Landstar System Inc (LSTR) 2013 Q4 法說會逐字稿

Good morning, and welcome to the Landstar Systems, Inc., year-end 2013 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 and Chief Executive Officer; Jim Gattoni, President and Chief Financial Officer; Pat O'Malley, Vice President and Chief Commercial and Marketing Officer; and Joe Beacom, Vice President and Chief Safety and Operations Officer.

Now I would like to turn the call over to Mr. Henry Gerkens. Sir, you may begin.

Thanks, Dori, and good morning, and welcome to the Landstar 2013 fourth-quarter and year-end earnings conference call. This conference call will be limited to no more than one hour. Our prepared comments for this call are a little longer than usual. As a result, I am requesting that each participant adhere to a single-question limit.

But 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 the other members of Landstar's management team 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 2012 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.

One of the highlights of the 2013 fourth quarter was obviously the completion of the sale of Landstar's Michigan-based Supply Chain Solutions operations to XPO Logistics for $87 million in cash. The sale resulted in a gain on sale of $0.72 per share, and, after estimated income taxes and transaction costs, generated approximately $53 million of cash proceeds. As I have stated before, the sale afforded our shareholders a tremendous return on the two companies it purchased in 2009.

Another highlight of the quarter was the strong finish to the 2013 year. Revenue from continuing operations for the 2013 fourth quarter was $692 million, and earnings per diluted share was $1.30 per share, both metrics above the upper end of our range of fourth-quarter updated financial guidance. December load volumes and revenue-per-load amounts were much better than we anticipated, and drove our revenue increase.

Although our earnings were negatively impacted by higher-than-anticipated insurance and claims expense, which largely offset the positive effect of the lower-than-anticipated effective income tax rate, we still finished at the upper end of the range of our earnings-per-diluted-share guidance. Overall, it was a great finish to an otherwise slow 2013.

In order to properly understand the 2013 fourth-quarter results, it is important to repeat what I stated in our 2013 fourth-quarter mid-quarter update call. First, I stated that estimated 2013 fourth-quarter revenue from continuing operations would be in a range of $658 million to $678 million. And that range excluded the estimated revenue from the supply chain entities.

Second, I stated that our estimated range of earnings-per-share guidance was $1.25 to $1.28 per share.

Third, I stated that I anticipated that the previously mentioned range of earnings-per-share estimates would include an estimated gain on the sale of Landstar Supply Chain Solutions of approximately $0.71 per share, and would include estimated 2013 fourth-quarter operating results of Landstar Supply Chain Solutions, up $0.02 per share. And that both of these amounts would be recorded in the line item: discontinued operations.

And finally, I stated that I estimated a $0.07-per-share charge to continuing operations in the 2013 fourth quarter, for a significant bonus accrual entirely as a result of the significant gain on sale. If one were to do the math from the EPS estimates given on our 2013 fourth-quarter mid-quarter update call, it would yield an estimated range of earnings per share from continuing operations of $0.52 to $0.55 per share, and an estimated discontinued operations amount of $0.73 per share. Even though the gain was to be recorded in discontinued operations, the significant provision the gain generated was to be recorded in continuing operations.

The range of analyst estimates as per FirstCall for our 2013 fourth quarter was $0.53 per share to $0.67 per share, with a mean estimate of $0.63 per share. I don't know how the guidance was actually interpreted by each sell-side analyst when they put out their estimates, but I suspect most of the sell-side analysts excluded the estimated $0.07 bonus charge from their estimates, and still some might also have included the estimated $0.02, 2013 fourth-quarter Landstar Supply Chain Solution income-per-share amounts in their estimates. All appear to have excluded the gain on sale from their estimates.

No matter how one might have treated these items, Landstar's fourth-quarter 2013 earnings-per-share amount was at, or exceeded, the upper end of the EPS guidance. For example, if the estimated significant charge for the bonus provision of $0.07 per share was excluded from our range of estimates, our estimated range of earnings per share from continuing operations guidance would have been $0.59 to $0.62 per share. Ex the actual charge of $0.08 per share for the significant bonus provision related to the gain on sale, our actual adjusted earnings per share from continuing operations was $0.63 per share. Revenue from continuing operations also topped the upper end of our guidance by $14 million.

Now let's more specifically address the 2013 fourth-quarter results. As I said, revenue from continuing operations for the 2013, 13-week fiscal fourth quarter was approximately $692 million, and compares favorably to the $685 million of revenue generated in the 2012, 13-week fiscal fourth quarter. It was the best 13-week fourth-quarter revenue performance in Landstar history.

For the 2013 quarter, truck transportation total load volume increased 2.4% over the prior-year comparable quarter, while truck transportation revenue per load was $1,741 in the 2013 quarter versus $1,772 in the 2012 quarter, a 1.7% decrease. However, revenue per load in the fiscal month of December 2013 was approximately 3.1% better than the 2012 December month. And as I said in yesterday's press release, it was the first month-over-prior-year-month increase we had all year.

Total operating income from continuing operations for the 2013, 13-week fourth quarter was approximately $40 million, versus $48 million in the 2012, 13-week fourth quarter. And was negatively impacted by a $4.5-million increase in insurance and claims expense, and a significant bonus provision of approximately $6 million, which related entirely to the gain on sale.

I am now going to turn the call over to Pat, Joe and Jim to add some color to our fourth-quarter performance. Pat?

Thank you, Henry. As noted by Henry, the 2013 fourth-quarter revenue was approximately $692 million, compared to the 2012 fourth quarter of approximately $685 million. As a reminder, in the 2013 third quarter, the top-10 revenue accounts from the prior year declined over $40 million, as compared to the 2012 third quarter. This represented more than the entirety of the revenue shortfall in the third quarter of $36.6 million.

In the 2013 fourth quarter, the top-10 accounts from the prior year declined by over $20 million, as compared to the 2012 fourth quarter. This small group of accounts represented 16.3% of revenue in the quarter, versus 19.4% in the 2012 fourth quarter. Improved performance in this segment was a function of increased opportunities in a specific energy account, and customers with seasonal business.

In the fourth quarter, we experienced increased demand for transportation services in core industrials around energy, power generation and machinery, while government, agriculture and mining remained muted. Overall demand for platform services were flat compared to the fourth quarter of 2012, while pricing remained similar to the 2013 third quarter, but behind the previous year. Meetings with customers, current bid activity, and improving estimates in industrial production give us cautious optimism around the platform business. Currently, approximately 37% of Landstar's truck transportation revenue is generated using unsided/platform equipment.

