Landstar System, Inc. (LSTR) Earnings Call Transcript & Summary

Well, great, and good morning, everyone. I think we're going to go ahead and get started with the 11:20 fireside chat that we have. I'm joined by Jim Gattoni, who is the President and CEO of Landstar System; as well as Jim Applegate, who's the Executive Vice President of Business Intelligence and Strategy at Landstar. I was looking the other -- last week before we -- I was doing some preparation for the call here today. Jim took over as the CEO in January of 2015. Since that time, the stock is up 165%. I think that, that can be attributable to only one thing, and that's the hope for an infrastructure bill. Or it can be a good business model run by a good management team. So I appreciate both Jims taking the time to join us here today. There is a link for anybody who has questions, should be below the presentation or the video screen, and you can go ahead and ping those to me, and we can work those in. But with that, we'll go ahead and get started.

So Jim, I had a couple of longer-term questions that I wanted to ask, but you saw a little bit of thunder and you put out an 8-K on Friday night. The good thing is after a 3-day week, and I forgot everything that was in the 8-K. So if you want to, maybe I think it could be helpful just to talk a little bit about what you had in the 8-K as far as what you're seeing here in the second quarter. Obviously, trends are coming in a little bit stronger, both on the revenue per load and on the volume side. So guiding now to be slightly above the previous guidance that you had given. So maybe just a little bit of color of what you've seen in the first couple of months here in the third -- or excuse me, in the second quarter and how that's trending versus your expectations?

Yes. We -- our updated guidance is really, Todd, that -- so I could speak freely here and just -- and put it out before the market open today. But we basically looked at the first 7 weeks trends through -- basically through last week and looked at the trends of what's going on with our truck volumes and our truck rates and felt that an upgrade to our guidance was kind of appropriate. If you look back when we came out at the end of April, and we were coming up with our guidance, we put rate -- and we didn't talk year-over-year because it's kind of silly in the second quarter to talk the year-over-year because of the collapse from the pandemic in the 2020 second quarter. So we were talking sequential. And what we were saying and what we were seeing -- or what we were estimating at the time is that our revenue per lot on truck load would increase in a 4% to 6% range over the first quarter of 2021. And then the number of loads would do the same thing. 4% to 6% and over the 2021 first quarter. And if we talk about revenue per load, it was really -- we saw the revenue per load increase almost 11% from February to March, very unusual climb, right? So in our minds, it's like most people think, does this stop? Are we at a level now where it might slow down? And seasonally, you wouldn't see the increase coming into the second quarter. Typically maybe a 1% increase historically from the first to second quarter. So we said, maybe it will be flat. So we took that March revenue per load. We took it through the quarter and said, "Okay, if we are flat on a revenue per load coming out of March, we would exceed the first quarter by 4% to 6% for the quarter because of that elevated March number." And on the volume side, we kind of looked at historical trends, didn't see a lot of reason why it would be a lot different from historical trends, which are pretty much 6% to 7% if you look back 5 years of the growth in load volume. So maybe we're a little conservative on the 4% to 6% growth over the first quarter on a volume standpoint because history would say 6% to 7%. And we're looking more like 11% right now through the first 7 weeks of May. And on the price side, we're somewhere 7% to 9% over the -- through the first several weeks of May over the first quarter. So I think it was appropriate to elevate the -- our guidance. And if you do the math there, you would say that, "Well, if you're about 11% on volumes to say that's 5% over the high end." And if you're 1% or 2% of our price, that's 1% or 2%. So you'd say we're about 7% over on our revenue side. So how do you get to slightly -- and I think we're just using slightly because on $1.450 billion at 6% or 7% is slight. And then you look at our EPS, our high-end was $2.30 million, and we're saying slightly above that. Now the reason we're not saying the growth in the EPS might not match up with the growth in the revenue from a percentage standpoint because the -- a lot of the growth has come for third-party trucks, which has a lower gross profit margin. So -- and with that, as we grow, we're going to end up with a little bit more variable compensation cost. So that's how we end up with a slight on the EPS with -- you're maybe talking a $60 million to $70 million beat on the revenue side.

Yes. I know. And all that makes sense. I mean, with the tough comps that you had in March and how you set up the guidance, and I remember that from the call kind of being a little bit conservative. So it sounds like you're seeing good seasonality off of a difficult comp as we move into the second quarter. But it also sounds like you're seeing strength in both volume and price, and so as you kind of think about those two, is that -- and I know that you typically take either a conservative or realistic or maybe even a little bit of a pessimistic view towards how things are going to play out. But with the strength that you're seeing in volume right now, how does that make you feel about trends as you move into the back half of the year and kind of the sustainability of some of the strength that we're seeing right now in the marketplace?

Well, let's start off with a pessimistic view.

Sure.

