, and in BCO you don't have that and in broker you do.

So can you just break out the brokerage ex fuel surcharge I think (inaudible). Do you have that?

I can tell you June for BCOs was $1,620.

June was -- what was it again?

(inaudible).

Okay.

What does that compare to?

It was $1,498 last year.

Okay, well, we can come back to that if you find the numbers, or I can follow up after the call, that's fine.

Let's see, so can you give us a little more perspective, Henry, just on how you see the pricing dynamic developing, and maybe some comments on flatbed and on drive van? It seemed like you're pretty constructive on it, but I don't know if there is any more perspective you can give us on how you would see that developing, and how rapidly you think that moves up looking to second half.

I will let Pat address -- answer some of the question, but from a macro perspective, we continue to believe that capacity is going to tighten. We think capacity from a smaller operators' standpoint capacity is going to come out of the marketplace, as we see it, which I think will continue to create additional tightness in the marketplace. So, Pat, I don't know if you want to address flats, vans.

I think the platform capacity continues to tighten, if you can imagine that. You could back to the first quarter and at the mid-quarter conference call. Flatbed capacity has been tightening all year long. It has gotten tighter, if anything. We anticipate that to continue through the balance of the year.

Van capacity is tight, probably more segment driven than the flatbed. Flatbed seems to be across the country with no respect to parts of the country. Van is particularly tied out on the West Coast and down in the Southeast.

Okay, great. Thank you for your time.

I've got those numbers. April BCO was $1,459, May was $1,554.

Do you have the year ago numbers?

Yes, I do. June last year was $1,498; April last year was $1,462; and May last year was $1,491.

You gave him the current year numbers, right?

Yes.

Those were BCO revenue per load numbers, right?

Yes, yes. No fuel, that is pure revenue per load.

Okay, great. I appreciate it. Thanks very much.

Jon Langenfeld. Baird.

Henry, can you just give us a bridge from the guidance to the actual results? So if I focus on the upper end of guidance, you had $0.49 and lower 20s revenue growth in terms of percent year-over-year. You're coming in lower 30s revenue growth, and you're still in the top end of guidance, what is a disconnect there? I know you have mix in there with the line haul, but it even seems like some of the core metrics on brokerage were stronger as it relates to pricing than maybe one would have expected.

Well, pricing, clearly has moved north, without a doubt, and we anticipated that. I think I gave the chronological numbers as far as April, May, June, and we have already said July is better. In fact, Jim has given -- I think we have talked about the July BCO number, did we not, as far as where that is running.

So pricing is getting stronger. That has a much bigger impact to Landstar, especially on that fixed net margin business, because on the non-fixed net margin business, what you've got is you've got issues with rising cost of purchased transportation, so they offset each other. It takes about -- I said it is going to take about a month and a half basically to catch up on price. But on the brokerage side that is non-fixed margin. It is like you're chasing something, and at some point it catches up. But what we see going on is that capacity will remain tight and pricing is going to increase.

Now I think as the substitute line haul volume goes down, our total volume that we haul goes down, but I'm losing 2% margin business, and I'm still going to stabilize at a double -- we believe, a double-digit volume increase. So now that price is going to go back up higher, that bodes pretty well for Landstar. Look, I don't have a crystal ball. That is what we think. We modeled the second -- third quarter after the second quarter.

There is a lot of things that could impact that. But in general, yes, I think we did a pretty good job in the second quarter as far as price increases, and the fact that BCO revenue is starting to climb really volume and also pricing, and it bodes well for us.

I wouldn't disagree with that. I don't think anyone would. I guess the question I have, though, is related to you are going to beat your revenue number by 8 or 10 percentage points in terms of year-over-year growth. And there was an upside to the upper end of that guidance range. So is that all due to mix, the fact that there was an upside to the earnings guidance because of the revenue?

It is all due to mix. Your insurance ran approximally the same as it did in the first quarter, so we had a little bit more insurance expense than we would have anticipated. But other than that, it is mix, insurance. And the numbers are what they are. Those are the two driving factors.

Then, Jim, cash flow from operations and cash CapEx?

Cash flow from ops year-to-date $26 million.

And cash -- that was cash CapEx?

No, that was from ops.

All right, $26.9 million, and then cash CapEx?

[$24.684 million]. Both those numbers are six-months.

And the cash CapEx is, as we described in the first quarter, is due to the purchase of this building here in Jacksonville. And I think everybody knows how our model operates, that in a time where you are basically increasing your revenue, we pay the capacity, pay the agent before we bill the customer, so we've got all that cash yet to come in.

Ed Wolfe, Wolfe Trahan.