Revenue from our van segment increased sequentially over the third quarter, and was up 5% when compared to the fourth quarter of 2012. The year-over-year revenue increase is attributed to a 5% increase in load volumes, as we experienced increased demand from a wide range of customers throughout the fourth quarter. While demand for van capacity remains strong, pricing in this segment was up 2% compared to the third quarter of 2013, and similar to the fourth quarter of 2012. As has been mentioned, improving estimates in industrial production, and anticipated capacity reductions associated with regulatory challenges, may provide opportunities for Landstar.

Earlier this year, we provided some detail around our LTL initiative. Although Landstar has historically participated to a small degree in the LTL market, in late 2011 we increased our emphasis on this service offering by implementing an easy-to-use capacity procurement tool, established standard rates with LTL carriers, and worked with our agents to identify customer opportunities. Revenue in the LTL segment increased when compared to the third quarter of 2013 and the fourth quarter of 2012, this in spite of losing a high-volume LTL customer in May of this year, who assumed the transportation management function that was previously performed by a Landstar agent.

We continue to gain traction in this space by adding quality carriers to our base of capacity providers, and increasing the number of agents that are selling this service. As we have mentioned, most of our sales staff and many agents have a background in LTL, and are comfortable selling the product. From the perspective of the LTL carrier base, Landstar's business model, diverse agent population, and large customer base represents an attractive, variable cost-of-sales channel.

In addition, virtually every existing Landstar truck load customer has some LTL business. This gives Landstar and our agents an additional revenue stream inside our existing account base. Finally, having this service offering exposes Landstar to another group of potential agents.

As for new agent revenue, we continue to improve our results by bringing on productive new agents. In the quarter, revenue from new agents represented 2.9% of total revenue. As a percent of revenue, this is the best quarter in 2013, and nearing our historic average of 3% to 6%. As a reminder, a new agent in the 2013 fourth quarter represents an agent who had contracted with Landstar after October 1, 2012.

Revenue from new agents increased 14% compared to the third quarter, and is up 54% from the fourth quarter of 2012. This improvement in new agent revenue is a direct reflection of the quality and availability of new candidates, and our pipeline remains well seeded. In addition, the number of new agents contracted in the fourth quarter of 2013 was higher than any quarter in the year.

Landstar finished the year with 478 million-dollar agents, compared to 504 in 2012. The decline in million-dollar agents can be attributed to softer demand, causing agents to move down one position and out of the million-dollar category, and the departure of certain agents, both planned and unplanned. In the case of departed agents, in almost every circumstance Landstar was able to maintain the business by transitioning the account to an existing agent.

We continue to believe that the challenges for small, independent brokers are many, and difficult to solve without support. Whether it is cash flow, tight capacity, or inferior systems, this segment of the industry is fertile ground to recruit productive new agents. We are confident that our scale, systems and support will help us maintain momentum in adding productive new agents in 2014.

Joe?

Thanks, Pat. In the fourth quarter, Landstar was able to grow BCO counts, as well as active broker carrier counts, ending 2013 with a total truck capacity provider network in excess of 40,000 providers, in spite of the elimination of carriers that were contracted solely to Landstar's Supply Chain Solution companies. The Company's improved truck capacity provider network at the end of the fourth quarter exceeded the prior-year quarter by nearly 500 truck capacity providers. BCO count increased each of the last three quarters, and interest in Landstar from owner operators considering BCO status remains consistent. In general, we see the BCO recruiting outlook as challenging, as owner operators remain cautious on making major changes.

The net gain in BCOs in each of the last three quarters of 2013 was the result of a very solid retention effort, which has continued into January of 2014. The first quarter typically sees a reduction in BCO truck count, yet Landstar saw its first January net increase in BCO trucks in five years, due to an approximately 30% reduction in the number of BCOs leaving the Company. BCO truck turnover in 2013 was 27%, a very respectable outcome. Solid execution on adding BCOs, and a strong retention effort, will be key to BCO freight growth in 2014.

As demonstrated by the record number of active broker carriers in the Landstar network, we continue to make progress retaining capacity and building relationships with carriers who see the opportunity to grow their business with Landstar. The foundation for further growth from truck brokerage has been making attractive, quality freight available to approved carriers. Given the ad hoc and unplanned nature of much of Landstar's freight mix, the size and scope of the network of capacity providers is very important in sourcing capacity across a wide range of services, often within a short window of time.

We began to see some additional favorable indicators around truck transportation in the fourth quarter. Overall, the number of loads hauled via truck increased 2.4% over prior year's fourth quarter, driven by a 5% increase in BCO loadings, with broker carrier loadings essentially flat to the prior year's fourth quarter.

Historically, the number of loads hauled via truck in the 13-week fourth quarter has been lower than the number of loads hauled via truck in the third quarter. However, in 2013, loads hauled via truck in the 2013 fourth quarter exceeded the 2013 third quarter by 2%. The 2013 fourth-quarter increase in BCO load volume over the prior-year period was the first quarter of 2013 where BCO load volumes exceeded the prior-year quarter.

In addition, the number of loads hauled via broker carriers in the 2013 fourth quarter were approximately the same as the 2012 fourth quarter, yet 4% over the 2013 third quarter; much improved from the trends experienced in the 2013 second and third quarters. This fourth-quarter load volume improvement in truck transportation is attributed to the increase in loading opportunities attractive to Landstar capacity providers.

Whether a single load or multiple lanes, capacity relationships drive capacity growth, and allow for improved account penetration as opportunities present themselves. We continue to see customers seeking reliable solutions to take into consideration a means to manage carrier selection, in-transit freight visibility, and to meet service requirements. The standards and methodology Landstar deploys to ensure the quality of the capacity made available to our customers, we believe, is a competitive advantage. Landstar has proven consistently that the model is appealing to third-party capacity in any economic environment, due to the volume and quality of freight, the freedom they have to operate their business, timely payment for services, and their ability to benefit from the meaningful discounts on tires, fuel and equipment.

The cost of purchased transportation increased to 77.2% of revenue in the 2013 fourth quarter, from 76.8% in the 2012 fourth quarter. Percentage of revenue on a fixed margin, which has an overall lower cost of purchase transportation than revenue on a variable margin, decreased to 58% of revenue in the 2013 fourth quarter, from 59% of revenue in the 2012 fourth quarter. The rate of purchased transportation paid on revenue under agreements that result in a variable margin increased 40 basis points over the 2012 fourth quarter, primarily from a 50-basis-point increase in the rate of purchased transportation paid to truck brokerage carriers in the 2013 fourth quarter.

We believe that the increase in the rate of purchased transportation paid to truck brokerage carriers was primarily attributable to the sudden spike in demand during the 2013 fourth quarter. It should be noted that the increase in the rate of purchased transportation paid to truck brokerage carriers on revenue hauled under variable margin agreements was partly offset by a 40-basis-point decrease in the rate of commission paid to agents. If capacity were to tighten, we would expect pricing to improve, and with that, price paid to capacity to increase, benefiting Landstar on the approximately 60% of revenue that is generated on a fixed margin, while prompting us to pursue pricing increases in order to protect the margin on revenue generated with a variable margin.

Turning to safety performance. DOT crash and frequency was elevated in the fourth quarter of 2013, due largely to the weather that impacted much of the country. While frequency of accidents occurring in the fourth quarter was elevated, the resulting severity of these crashes has been moderate. We continue to have strong participation and commitment around the Company's safety programs from agents, BCOs and employees.

The Company continues on pace with the implementation of its electronic logging device initiative, with more than a third of the BCO fleet equipped with ELDs, and has seen the desired improvement in its CSA hours of service basic scores. Each of the seven CSA basic scores for each Landstar carrier is below the threshold established by the Federal Motor Carrier Safety Administration. As customers continue to evaluate capacity providers, we believe this level of safety and compliance performance is a competitive advantage, and believe this will be additive in light of the additional regulation aimed at motor carriers, freight brokers, and forwarders, which are on the horizon.

Jim?

Thanks, Joe. We have already discussed certain information regarding the 2013 fourth quarter. I will cover various other financial information included in our fourth-quarter release.

The Company's full-year and fourth-quarter income statements have been presented with the historical results of operations of the Landstar Supply Chain Company shown separately as a discontinued operation. All comments that follow include comparisons of the financial results of continuing operations for the 2013 fourth quarter compared to the 2012 fourth quarter.

Gross profit, representing revenue less the cost of purchased transportation and commission to agents was $102.7 million, or 14.8% of revenue, in the 2013 fourth quarter, compared to $103.7 million, or 15.1% of revenue, in the 2012 fourth quarter. The decrease in gross profit was attributable to an increased rate of purchased transportation paid to third-party capacity providers, partially offset by a lower rate of commission to agents. Joe has already discussed the cost of purchased transportation and commissions to agents in his prepared comments.

Other operating costs were 6% of gross profit in the 2013 quarter, compared to 5% in the 2012 quarter. This increase was attributable to an increased provision for contractor bad debt in the 2013 fourth quarter.

Insurance and claims costs were 13.2% of gross profit in the 2013 quarter, compared to 8.7% in the 2012 quarter. The increase in insurance and claims as a percent of gross profit was primarily due to unfavorable development of prior-year claims of $2.7 million in the 2013 quarter, compared to $1.4 million in 2012 quarter. Insurance and claim costs in the 2012 fourth quarter also experienced a lower frequency in estimated severity of accidents, when compared to the frequency and estimated severity of claims compared to 2013 fourth quarter. Insurance and claims expense was 4% of BCO revenue in the 2013 fourth quarter, which was higher than anticipated, and higher when compared to the average of 3.3% experienced over the past five years. The increase on insurance and claims expense in the 2013 fourth quarter over the five-year average negatively impacted the fourth-quarter diluted earnings per share by $0.03.

Selling, general and administrative costs were 35.8% of gross profit in the 2013 fourth quarter, and 34.4% of gross profit in the 2012 fourth quarter. The increase in selling, general and administrative costs as a percent of gross profit was primarily attributable to an increased provision for bonuses under the Company's incentive compensation program in the 2013 fourth quarter, compared to the 2012 fourth quarter. It should be noted that the provision for bonuses reported as a component of continuing operations in the 2013 fourth quarter was entirely attributable to the gain on sale of Landstar Supply Chain Solutions. The increase in selling, general and administrative costs as a percent of gross profit caused by the provision for bonuses was partly offset by a lower provision for customer bad debt and lower stock compensation in the 2013 fourth quarter.

Depreciation and amortization was 6.7% of gross profit in the 2013 fourth quarter, compared to 6.2% in 2012 fourth quarter. This increase was due to increased depreciation of trailing equipment, as we continue to replace older, fully depreciated equipment with new equipment.

Investment income was $364,000 in the 2013 quarter, compared to $378,000 in the 2012 period. The effective income tax rate was 35.3% in the 2013 fourth quarter, compared to 30.1% in the 2012 fourth quarter. The effective income tax rate, which generally is approximately 38.2%, was impacted in both periods by favorable outcomes of various tax matters.

Looking at our balance sheet, we ended the quarter with cash and short-term investments of $215 million. 2013 fiscal year cash flow from operations was $169 million. Cash capital expenditures were $6.4 million in FY 2013. FY 2013 return on average shareholders' equity is 35%, and FY 2013 return on invested capital, representing net income divided by the sum of average equity plus average debt, was 28%. At December 28, 2013, shareholders' equity represented 82% of total capitalization.

Back to you, Henry.

Thanks, guys. The fiscal January 2014 period closed last Saturday, and I am pleased to say that truck transportation revenue trends experienced in January 2014 compared to January 2013 are very favorable. Both truck transportation load volume, and truck transportation revenue per load in fiscal January 2014 were better than the prior-year month; a very, very encouraging sign. I will note, however, that during the first several business days of the 2014 fiscal February period, we have been negatively impacted by some severe weather, primarily in the Southeast.

Also encouraging are the latest 2014 quarterly forecasted industrial production growth rates, which are now forecasted to be better than the previously published 2014 quarterly industrial production growth rate forecasts, and better than the growth rates experienced in 2013.

During the past 4.5 years, we have spent much time and effort trying to create ways to integrate the automotive-focused Michigan-based supply chain companies into our agent-based model, with modest success. Over that time, we came to recognize that those acquired companies were better suited for a company-store type operation, and not our agent-based model. So, when the opportunity presented itself, we took advantage of it, and sold those companies. As I said before, the sale offered our shareholders a tremendous return on our 2009 investment in those companies.