I don't want to go over things that were just asked, but I guess a different way of asking the same question is, based on your guidance, if I took 30% revenue for third quarter, I am back at '06 level for revenue. But based on the earnings guidance you are giving, my margin -- your operating ratio is 200 basis points worse. What is it that has changed that is driving the OR? Why haven't we seen more OR improvement? It has been pretty flat and you have had a lot of revenue growth to this point.

Again, I think if you go back to '06, you've got to look at the insurance numbers. Because I think if you go back to '06 -- in fact, I've got insurance as a percentage of revenue all the way back to 1999. '06 and '05 and '08 were years where we were running under -- approximately under 2%. In fact, '08 we ran 1.4% for the full year. '06 and '07 you had a whole bunch of -- '06 and '05 you had all that FAA revenue, which is going to have an effect that is going to decrease that. So insurance clearly impacts that.

And the other piece is the impact of the 2% substitute line haul business as far as the calculation of margin. I think sometimes people get hung up on a calculation of margin in our business, as opposed to the actual operating income that is being generated.

So I think all those things -- I hear what you're saying, but those are the component parts. And Jim or anybody -- if anybody has any other comments on that, feel free.

Well, it sounds like the line haul piece is going to start going in the right direction. How does the insurance come back down?

Well, a couple of things. I don't consider it going in the right direction. I hate to lose revenue, even though it is only a small percentage, because as I said, there is no risk on that and it generates cash.

So to me it is always -- it is a cash business. And I will take $2 out of $10 every time, if I know it is risk-free. So from that perspective I'm not sure I agree with that scenario.

But insurance is -- look, we continue to drive safety. It is a matter of those numbers come -- you look at the absolute number in the second quarter of about $13 million -- was it $14 million there about let's call it. I mean, it is higher than the absolute number in the first quarter of this year.

You go back to the second quarter of 2009, it is a good $4 million higher. That is a matter of that normalizing. But, again, as I said normal is anywhere from us from 1.5% to 3%, depending on the frequency and severity of accidents. We had some severe accidents, although it is 2.2% of revenue, which is right within our range. From an absolute dollar standpoint it is higher than probably -- than we anticipated. But I am going to be -- on an average basis that is what the numbers look like.

Do you have visibility three months, six months, not even on that. Where do we model that for the second half of the year? How do you think about it?

If I was in everybody's shoes out there, I have said that it averages 1.5% to 3%. 2.2% actually is rights smack in the middle. That is probably what I would be looking at somewhere in that range as far as -- for your purposes, that is what I would do.

Okay, that makes sense. So shifting gears a little bit, if you look at that 26% of your revenue that is impacted by the changes in transportation costs, how do the gross yield and the operating income on that business, how did that compare year-over-year in second quarter relative to year-over-year in first quarter? Is that business starting to go in the right direction or are you getting squeezed even harder?

Do you got that, Jim? Do you have that, Pat? My general comment is obviously the first quarter we were playing catch-up with price. Price has caught up to some degree. But, Jim, I don't know what the actual -- you've got the net margin numbers?

Compared to the first quarter, more pressure in the second quarter. I think we lost about 44 bips in the second quarter.

I would think seasonally you do in second, so you're looking year-over-year on first and year-over-year on second, or are you just looking at second over first?

Second.

Can we do it year-over-year for each, just to take the seasonality out maybe?

He's got a couple of sheets he's got to look at.

While he is doing that, Henry, what are you seeing for steel demand? We have heard some people talking about steel slowing a little bit in the US. Is that something that throughout the quarter is consistently trending one way or is it inconsistent?

Pat?

Again, I think it is all relative. Clearly the steel demand has decreased from where it was, call it, April to mid-May, but the demand from the steel manufacturers remains very high. It is a combination of tight capacity, but they are still producing a lot of steel. So certainly not as robust as it was in the April/May timeframe, but still the steel manufacturers, there is a ton of demand out there. They can't meet the demand because of their capacity.

So you think it is pent up and it is going to reaccelerate, or do you think that we are in a capacity crunch that there is no way to prove that in the near term?

Well, I think the capacity crunch will continue through the balance of the year. I don't think there is any question about that. As far as steel demand, frankly, that is a little outside -- I wouldn't want to speculate on that.

Jim, one other question, and then hopefully we still get the answer on the gross yields for that 26 piece. When I look at the 8% that you gave us an average for the quarter for revenue -- or for yields, the average of the 4% in April, 9% in May and 11% in June, how do you look at that in [drive van] versus flatbed? Roughly how does that breakout? I am guessing the flatbed is something higher and the drive van is something lower. How do you think about that?

(multiple speakers). One of the things I think confuses -- when you -- what numbers are you referring to?

In your statement, Henry, you talked about revenue per load for the truck yields at 8% for the (multiple speakers).