As we enter 2014, we are re-energized and refocused on growing our core agent-based model. To that end, we have realigned our internal field sales organization into three field divisions from two field divisions, with each field division led by a senior sales executive. Each field division in turn will contain three regions, each led by a region Vice President. Each region is further segmented into various sales areas, each led by an area sales manager. And additionally, each field division will include two business development Vice Presidents.

The increased and more concentrated field presence should augment our agent growth, in addition to driving incremental overall revenue increase through account penetration. The improving economic picture, coupled with the increased and more concentrated field presence, sets Landstar up for solid revenue growth.

All that being said, there still remains some uncertainty, and although I am optimistic as to 2014 and beyond, however, I think it is important to be somewhat cautious. Based on the continuation of the current revenue trends and the increased economic indicators, I currently would anticipate revenue for the 2014 first quarter to finish in a range of $640 million to $690 million, versus the $623 million in the 2013 first quarter.

Based upon that range of estimated revenue, and taking into consideration an approximate $2.2-million charge for the Landstar annual agent convention to be held in the 2014 first quarter, versus being held in the second quarter in 2013, I estimate diluted earnings per share from continuing operations to be in a range of $0.56 to $0.61 per share, versus $0.55 per share from continuing operations in the 2013 first quarter. While the convention cost is a headwind in the 2014 first quarter, it is a tailwind in the 2014 second quarter.

And, Dori, with that, we are going to open it up for questions.

Thank you very much, sir.

(Operator Instructions)

Our first question comes from Bill Greene with Morgan Stanley.

Good morning. Henry, you didn't mention there at the end, some of the commentary you had in the press release about the long-term growth rates. Maybe you could just put some color around that, in terms of assumptions that go into that. Is it -- what kind of macro environment, are there acquisitions in there or buybacks, maybe just some color to get us understanding what -- (multiple speakers).

I think historically, a couple things. One, I think with the repositioning, if you will, an increased field presence with our -- the way we have divided up the country, I think that is going to basically create much more revenue opportunity. And if our model really generates -- if I can generate the top line and generate gross profit, the structure falls pretty much, and yields that operating income number. It is my feeling that we can grow at those rates. Our objective is to be at a 50% operating margin within a five-year period.

This year we took a little bit step backwards, but I think we basically refocused ourselves with pushing -- selling the supply chain company, which by the way we love the people there, great operation, but really didn't fit our Company. We recognized that, and what we decided to do is just re-energize our focus, if you will, on growing the top line, managing our costs. It's two ways to look at it, grow the top line, and make our agents and capacity more productive, and that is how we are going to get there.

Now obviously, we are looking also at that double-digit mid-teen EPS growth. That coupled with increasing that operating income number, and coupled with our buyback program, which we historically have executed on, and we will ramp up that as we move into the future. So that is how we are going to get there, and pretty confident on that.

Okay. That's great. Thank you for the time.

Our next question comes from Jason Seidl with Cowen and Company.

Hello, Jason.

Hello, good morning, how are you? A quick question here. I recall last year we had some issues with some of the demand from the wind sector. Can you remind us where that comes up in the quarter, and how that business is looking this year?

Jason, I don't have that at my disposal by quarter, but I can tell you that we anticipate the wind business being better in 2014 than it was in 2013, but not as good as it was in 2012.

Okay. Maybe you can give me that offline after the call then, in terms of where it hit you last year.

Okay. Next question. Thanks, Jason.

Thank you. Our next question comes from Todd Fowler with KeyBanc Capital Markets.

Todd.

Great. Good morning, Henry. I just wanted to help maybe understand a little bit about the dynamics in the fourth quarter, and then how you are thinking about the sequential progression of gross profit margins into the first quarter. Revenue was obviously strong, higher than your range. Earnings per share coming in right at the high end of the range. Is most of the reason why the revenue didn't drop down to the bottom line is that the net revenue margin compression, some of the things that Joe talked about? And then, when would you expect the net revenue margins to normalize? Should we see that in the first quarter, or is there a greater lag?

A couple of items here. I mean, because there is a lot of things that focus in here. And I would say that when you have increased demand, and you have got some tight capacity, you are going to basically pay a little bit more for that brokered truck. Now, all that being said, we have done a pretty good job on BCO loadings. Our system benefits -- in that environment, we might pay a little bit more for that broker truck. But when we get that price increase, which we will get, what happens is that from the fixed margin, as Joe mentioned, that really benefits Landstar. And I would say that you are going to start to see that progress, as you move through the year.

At first, when that stabilizes, it depends on the volume and on how much composition that you have. But what we look at is, okay, get that price increase. Because that price increase is going to basically resolve some of that pressure. But I would anticipate that you are probably going to see some pressure, assuming demand stays where it is on the variable piece. The other thing as far as the fourth quarter, which I think is very important, and Jim mentioned it in his -- as it relates to the results and pushing it down to the bottom line -- insurance and claims expense in 2013 was higher than we would have anticipated.

And clearly, when I gave my mid-quarter update in 2000 -- in December, the insurance costs were even higher than we anticipated then. And that really impacted I think, why you didn't see the full benefit of some of the numbers in the fourth quarter. I don't anticipate that we are going to run 4% of BCO revenue in 2014. And you go back to that historical five-year rate that Jim refers to at 3.3%, that is picking up some pretty good margin there. Obviously, knock wood, got to be safe, and we have also talked about the number of cases out there of large value, and that is dwindling.

So we feel comfortable with that. But you never know with that line item, and the weather is not too good. But so far in January, knock wood, we have been okay. Todd, that is about the best I can get, unless does someone else want to add anything on that? Okay.

Henry, would you care to share a range on the gross profit margin percentage that is incorporated in the first quarter guidance?

15%, 15.5%, slightly higher in the fourth quarter.

Okay. Perfect. Thanks a lot for the time.

Our next question comes from John Larkin with Stifel. Your line is open.

Yes, good morning, gentlemen. Thanks for taking the question. Your balance sheet liquidity is probably better than it has been in quite some time, with something like $215 million in cash and marketable securities, and another $185 million in borrowing capacity. If I read the press release correctly, $400 million of fire power, if you will. Last year's share repurchase rate was about $60 million worth, if I am correct on that point.