Well, revenue per load, that is our pricing. Every time you say yield, I think that confuses people here. But that is pricing. If you look at our pricing comparable numbers from flat, on a revenue per load basis, Jim, he's looking for Van versus --.

What did you give him?

I gave him --.

You gave me 4%, 9% and 11% for April, May and June, averaging 8% year-over-year and up 6% sequentially.

Well, now the vans and the flats I'm going to give you, it is not all truckload because it excludes our substitute line haul and some other expedited. But this truly is the core van and flatbed. So on the (technical difficulty) van side, it was up 1%, 5% and 9%. That is the van. And on the flat it was up 3%, 11% and 16% on a revenue (multiple speakers).

That's great. Okay just then the only thing left was, did you get an answer on the difference between the yields in second quarter over second quarter relative to first quarter over --?

Are you saying yields or are you saying price to us, revenue per load?

No, I am talking transportation yields, so purchased transportation as a percentage of revenue.

Hold it. I had it and then I had to turn my page.

He's talking net revenue.

If I told you -- would this answer your question, in the first quarter 2010 versus first quarter 2009, the PT on the trucks, on the variable piece of the brokerage, we paid 80.7% in 2009, and it was 82.7% in 2010. So basically it is 200 basis points up from (multiple speakers).

I didn't hear that, Jim. It was 80 what versus 80 what?

80.7%, and it went to 82.7%. It went up (inaudible). Now in the second quarter over second quarter it went from 80.9% last year to 84.6% now. So we have seen more pressure on pricing on that variable (inaudible).

That is exactly what I was looking for. Thank you very much.

Got more price back, right, is that what you are saying? Okay, that's what we got. All right, net rev.

Todd Fowler, KeyBanc.

Hopefully we will keep it simple after some of that. But I guess at a higher level, Henry, you have talked about this in the past, and I think you have mentioned it here earlier on that there is basically a one to two month lag between when you start to see prices go up on the brokerage business and having some success in passing that through.

It really felt like pricing started to move late in the first quarter and into the second quarter. Can you talk a little bit, I guess, about the success, or lack thereof, that you're having in passing through some of the higher prices to your customers now that we have been in a rising rate environment for the past, let's say, four months or so?

Again, I think just by -- if you look at the numbers that I rattled off, that I is talked about as far as the revenue per load, as far as the pricing, which is one of the gauges that we utilize, you are up at 11% in June versus in April you were down at -- what -- about 3% or 4% is what I said.

So we have clearly moved that up, and we are up in the double-digit range in July. So we are having success. The point being is that from the 26% portion of the business, you've got still rising costs and there is going to be that delay, but where that price increase is really going to come into play is going to be in our fixed net margin business, if you will. That is I think is important from Landstar's perspective.

Look, I think pricing is going to continue to tighten, which means I'm going to be paying more for purchased transportation. So I am always going to have that lag on that brokerage side, where I split margin, if you will, with the agent. But on the other side of the business, which is 74% of it, that has got a better impact for us overall.

I completely get that. And I guess just to make sure I'm hearing you correctly, basically what you're saying is that customers right now are receptive to high single, if not double-digit, rates increases because --.

Recognize that there is -- that capacity is tight. There is no doubt about that. Pat, Jim, you people --.

From a customer perspective, especially as you look back over the last four months, it is becoming more and more evident that shippers across the spectrum, where the marketplace is and what kind of environment they are working under. So from a price increase standpoint that is expected. I think that will continue here as we go on through the rest of the year.

They are also looking for commitments as well. They are all trying to position themselves, obviously, to move their freight. So that type of dialogue from a shipper perspective is much more receptive, especially over the last 90 days or so.

I think that was Jim Handoush. That is exactly what I was looking for. Thank you.

Then, Henry, I guess as you think about the second quarter, it sounds like automotive was strong, a couple of other areas were strong. Is there anything that jumps out to you that you would say was particularly unusual or would be what you consider somewhat non-recurring as he look through the rest of the year that -- you had some strength in the second quarter, but was driven by something unusual, if it was the Gulf oil situation or something like that that may not be returning, or do you see just that leveling out at a new higher demand rate with where we were in the second quarter?

No, there was nothing that I would consider unusual. The only thing I did mention that I anticipate coming down, and we are starting to see that, and we have seen it throughout the second quarter, is the substitute line haul business will fall.

But other than that, I don't anticipate -- that will impact our overall volume increases, but based on everything else that we are doing in every other sector, things are going to be going very well. We have done a very good job as far as bringing in new agents, so I think we are taking some marketshare.

So that is the only thing that -- I wouldn't call it unusual, but when we went into this year we just didn't anticipated at all the substitute line haul business to be that large. But there is nothing else in there. We really didn't have anything at all that was material and whatsoever that really would move the needle on anything to do with the Gulf oil spill at all.