So the question is, what do you plan to do with all this availability? Do you plan to step up the share repurchase program opportunistically if that makes sense, or is there an acquisition in the offing that perhaps fits better with the structure of the organization?

I think we would be looking -- obviously, we do have a lot of fire power. We would be looking -- a couple things. One, we are clearly going to step up the share buyback program. Two, we would also be looking -- if the right acquisition comes along. I mean, and John, and you know this, and a lot of people on the call know this Company very well. The culture here is different. We have to be -- it is a very unique company that would fit into this particular Company.

There are a number of those out there. We would continue to look, and if that opportunity came, we would clearly strike. Absent that, our objective with what we had, would be basically to return this to the shareholders through an increased buyback program. But we are always on the lookout for a potential acquisition. We don't have anything on our radar at this time.

Thank you very much.

Thanks, John.

Our next question comes from Scott Group with Wolfe Research.

Thanks. Good morning.

Good morning.

So I wanted to talk a little bit more on the gross margins. Jim, do you have the brokerage gross margins year-over-year, and if you have them sequentially, that would be helpful. I guess the question -- the crux of the question is -- I get gross margin is getting squeezed. Talk about brokerage net revenue, and if that was better or worse than you were thinking. And how you are thinking about net revenue growth for brokerage in 2014 versus 2013.

Well, I think, when you listen to Joe's prepared comments, he had mentioned -- we don't give out the exact percentage net revenue margin for brokerage. But in Joe's prepared comments, he had mentioned that truck brokerage within that variable business, the PT rate was up 50 basis points over the prior year. So you see we are getting a little bit of margin compression. But again, in that variable business, when the brokerage PT rate goes up, the agents share in that a little bit. And at the same time, you mentioned the agent commission --

Goes down.

We picked up 40 basis points there. So it's really -- we are feeling margin pressure on the brokerage side on the variable business, coming into this fourth quarter of 50 basis points. And like I said, carrying into the first quarter, we do anticipate a little bit of that continuing into the first quarter, but from an overall first quarter, we are looking 15% to 15.5% on the gross margin.

Yes, I think it's important, and Jim stressed again, is that every time we have that compression as far as what we pay for PT, we never -- we don't bear the full brunt of that. I mean, that is shared with the agent. Again, that is what sets us apart from I think other, quote, brokerage operations. They pull -- they bear the full brunt of that. We don't. In addition to that, we have got this huge 60% piece that is fixed margin that -- because eventually this is going to turn into price increases, that clearly is going to benefit Landstar.

Yes. No, I appreciate that. That all makes a lot of sense. I guess the question was more on -- everyone is focused on the margin. I was thinking more on the net revenue, and how that did in brokerage.

Scott, our -- again, our piece is different, because net revenue, you are referring to revenue less purchased transportation. We always have an agent commission associated with our revenues. So therefore, you can't ignore the two. But -- and what we are trying to say is, if I get compression in that net revenue number, I get an offset because I am paying lower commissions. So again, that is why we are different on -- from a brokerage operation.

Okay.

Okay?

All right. Thanks.

All right. Next question.

Thank you. Our next question comes from Allison Landry with Credit Suisse.

Good morning, thanks.

How are you?

Good. How are you?

Good.

I was wondering if you could talk a little bit about what you have seen, specifically from your top 10 accounts in January? And as you are talking to them about their outlooks for 2014, could you just give us some flavor about how they are thinking about their businesses, and possibly what that means for Landstar?

Allison, this is Pat. I think I mentioned in my prepared comments that, whether you look at conversations we have had with customers, or we look at bid activity that is coming in, we anticipate our top accounts in the energy sector, power generation -- we saw some pretty good things happening towards the end of the year. We look at the vans that we talked about in the fourth quarter. Not only was it strong in December, but it was throughout the quarter from a wide range of customers.

So if you talk -- in our conversations with our agents, our customers and our salespeople, I think what Henry said in his prepared remarks are correct. And that is, it has been a great start. We look at the industrial production numbers. We are cautiously optimistic about things relative to those two things. So --

Okay.

That's where we stand.

Okay. Thank you.

Thanks, Allison.

Next question comes from Jack Atkins with Stephens. Your line is open.

Good morning, Jack.

Good morning. Thanks for the time. So I guess a couple housekeeping items. Could you -- Henry, could you quantify for us the improvements in January that you saw in volumes, and then in revenue per load? And then secondly, Jim, could you quantify the impact on the full year, from bonus accruals in 2014? Because I know that you are going to have some bonus accruals this year in the first three quarters that you -- that it seems like you didn't have last year.

Simply put, the -- they are both revenue per load and load volume, truck volumes have increased -- and Jim, correct me -- they are about 3% each.

Yes.

Each.

It's about equal.

Okay.

And from a bonus perspective, we had the entire bonus was pretty much booked in the fourth quarter 2013. So from a quarter-to-quarter standpoint, looking into 2014, a one-time payout under our plan would be about a $7 million, $8 million a year. And generally, that is quarterly, so you would look at it that way. So you are talking about a little bit of headwind each quarter, going into 2014 based on bonus, because the first three quarters, we pretty much didn't have any in 2013.

Okay. That's great. Thanks.

Thanks, Jim.

Thank you. Our next question comes from Ben Hartford with Baird.

Good morning.

Ben.

Henry, you made the comment about going after price, and it sounded like you were a little bit more optimistic that things will normalize from a gross margin standpoint in 2014. I am just wondering specifically, if you look at January, and you look at the disruptions that we have seen in November and December and into January from a capacity standpoint, do you think that shippers on balance are more receptive to paying, and the volatility is a trigger that we need? So that this gross margin compression that has been taking place for several years, can start to unwind in 2014? Is that something specifically that provides you optimism, as it relates to 2014's gross margin?

Pat?

Ben, this is Pat. Yes, I think what you are seeing is, increased demand, and not a tremendous increase in the amount of capacity that is in the marketplace. If you recall, in my prepared remarks, we talked about the van business specifically, and the impact some of this regulatory requirements are going to have on capacity. You saw it the fourth quarter -- I think it was Avondale came out and said the fourth quarter had a significant number of fleet failures, much more than anticipated. And we expect, again, capacity to tighten. If demand creeps up, as we have mentioned in our prepared remarks, we expect to be able to have some pricing power.

Thank you.