Then just a follow-up on that and I will turn it over. Anything that you would point to maybe on the housing side as well. There has been some talk that the housing market now has slowed down as we have seen some expiration of the stimulus. Would that have any sort of impact on what you saw in the second quarter and going forward?

I am assuming on certain accounts, but again, I don't think it is going to move the needle, because from a housing standpoint as far as things we do, it is not a lot of business in that regard. Pat or Jim, if you want to comment on that.

I agree with you wholeheartly.

Alright guys. Thanks for the time.

Nate Brochmann, William Blair & Co.

Henry, I wanted to talk a little bit about all the obviously evidence of the marketshare gains that you're getting. In terms of whether you're seeing that from the new agents that you brought on or whether it is some of your existing customers that are adding back some volume, or whether it is just coming from the cross-selling opportunities that you're seeing out there. I wonder if you could give us a little high-level flavor for each of those three categories.

Well, I think a couple of things. One, if I look at our total revenue increase, net of agents that maybe terminated last year, and I have the new agents in this year, I think our revenue growth from -- which would be really new business, is about 15% of the total increase, which would mean the remaining is coming from existing agents. Of that piece as far as what new business from those existing agents, that is hard to tell. Obviously, in the substitute line haul, for example, these are lanes we didn't have last year. Clearly we have picked up some business from other companies that I would consider from existing -- with existing agents. But I don't really have that breakout.

Pat, do you have any handle on that or a gas?

I think I would answer yes to all three. I think that the marketshare gains from bringing on new agents have been significant. Henry put some color around that relative to the numbers. If you take a look at the marketshare gains that we have gotten from our existing agents, I think they have gone out -- last year was a tough year for everyone. In order to maintain a certain standard of living and a certain revenue number they had to go out and be very (technical difficulty). That is starting to bear fruit for them.

As it relates to cross-selling and the revenue opportunities from that, I would say of the three elements, that is probably the one that we have had the less success in than the other two. But clearly marketshare gains from the selling efforts of our agents and field staff, along with the new agents that have come on with Landstar.

Great, that's really helpful. We also -- a year ago I believe that we did lose a few productive agents here and there for various reasons. Can you just remind me have we lapsed some of those -- the loss of some of those bigger ones?

I am sorry -- have what?

I believe that, if I recall correctly, that there was one or two larger agents that you guys decided to end a relationship with. Have we lapsed that at this point in terms of --?

No, that -- the one big agent you're talking about was -- occurred in December of last year. So we have not lapsed that (multiple speakers). But I think what is important on that is when you look at that rail business specifically, the fact that that rail is doing as well as it did in the second quarter shows you that there is other things happening.

Great, very helpful. Thanks, Henry.

Alex Brand, Stephens.

This is Sterling Adlakha actually in for Alex today. I guess someone needs to say congratulations on a good quarter, which I think it was, despite the emphasis here on operating leverage.

Thank you very much. Frankly I think it was an outstanding quarter.

Outstanding, yes. I'm sorry. I don't mean to tune it down too much. I think I got some pretty simple ones here. But the number of BCOs seems to be on the decline. It looks like on a year-over-year basis down a little over 5%. Can you talk about what the dynamic here is, and if you are satisfied with the number of BCOs, if that is an area of concern, an area of focus or not?

It is -- we always try to grow our capacity, and as I have always said, we try to grow both sources of capacity. It has been -- I will let Joe talk about that. Joe is our Compliance guy, and I will let Joe talk a little bit about that.

Well, we do put forth a great deal of effort to add all types of truck capacity. But the number of additions through this year so far is down over last year, but so are the number of terminations. And I think last year was pretty difficult on all truck owner stands. So some of them have probably left the business. We might see them come back. The ones that are here are obviously seeing plenty of loading opportunities, and thus the fewer deletions that we are having this year. But we are just keeping an eye out to see what the in the door interest is, and it seems to be holding steady, but behind last year when people were looking for greener pastures.

Got you. Just my only follow-up is along the same lines, and maybe more holistically. Do you see, at least shorter-term, the number of BCOs you can bring into the business, is that a bit of a headwind to meeting your long-term goals? I think it is growth of 15% in revenue and faster growth in the bottom line?

You know, capacity is -- look, as Joe said, we are always trying to bring in new qualifiable business capacity owners. They are a certain type of quality that we look for. I think that is not a headwind per se, because I think the real focus that Landstar needs to go in is what comes first. In my view is the revenue comes first. If I have revenue, it is going to attract capacity to the Landstar System.