Our next question comes from Matt Brooklier with Longbow Research. Your line is open.

Hello, Matt.

Hello, thanks. Good morning. I wanted to talk about January and that 3% volume number. How does that break up, between your dry van business and your flatbed business? It sounds like dry van was stronger in fourth quarter, and I am just curious to hear if flatbed is starting to reaccelerate. Thanks.

Matt, I would love to give you that answer, if I had it at my fingertips. The period just closed last Saturday. I have got finals -- I don't have reports in front of me that break that out between equipment, so I really can't. I don't have that at this point, but that is just the answer to that. Sorry about that.

Okay. Thanks.

Our next question comes from Tom Wadewitz with JPMC.

Hello, Tom.

Yes, hello, Henry. Good morning. So I guess another along the lines of the flatbed and van. How much of the December tightening was really a spike in flatbed pricing, and it drove the gross margin pressure, or was it primarily dry van that was really tightening up?

Pat, do you want to answer that? Or I think it was more van than in flatbed. More van than flatbed. Pat, do you want -- was that accurate?

Yes, the van pricing in the quarter was stronger than flatbed pricing in the quarter, in a year-over-year comparison.

Okay. So it wasn't an unusual squeeze and tightness, it was just -- in flat. It was just -- it sounds like maybe building tightness through the quarter, and then exaggerated a little more in van in December.

We saw -- van pricing and flat pricing both climbed from November to December. With van, actually, pricing climbed a little bit more than the flats.

Right.

Okay.

All right, thanks, Tom.

Thank you.

Our next question comes from Scott Schneeberger with Oppenheimer.

Hello, Scott.

Good morning. This is [Daniel Halsberg], filling in for Scott.

Okay.

When you look in 2014, can you give us some color on the end markets where you see the most upside?

Well, I will try that, and then maybe Pat can come back. I think the most -- I think there is a lot of potential upside, right? I am normally an optimistic guy.

And but, when you think about what has happened with Landstar in 2013, the decline in -- not the decline, but flatbed being not as robust as we would have liked. I think there is a lot of opportunity there. We remain the number one flatbed, unsided carrier. So when industrial production picks up, I would expect that to pick up, and that should clearly benefit Landstar. I think that is the most exciting thing.

The other piece of that is -- Pat talked about his top 10 accounts being off. Now, we did lose one of those accounts. All right? But we have the other accounts. And at some point in time, those things are going to come back, and some of that ties in to my flatbed comment.

But we have done a very good job, as far as secondary and tertiary accounts and building that up, which really offset that top 10 decline. So I think there is a lot of opportunity for Landstar, and I am optimistic. But as I said in my prepared comments, I try to temper that a little bit with a little bit of caution, because I still think there is some geopolitical -- uncertainties out there that, who knows how people might react. But, Pat, I don't know if you want to?

I absolutely agree with Henry. I think it will be broad-based. If you take a look at the 36 -- excuse me, the $40 million decline year-over-year in top accounts, top 10 accounts in the third quarter, $20 million decline in the fourth quarter, yet we beat last year's revenue.

Clearly, the model works. We have agents servicing those secondary and tertiary accounts, and I think the platform business will rebound somewhat from the previous year. As we mentioned to Ben, we think that there is some pricing opportunities as we go through 2014.

The other thing I will add is the fact that -- and again, the fact that we are focused on -- I mean, not that we weren't focused, but we are refocused. I mean, we are not trying to basically do some other things, i.e. with supply chain, all right? That we did in the past which sort of, I think maybe took our eye off the ball a little bit.

Okay. Great. Thanks for the time.

Thanks.

Our next question comes from Thomas Kim with Goldman Sachs.

Hello, Tom.

Good morning. I wanted to ask around the new agent pipeline. Can you give us a sense of how many new agents you anticipate this year? And then, just with regards to your multimillion-dollar agents, what do you see as potentially turning the -- number -- reversing the declines in the number of million-dollar agents? Is it just a matter of the top line growing again because of demand? Or do you anticipate -- or are there Company specific measures in place to actually help that -- help stimulate the overall individual agent revenue growth? Thanks.

Tom, a couple of things. If you look at it, we anticipate getting back to that traditional 3% to 6% run rate in our new agent revenue per quarter. We have 2.9% in the fourth quarter, 2.6% in the third quarter, a 54% increase in new agent revenue over the fourth quarter of 2012. So we don't have a specific number of agents that we are going to bring on that are going to produce that.

As it relates to the decline -- agents that are in our million-dollar category, let's look at it a couple of different ways. We had 43 agents, 9 of them new, move into the million-dollar category. We had 49 agents move out of the million-dollar category. As we said in our prepared remarks, and you formed in your question, some of that top line revenue growth caused some of the agents to drop out of that area. The agents that left us, we talked about planned and unplanned. The majority, excuse me, the majority of those were planned. And in the unplanned ones, there were two agents that left Landstar. We were able to retain about 25% of the total business there. So we felt, although the number is down, there is good explanation for all of that.

And then lastly, if you think about what Henry talked about relative to the reconfiguration of the field, we have more people out, calling on agent prospects to bring them in here. And we think that -- as we mentioned in our remarks, we think that that's pretty fertile ground for us, those small brokers that are continuing to get squeezed. We think we have got the right scale, systems and support for those people to become successful.

If I could just add -- or if you could just elaborate a little more on that 3% to 6% run rate -- like what are some of the drivers that get that run rate back up there again?

Bringing on productive new agents.

Okay. Thanks a lot.

Our next question comes from Nate Brochmann with William Blair & Company.

Hello, Nate.

Hello, good morning, Henry.

Hi, how are you?

Great. Nice and cold up here. This is a little bit more of a strategic question, and like with the sale of NLM and the supply chain businesses, a lot of your competitors are moving to this multi-modal, holistic, collaborative approach, all encompassed with technology and a skill set. Obviously, you have a great platform with that, in terms of all the different modes you offer. And with the agent network, how do you see that evolving in terms of just your own strategy to take advantage of some of those trends? Or how do you more holistically serve some of those customers across your agent network?

I -- well, look, there is a couple things. I mean, what we have -- what we are trying to do is basically move in with what we call a solutions approach, which will encompass a lot of different things, capacity, technology. But I think the biggest thing we have to do is make our agents, make our capacity more productive and efficient, and then look what the customer wants. Right? And I think we can provide all that. Pat?