Yes, it is very -- it is harder to get -- to become a BCO or have an owner operator sign on here because our standards are higher than everybody else. But on the other hand, with revenue opportunities in our system that will attract people. So it is all about revenue and then I will attract capacity. I don't have any change in that philosophy.

Right. Okay, thank you very much for the time guys.

Anthony Gallo, Wells Fargo.

The first question on supply-chain solution revenue, $6.1 million in the quarter, a couple of questions. Was there any of that revenue in the first quarter of 2010?

In the first quarter of 2010, yes, about $5 million, as I recall.

How do we think about the margin on that? What I'm trying to get to is what is the real purchased transportation expense if we had to take that out?

There is really zero purchased transportation. The overall margin on that business runs about -- you guys correct me if I'm wrong -- 30% to 40%.

Okay, great. That is actually what I was getting at. Then can you tell us how that business is typically sourced? In other words, is that through the agent network? Then the recent contract that you mentioned, how is that piece of business sourced?

Most of the revenue that is in -- of the $6.1 million fee revenue, it comes from revenue that came over through the NLM acquisition. It relates to the majority automotive related business, nad that was NLM's primary business in the past.

As you well know, the automotive industry is doing quite well. And as a matter of fact, in the third quarter I don't think they have closed as many plants as they did shut down last year, so I think that bodes well.

The contract -- the customer that was sourced on this thing, yes, an agent is involved in that. And we will just leave it at that. Again, because we don't have any revenue from that customer yet, we only signed that contract today, we are in the process of integration phase of hooking the A3i system into their supply-chain. And we hope to have it up and running by the fourth quarter.

The agent will participate in just about every phase of that. We will put some color around that when we get to the -- when we actually have this customer up and running.

Then along that same line, back at the analyst day, I guess it was down in Florida, if I remember correctly, you had given us some metrics about how you had rolled those products out to the agent network. I think you said at the time about 10% of the network had gone through various training. Can you just bring us up to speed on where the network is in getting up to speed on these products?

From an overall training standpoint of the agents there has been approximately 300 that have gone through either face-to-face training or via WebEx. Again, we're trying to make them familiar enough with the product. It is not an easy sell, so we are trying to make them familiar enough with the product, and what the opportunities are from a current customer perspective, not only in the technology field, but also in actually driving further transportation opportunities to our agent family to help satisfy that account on a more strategic level.

So basically what we are looking for from them is to bubble up the opportunity, recognizing that we have these capabilities, and then recognizing what the customers' need is, and then helping them fill that need. And that has taken some time. That is a pretty good shift from a sales standpoint for our agent family. So there has been a lot of foundational things that has to be done first. And I think we are seeing some progress with that. And as that foundation is laid, and as we have more success that will help feed off itself.

Fantastic, I will turn it back to you. Thank you, gentlemen.

Matt Brooklier, Piper Jaffray.

I'm going to ask the non-truck, non-gross yield question here. If I'm looking at your intermodal business, I know there is some noise there. You guys lost a big, big agent, I believe, at the end of fourth quarter. If I look sequentially at the intermodal volume numbers in Q2 from 1Q, you guys showed nice improvement on the load side. Was that -- and the increases in volume, was that purely organic or did some of the new agents that you guys bring onboard add to that particular number?

Yes, there has been new agents that have been brought onboard on the intermodal side. We were able to also retain some of the business of the agent that we lost. And some of the cross selling that Pat talked about earlier, even though they hadn't taken as strong of a hold as we would like, it is actually starting to take some shape and help contribute to some of the intermodal growth in the second quarter.

I am just trying to get a sense for how strong intermodal was, I guess, guest from an industry perspective. If I just look at Landstar adjusted organic volume numbers, how much of a stepup in loads -- I think, you guys did roughly 8,600 loads in second quarter versus 6,800 -- how much of that stepup was driven purely by industry volumes versus agent adds? Is there any way to roughly quantify that? I am trying to get a sense for how the intermodal market as a whole trended in second quarter?

The business from an overall industry standpoint is up, and I think continues to rise as shippers look for alternative sources, especially as things on the truck side continued to tighten. That is one of the things, obviously, that we recognized early on, and one of the main things we are focused on in terms of cross-selling to the agents, so they have alternative options to give their customers.

In terms of trying to define how much of that for the quarter, that is very difficult for us to do. I don't really have that. But I know whether it is the intermodal side or whether it is the other service options that we have, we're trying to give our agents the understanding of what our capabilities are, and then help them give alternatives to their customers. I think that is starting to take shape. I just don't -- I don't have a definitive number for you.