I think one of the, I think, barriers, when you have technology, is you go in with a technology sell, and you say, listen, here is how I am going to solve your problem. You don't do a lot of what Henry referred to as solution selling, and trying to build a collaborative solution with the customer. If you look at the customers that Landstar has, and where we really perform these kinds of services, it is when we have a customer that values our flawless execution, the expertise that the agent brings to the party. And then, we collaborate with them on the solution, and our capacity providers are a big part of that.

As Joe sketched in his comments, that capacity solution that we have is broad, deep, and experienced. And we think that that gives us a competitive advantage. So frankly, the technology held us back, because it was -- we were going in there, selling technology first, and we weren't really seeking solutions. We were trying to say, here is the solution you need. That never works.

Okay. And then, just real quick with that. With the realigned field sales force, and getting a little bit deeper on that, do you think that that helps with that collaborative approach too? Like even when you have to work with multiple agents across like for one customer?

Yes.

Any time you put more boots on the ground, because that is what this is, you are going to get a better answer.

It makes a lot of sense. Thanks.

Our next question comes from the Anthony Gallo with Wells Fargo.

Anthony.

Thank you. Could you continue along those lines of the biggest differences you have got in that sales organization? I recognize there might be some competitive details you don't want to share. But maybe how the incentives are structured, the number of people -- the main differences between what that looks like today versus, say, one or two years ago?

Well, when I first set up this division of -- a field division of north and south, and you have got to go back because I set it up in 2001 or 2002. I set this up, and the Company at that point was about $800 million, divided either way. Where now, if I look at the US, it's $2.4 million, and the size of the staff really hasn't changed. And so, the thought process was, well, if we further subdivide the United States into a third region, that is going to get me a better revenue answer. It has to, because it is a more concentrated approach. You are not covering the big geographic area.

So what we did is we took -- we promoted one of our internal region guys to that. We are going to be hiring a number of people, and we have basically redrawn the United States. And actually, one of the other changes is we moved -- Canada reports directly up to Pat O'Malley now. And I think that gets a better answer. We changed our Mexican operation, which is a trailer interchange operation to report to Joe, because really it is more operational. And we are also going to basically utilize the Mex -- what we call the Vice President of Mexican sales, because we see opportunity there.

So I think what we are trying to do is put more boots on the ground, all right? In a concentrated area, to basically recruit more agents, and basically help our additional agents create additional opportunities within their customer base.

Is there a number on the sales side that you would care to put on that? In other words, would these guys draw 2% to 3% more volume through the system? Anything there would be helpful.

Anthony, we don't have specific numbers that we will share here. I think that is proprietary. But I will tell you, the other thing that I think is really good about this is we have got a heck of a lot younger. And I think that's going to bode well for Landstar, short-term and long-term.

Is younger better these days?

It depends on who you are talking to.

Sorry, I have got a big birthday coming up. Gentlemen, thank you very much.

Not me. I have a birthday coming up too, and I think older is much better. (Laughter).

Thank you.

Next question comes from David Campbell with Thompson Davis & Company. Your line is open.

Hello, David.

Hi. Good morning, Henry, Jim, and everybody. I just want to make sure I understand how this agent situation works in a period of rising demand. The agent sells, has a customer, and he offers that customer a service at a certain rate, and then he finds out later that it cost him more so his percentage of his commission goes down. And so the next time he gets a -- the customer comes in, he charges him more money. Is that basically how the gross margin recovers?

Yes. Because at a certain point in time, that agent is going to go back at that customer and say, hey, look, it cost more to basically get this purchased transportation. And from his standpoint, his take was therefore less, so he goes back to the customer and says, hey, I need a higher price if you want to move this piece of freight.

Okay. All right. So whatever happened in the fourth quarter, shouldn't keep happening in the first quarter. That is embedded in your assumptions, right?

Well, that depends on how demand picks up and accelerates. I mean, in theory, there is always a catch-up game that you are going to play, as far as price and cost. I mean, for example, if demand keeps picking up every single month, and let's say you paid $0.01 more in this month. All right? So now you try to recover that $0.01 next month, but maybe now the capacity wants $0.02. So you are still a little bit behind.

But over time, you basically -- you get that back. It benefits Landstar more than some other companies because a lot of the other companies might have fixed pricing type things, where we basically don't have that.

Right, right.

All right?

Got it. Okay. Great. Thanks.

Thanks.

The next question comes from Matt Young with Morningstar.

Hello, Matt.

Good morning. You mentioned a little bit here about making capacity a little bit more productive, probably referring to the BCOs. But in the past, you have also talked about looking for ways to build stronger relationships with your broker carrier capacity. Anything specific along those lines you have been doing, perhaps there are opportunities from your efforts to improve buy rates? And, I guess, along those lines, could you clarify if most of the procurement comes from your agent base, or do you have a centralized procurement team, so to speak?

Joe?

Matt, this is Joe. For a while now, a couple years now, we have been going out, calling on carriers, some that are with us and active in hauling freight to make sure they are happy. But also a lot that we believe would make a great fit. And what we try to do is understand what their needs are. Every carrier has head haul lanes, back haul lanes, and opportunities where they can improve their business. And we try to match that up to what opportunities we have coming through the agent network.

And ultimately at the end of the day, it's the agent who deals with the carrier. We are acting as an intermediary to market the totality of the agent opportunity to carriers. And that is how we are growing our carrier count, and that's how we are growing that improved carrier count, where more carriers are actively hauling Landstar freight.

Okay. That makes sense. So you don't have, then, a centralized internal procurement personnel; it is in the hands of the agent?

Yes, it's in the hands of the agent.

Okay, thanks.

Thanks, Matt. We are going to take about four more questions. I know we are a little bit over time, but try to get as many in as we can.

Thank you. Our next question comes from the Justin Yagerman with Deutsche Bank.

Hello, Justin.

Good morning. It's Rob on for Justin.

Hello, Rob, how are you?

Not too bad, Henry. Could you walk us through what the truck load trends were during the quarter? And obviously, it's up about 3% thus far in January.

I think you can probably take that one.

Well, the problem you have got there, if you do a month to month, our fiscal months aren't consistent year-over-year. So I don't think we want to provide that information because Thanksgiving -- just the way our months work, Thanksgiving and Christmas were in our December month this year, when last year Thanksgiving was in November. I know it's hard to understand, but it really creates a non-comparable issue, when you compare month over month. So those are -- it would be misleading if I gave you the growth rates in load count October, November, December over prior year. It is hard to decipher.

For example, we had 20 business days in -- this year in November, but last year was 18. Thanksgiving is generally a week, a slower week. We try to stay away from going month to month. I will tell you that December picked up volumes, there is no question.

I totally understand that. And I guess just getting back to the productivity of the BCO count, it looks like Q4 you moved about 25 loads per overall BCO which is a step up, and despite the headwind from a little bit lower BCO overall count. Can you talk about your expectations for improved productivity, as we look forward, from that fleet?

Well, this is Joe, Rob. I think productivity of the BCO is largely determined by the amount of freight in the system. And as you know, I mean, they are making their own decisions day in and day out, which a number of different things affect their decision, weather being one of them.

So I mean, in theory, and in generally, historically the more quality freight we put in the system, the more loads you will see being hauled by BCOs, as well as broker carriers. And the way we present the quality of freight to them, via the Internet or via their phone, via an app or however they want to look at it, it is really about getting the freight in the system, and putting it in their hands as quickly as we can. And that really is what drives utilization.

Makes sense. Appreciate the time.

Our next question comes from Thom Albrecht with BB&T.

Hello, Thom.

Hello, a real quick question. We know what happened with insurance last year. How confident are you that it can return to that five-year average of around 3.3% of revenues at the BCO line there?

This year, just to point out a little bit of what is going on this year, is we had a couple claims from prior years that had some unfavorable development. If you were to add up the quarterly numbers, and I provided this quarter was $2.6 million unfavorable, we have probably around $9 million or $10 million worth of development -- unfavorable development of prior year claims in the 2013 number.

And that is all based on what Joe referred to as the pool of significant claims. And we have been able to shrink that pool of significant claims, which has more volatility throughout 2013. We shrunk it. So we are feeling a little bit better on the existing pool of claims. But we anticipate -- if you look at any year, it's $40 million to $50 million, and it is at the high end this year. And we are probably -- it's unpredictable. But you definitely hope to have a better year, if we can avoid some of the significant accidents.

Yes, Tom, that's a -- how confident are we? Well, I am always confident in our safety record. What I am not confident in is the legal system. So you just never know with what happens here. But, knock wood, we stay safe. As Joe and Jim alluded to, the number of significant claims have dwindled, and those are the ones that create that volatility -- largely create the volatility in those development of prior year claims. So from that regard, we feel pretty good.

But 3.3% is our five-year average. We are at the high. What are the odds next year we actually finish at the high? I don't know, probably a lot less. All right? But that's -- you know what I mean? I mean, it's hard to say.

So of that $9 million to $10 million, what is a -- I mean, it's never going to be zero. What is a normal? $2 million or $3 million of reserve for prior year developments?

If you look at history, we are actually -- have been mostly favorable to prior years. This is just driven by three or four claims this year that just kept turning bad on us.

Okay. That's helpful. Thank you.

Thanks, Tom.

Our next question comes from Donald Broughton with Avondale Partners.

Good morning, gentlemen.

Donald, I haven't heard from you in a while.

Well, as you know, my colleague, Ryan, was covering you, and he has gone on to the buy-side. And so, we have taken -- I have taken the coverage back over. I appreciate the plug earlier in your conference call. Indeed, we did put out a failure report. Any of our paying buy-side clients want a copy of it, contact your Avondale sales representative. (Laughter).

That said, I know you are well aware of the emission rules change in California as of the beginning of the year. You really can't drive an older than 2008 model truck in and out of the state. Has that affected your BCO operations in any way, shape or form? Are you seeing better rates in and out of California? Are you seeing anything in the marketplace that reflects that change?

Donald, this is Joe. I -- as far as the rates, I think it is a little bit early to tell because the rule just went into effect. But I think we have seen BCOs upgrade and get newer equipment, and we have seen some that have taken a wait and see approach, as you would expect. What we have really encouraged our agents to do going back a year or more, is to make sure that they can identify which BCOs have tractors that are carb compliant, if you will, for California, as well as carriers.

We have thousands of carriers in the system who have -- are in and operating in California, in and out of California. So trying to find the right solution for the customer, but clearly BCOs are aware of it. Some have taken an active position to change it, and others are taking a little bit more wait and see approach, as the used truck market and the credit issue get a little better for them.

Thank you very much.

Thanks, Donald.

This is our last one? Last question.

Thank you. Our final question comes from Cleo Zagrean with Macquarie. Your line is open.

Good morning, and thank you for taking this question. My question is about how you think about repurchases as a contributor to your mid-teen EPS growth rate. And in terms of the other long-term targets that you put out there for gross profit growth and conversion to operating margin, what do you think we should see this year, stack up compared to those long-term goals? Thank you.

We schedule our buybacks about 2% to 5% of the outstanding, based on what we project to be our free cash flow. And obviously, and our goal is always, even for 2014, would be to push 70% of our incremental gross profit through non-operating income.

What do you think would make that -- what gives you confidence about achieving that goal, given the challenges we have seen last year?

Well, I think -- this is Henry. I think we have bridged a lot of those challenges. I don't think you are going to see the same fall off, in top 10 accounts. I think that comes back. I think the top line growth, as indicated by what we just forecasted for the first quarter, and what we are seeing in January. So again, and knowing our model, if I can generate the top line, I have got a margin -- gross profit margin I am going to get. Might be squeezed a little bit, because of some brokerage piece, but that at some point might level off.

And that is going to fall to the bottom line. So I think we have got, coupled with the economic indicators, coupled with the region realignment, I do see Landstar basically generating more revenue. In which case, once we generate that revenue, I believe you are basically going to see some of that stuff fall to the bottom line. And that is really what's going to drive it. And that coupled, then, with the stock repurchase program, gets you to that mid-teen, if you will, EPS growth which is what we are targeting also.

Thank you very much.

Thank you.

And that is it. Any final comments from anybody here? Nope.

Okay, I -- thanks for tuning in. I know it was a little bit longer than we anticipated. We had a lot of information to cover.

But, everybody, have a great rest of the day, and I look forward to talking to everybody on our first quarter, mid-quarter update call. Thanks, again.

Thanks for joining today's conference. That does conclude the call at this time. Please disconnect your lines.