On the supply-chain solutions business, it looks like the fee-based revenue is starting to ramp up. At your investor day you guys had talked about there is two components to that business. There is the pure fee-based side of it and deriving revenue and profits from that, but then there is also the transportation volume opportunities. I was wondering if there is any way to quantify if you guys did realize transportation volume opportunities from the supply-chain solutions business from a volume or revenue perspective or just discuss it generally. Are you seeing some traction in terms of being able to pick off loads through that technology?

I don't think -- my general answer to that question is that there hasn't been that much attributable to that $6.1 million. I think this one customer we brought onboard, I think that will -- over time you will see that really develop. I think you will see that start to pick up as we move forward. But the fee-based revenue that you saw in the second quarter, not a lot of additional transportation was affiliated with that, because that was really carried over from what NLM was doing in the past.

My final question. You guys have upped your dividend. Does that change your share repurchase thoughts going forward? If I look at uses of free cash, the dividend has been boosted up. Does that mean you guys are going to be purchasing less shares going forward? How should I think about that?

The answer is no. We will continue our share repurchase program. We implemented a small dividend program a number of years ago. I believe we have increased that dividend every year, and we have continued to buy back stock. Again, I think with our model we don't have a lot of cash requirements or capital requirements, and the use of our cash will continue to be -- stock buyback will continue to be looked at as a use of cash.

Okay, so the increased dividend I shouldn't look at it that as taking away from the prior year cases of share purchases?

Absolutely not.

Tom Albrecht, BB&T.

You gave a lot of numbers and stuff. I just want to make sure a couple of things. Did you give the load growth by month and brokerage? I heard some numbers for just the truck (inaudible), but you had 49% load growth for the quarter in brokerage, and I'm just curious how that tended by month.

You got that, Jim? Jim's got a book of all these statistics. He is thumbing through it to get to it.

I've got three books.

Three books. If you've got another question while he is doing that, we can --.

Also, I wanted to make sure I understood what you said the gross profit margin at brokerage was. I got the purchased transportation cost that in the most recent quarter were [84.6] and all that, and you gave other quarters. But I'm not sure if I've actually heard the net margin for brokerage.

So maybe you will be looking that up. And maybe, Henry, you can address this. When you say LTL, the substitute line haul business, some of that is going to be brought in-house, you mean by the individual LTL carriers?

Yes. The reason it has been brought in-house is because to the primary substitute line haul people we deal with, they had picked up additional lanes from other LTL companies. They have taken marketshare. So basically they couldn't implement their plan as fast as they would have liked to. But we continue to believe that that will -- that that is their plan. And we have seen little bit of a fall off. I think you have seen a fall off if you go through -- I think, the first quarter, I think I said all of that was 14% of our revenue. I mean, it was down to -- what did I say, 9% in June or 8%, something like that.

So you're going to continue to see that fall, I think, as you move through the year, and level off at some amount, which is what we have been told. But when that happens, I am not sure. And it makes it difficult for us to forecast getting to that "percentage" net margin piece, because that is a 2% margin business, and that makes it a little bit difficult on the positive side. We know pricing is going up on that 74% of the rest of that BCO business, which is going to have, I think, a very positive impact.

Jim, do you got that --?

Brokerage -- the truck brokerage, April, May and June, 49% over 48% over 50% over.

49%, 48%, 50%. Okay. How about the net margins, I guess just the quarter is fine.

The net margin on truck brokerage?

Yes.

It is 8.3%. That doesn't include the substitute line haul.

8.3%, and that was versus what, 7 something --?

9.7% in the prior year.

Okay. What about Q1? I think I've got that in my model, but I don't have -- I can't find it.

9.1% first quarter -- the first quarter is 9.1%.

What was that versus?

9.7%. Say 9.7%.

Okay. And, Henry, why the job in agents? The first quarter of '10, the first time in a year or so you actually added agents, and then the second quarter be dropped 29 again. You have been (multiple speakers).

That fluctuates. Again, I think the real issue there is, as I tried to explain, it is really the quantity is one thing; the quality is another. I think the agents that we are bringing onboard -- and we're spending more time on sorting out more productive quality agents that are going to drive revenue, as opposed to bringing on someone that we have been (inaudible).

We also had a number of agents, existing agents, decide to close locations, because that is a location count, that first number I gave you. There was a number of agents that decided just to consolidate and pull out of a location, which is fine. So I think the key number is the revenue being driven in by the new agent adds, which is at $39 million is pretty impressive.

All those numbers, when you you guys were talking with Ed on the van and flat numbers, I want to clarify, that was a revenue per load or a pricing, because revenue per load is mix, fuel and pricing.

It is revenue per load. If your absolute pricing would be on a per mile basis -- and when we look at our pricing, look at our 10-Q, we are looking at revenue per load and the number of loads, and that is how we get the way we look at our business.

Ed was talking about yield, also, which, again I think the terminology is a little bit different than we were referring to, and I think that was confusing as far as trying to look up some of these numbers.

Lastly, for July -- again, I think you gave this for truck, but I didn't catch it. What was the load growth so far in July there and so far for brokerage in July?

We didn't give any of that. What we said was that the total load count is slightly less than the June numbers, but pricing basically is offsetting that. And as I have also said that is good. Low volume is going to level off at some double-digit amount -- increased amount, or rate I should say, and we think pricing is going to continue.

One thing I might add, and I don't want to confuse anything anymore, but I did this little -- we are [assuming] with that calculation, on the net revenue percentage as we refer to it, which is the prior quarter -- prior year quarter versus the current quarter. Last year's second quarter we were 17.2%; this year we were 16.3%. Obviously, the last year you had -- you are able to basically push down price, the capacity, and therefore increase that.

But if I were just to pull out substitute line haul from both years, the net revenue percentage, as opposed to being 17.2% to 16.3%, becomes 18.4% to 18%. So you're not talking a major change. Really the substitute line haul has a very big impact in how much of that increase, because the substitute line haul increase was very large in the second quarter. So again that is another way to look at that.

I am not trying to -- I like the substitute line haul business, because it is -- it will take, as I said, $2 out of every $10 all the time, since I know I'm going to get it pretty much accident free, and they are paying it within 20 days. But when you get to that net margin percentage, which a lot of people seem to be hung up on, you pull that out -- I have been trying to say this is all about mix basically. Yes, are we impacted somewhat on the increase in purchased transportation cost on 26% of our business? Yes.

I thought you said 15.3% earlier. A moment ago you just said 16.3%.

It was 16%.

It was 16%.

Thank you very much, guys.

David Mack, Jay Goldman.

I had a question about -- back to substitute line haul and the effect on margins. Would you say that last year substitute line haul declined as LTL volumes declined?

I don't have the '08 numbers.

Or '09?

I've got the '09 numbers, in '09 -- again, we are up dramatically. Almost double this year second quarter, the second quarter now. '08 to '09, I know numbers started to decline in '09, I just don't know --.

Okay, so '09 from '08 was down --.

Slightly. I think. But, again, do you have those numbers, Jim, by any chance?

(inaudible).

Yes, you got quarter over quarter for substitute line haul for second quarter '08, '09?

So, Henry, I guess what I'm wondering about is a lot of talk has been well, when substitute line haul dissipates as a percent of revenue it should have a positive impact on margins. But --.

I would still create operating income. I hope people understand.

No, I understand. I know. But your incremental margin last year were twice as negative as they are positive now. So what I'm trying to figure out is, is there something besides the substitute line haul which might be holding margins back relative to what some might have expected?

In other words, my guess is substitute line haul went down a fair amount last year, which should have buffered your incremental margins. Because as you cycled out a very low margin business, it would make the margins on the remaining business look better, which would have buffered the margins and make the incremental margins look little better than they were.

So now that we are in an upswing, and revenue is going up a fair amount, I guess my disconnect is that if that is the case, shouldn't incremental margins be at least pacing like they what on the opposite when they were going down?

You're talking net margin; you're talking total operating margin, because again --?

Operating margin.

All right. '08 you ran insurance at 1.4%. And you go back to '08. And even insurance, as I said before, is running approximately 2.2%. '08 ran 1.4%. Last year in the fourth quarter it ran 3.1%, which drove it up to 2.3%, but the other quarters were less than that. So insurance does have an interplay with that. It is actually -- I think we are making this much more complicated than it really is. The real issue here is the substitute line haul.

Do you have '08 substitute line haul, by chance, Jim, to answer this question?

(inaudible).

All right. What what is the -- in second quarter?

You want every quarter for two years?

I asked you, second quarter of '08.

$66 million.

$66 million. And last year was $35 million. I think --.

Yes, okay.

So, yes, we are down substantially in the second quarter to your point.

So then the other thing is insurance. Can you just remind me, this conference call has been so long, are you saying insurance is going to come down as a percentage of revs or will it remain --?

I didn't say any of that. You can't predict insurance. What I'm trying to say, and I have said for a number of years now, it is going to run anywhere from 1.5% to 3% of revenue. That is what we consider the average.

And when asked the question before, if I was -- on anybody's side of the equation on the other side of this conference call, I would factor something right in the middle. Because that is -- if I go back -- all the way back to 1999, it has run as high as on a full-year basis 3% and on a full-year basis the lowest was 1.4%.

You know, again, people focus on the 2008 year, where we had 1.4%. Yes, we are going to drive (multiple speakers) down there. But 2.2% is not abnormal. I'm not happy with the total number of claims in the quarter, and, yes, we are going to try to drive that down, and we try to drive that down every day.

So I think Jon Langenfeld might have touched on this, so if substitute line haul is going down as a percent of revenue, and that is a cost plus model. But I know it generates cash. It is a good business. It is an easy business. But from a margin perspective it is optically not as favorable as the rest of the business.

If revenue trends are running as they have been, but essentially the margin mix is getting better, why won't earnings be better in the third quarter than just being in line with what they were in the second quarter?

Well, a couple of things. I think we basically -- we like what we see in July. We modeled the third quarter after the second quarter. And the effect on margins -- I don't run my business on OpEx, I run it on cash. But the model was based on what we did in the second quarter.

Now, could there be favorable variances to that? Yes. Could there be unfavorable variances to that? Yes. I think how we model the third quarter I think is what our best guess is right now sitting here in July.

Okay, but from a cash flow perspective, or an operating income perspective, if you are shifting out of 2% margin business into 6% or 7% margin business, and you're running on the same revenue base --.

That is correct. I get a better margin percentage, and therefore I'm going to add more -- all things being equal, I add more bottom line. Absolutely correct. Remember what we are saying is we were looking at -- when we modeled the third quarter after the second quarter.

We're not getting rid of the substitute line. I think what we are saying is it is going from 11% to 8%. It is not going away.

Right, that you're adding -- you're adding revenue theoretically then. But as it shrinks as a percentage of the total, you're adding revenue at more favorable margins. Unless the business that you're adding is on a similar economic structure, where it is no risk, it is just cost plus.

You're right. And we went through -- and where June ended, what I said -- you got to understand what I said. We model the third quarter after the second quarter. Now if that continues to drive down, and nothing else happens, it could be a better answer. If it doesn't change, and I have said this -- I had been forecasting that substitute line haul business was going to go away since the first quarter, and it doesn't go away.

So I think what we have done as far as our model is -- what we have said about the third quarter is, look, we think revenue growth is going to be there. We do think pricing is going to go up. There's a lot of things that are going to play into that. And we basically put forth a third-quarter estimate based on what happened in the second quarter.

Okay. Great, thanks.

Chaz Jones, Morgan Keegan.

I think I am going to say thank you for all the commentary, and leave it at that. All my questions have been answered.

Justin Yagerman, Deutsche Bank.

It has been a long call. I guess my only question that I had was why agent locations were down sequentially, and what your expectation is for the next quarter or two?

Look, as I said before, I think the agent locations, a number of agents shut down some locations that they had operating as multiple locations and consolidated.

It really is a matter of what we are going after, and we are really trying to seek out the more productive agents to bring on revenue. And I think that is evident by the total new revenue growth. So I don't -- the location count isn't as important to me as far if those agent locations are productive. And what we have done is brought in the more productive ones. So we are spending more time in that arena.

Thanks, Henry, I will take the rest off-line. I appreciate it.

Jon Langenfeld, Baird.

Jim, you gave the number 84.6% of the purchased transportation in the quarter related to the trucking side. How -- did that -- do you have that number for June?

I do. 84.6%

So it is similar? So you had made the comment, Henry, that the pricing has gotten -- or it gets progressively easier to pass through some of these rising rates to customers. Did it feel that way through the quarter and into July, the lag effect of that?

Yes, again, the revenue per load has increased consistently throughout the quarter, and is better even in July. Then it gets to June, and I think I have said it was 11%, and it is higher in July. I don't see any change to that pattern at this point in time.

So we should see this 84.6% eventually migrate down?

Eventually. Jim, that was brokerage?

Yes.

It just depends on how -- it is a catch game. It depends on how much more I have got to pay for that truck. I might get that revenue -- that pricing up 15%, but maybe the truck is going to cost me a little bit more. So I think that levels off. And I think that is what you are starting to see.

But it depends on how tight capacity gets, and how much I've got to pay for that capacity, and therefore I'm going to go back to more price increase. And you pay that catch up game. But where it really impacts Landstar, as I said before, is on the 74% of our business -- or not a full 74%, take out the substitute line haul, the BCO part of it and the retention brokerage piece, because that will affect -- that has a positive impact.

Yes, absolutely. Thanks for all the granular detail.

That does conclude the question-and-answer session on today's conference. I will now turn the call back over for closing remarks.

I don't have any closing remarks at this point. It has been a long call. I think there is a lot of information that we tried to provide. I am not sure there's a lot of other companies that do that. But I think -- as I said before, I think Landstar is positioned pretty well at this point in time going forward, and into the third quarter.

I look forward to talking to everyone again on the third-quarter -- mid-quarter update call in August. Have a great rest of the evening. Thanks.

Thank you for joining today's conference call. Have a good evening. Please disconnect your lines at this time.