But look, we're going to have tough comps, right? This stuff started in August, and it was very strong. And I, still in the back of my mind somewhere, believe that the consumer spend, which has really helped drive the growth start in August will slowly subside as people go out. The theory of you going to switch from buying goods to buying services, whether it's entertainment, going out to dinner or stuff like that. So is there going to be a transition of this money flow out of the goods side? The Amazon packages and the durables and stuff like the consumer durables into more of an entertainment, more service and travel, restaurant-type stuff. So I still believe that will happen to some degree, but not to the extent I thought it was back 4 months ago when I thought that was going to happen because the consumer demand is still very elevated for us. And I don't see any indication that's going to slow down. One of the things I thought was going to slow down was the e-commerce businesses where we haul full truckload freight for basically the parcel carriers, whether it's FedEx or UPS. And that was very strong start in August last year, and it usually doesn't really start-up until end of October-November. And I really anticipated a little bit that to slow down as the consumer demand coming through those parcel carriers was going to kind of subside a little bit into the end of the first quarter and into April and May, and it hasn't. So the consumer strength is still there. I still think you're hearing about appliances taking 6 to 8 weeks to get and stuff like that. So I think the demand is going to continue to better than I thought it was back in January when we did our year-end call. And I think on the supply side, there's some things I didn't anticipate is really the -- I just feels like there's a lack of access to available drivers. I still think they're sitting on the sideline. I didn't anticipate another stimulus package. I didn't anticipate another child credit. Pretty soon, we're going to start cutting checks on July 15. So if you can get that child credit, but work in a lesser paying job, maybe that's keeping you out of a truck. So I think we got a supply side dynamic that's going to extend into next year, which I didn't really anticipate a couple of those things that are happening now when I was sitting here in January. And I think the consumer demand is going to continue based on not just what we're seeing in our model and what we're seeing come through our system, but we're hearing from shippers. I think one of the things that we were hearing, the one thing where we really got a good hook into -- not a hook, but where we're really more sticking to a customer is when we provide trailing equipment. And I don't recall a year where we had shippers talking to us in January and February about trailers for the back half of the year, right? So there's concern out there that when this thing -- when and if this takes up from the e-commerce coming into peak at the end of the year, that there's not going to be enough trailing equipment out there. So we're getting it from the shipper side with concern already about what it's going to look like a peak as we head into the back half. And again, on the available driver side, it just doesn't feel like there's trucks coming back in the market. Remember, the other thing that was going on is truck orders were elevated. You saw that coming into the fall in January. We had elevated truck orders. But now with the chip issues and the manufacturing, not being -- running full throttle, those deliveries are until next year, too. So those factors have now got me thinking, I think, we're still going to have a -- I think this will continue through the rest of the year only with a tough comp as -- clearly, the second quarter comp is easy. But in the third and fourth quarter, I think the comps get a little tougher. But I still think we're going to continue through the year. And if we're going to cycle back, I think it's next year, it's not this year.

You sound like an optimistic pessimist at this point.

Yes. I throw the pessimist stuff in there to disclaim on my optimism.

One last kind of question on the near-term, and then I want to shift over. I've got a bunch of things kind of on the business in longer term. But it's interesting to hear all of your comments about e-commerce and kind of the trailer pool. And I think traditionally, we think about you having -- and I know that you do more weighting towards the industrial end markets and the specialized in the flatbed. Can you talk about the differences between those end markets? And it really seems like the strength in the e-commerce and the van side has been very strong recently. Where is flatbed? And where are the industrial markets relative to maybe a normalized level? And how are you seeing the improvements or lack of improvement in those markets relative to the van side?

Yes. Clearly, the van has been the driver here ever since August. The flatbed was soft pretty much once the pandemic hit and it stayed soft through the year. But if you look at industrial production in the U.S., it was pretty much negative growth almost through the end of the year. I think we saw a tick up a little bit positive coming into December. So you really rely -- if you go back in the history of Landstar, we've relied a lot on U.S. manufacturing, right? That's been our niche. But I think over the years, it goes probably goes back 4, 5 maybe a little further. We've slowly got into the -- a little bit more on the consumer side only because that's what naturally happens when manufacturing is slow. Our agents eat what they kill. So they actually have to get off the couch and sell further into the market. When they see opportunities within the consumer side, that's what they do. And I think we're really seeing that this year. We saw it in 2018. And in this kind of market dynamic, when manufacturing is soft, it provides the agents an opportunity to go build relationships with the consumer-driven organizations, right? Whether it's the Home Depots and the Lowe's and the Walmarts are now a bigger picture, a bigger piece of our market than it was 5 or 10 years ago just because the demand is coming from that side. On the manufacturing side, clearly, a negative or a softening impact on our flatbed business. So real strength on the van side, most of what's driving it. And then on the flatbed side, it's showing improvement. How about that? We've seen growth there coming in fourth quarter, year-over-year, grew a little bit, but it was mostly on the rate with a little bit of volume, similar in the first quarter, but nothing near the van side. So I think there's opportunity going forward if we see consumer softness if the manufacturing sector picks up. You would see maybe the flatbed coming back with a little bit of pullback in van. Am I going to tell you that the manufacturing sector will drive the growth that the consumer sector is driving right now? I don't think there's a chance for how strong this has been on the consumer side. But any kind of future offset or future decline in consumer demand, which people like -- they're talking about maybe next year, you might start seeing that. I think the manufacturer sector will kick back in and get us some of that flatbed business, an additional van business. But I don't think it would be as strong as the consumer demand is right now. So I expect some offset from the manufacturing sector. But really the eyes on the consumer sector and what's going to drive that going forward? Because I anticipate strength coming back in the manufacturing side.

Yes. No, that makes sense. And it seems like there's maybe a little bit of a trade-off between the two, and we definitely have seen that in the recent results. So I was joking around a little bit at kind of the intro with the performance in the stock, but I do think, Jim, one of the things that's been overlooked is your organization has done a very good job in growing volumes over the last 4 or 5 years. The math that we come up with is the compounded annual growth rate from volumes has been mid-single digits, which I think is ahead of where the industry is, certainly ahead of where some of your peers are. What do you think that, that's attributable to in general? I mean, is that the shift in kind of taking more van freight? Is that some of the technology investments that you've done? How do you think about your ability to be successful in growing volumes? And as you look out, is that something that's sustainable going forward?

Yes. Todd, as you know, we're a baby-step company, right? We do a lot of things around the edges. We don't jump in big anywhere. And I think it's everything you would say. It's look, the -- we attract individual-owner operators, one truck at a time, and we do this stuff. And I think our whole goal in life here is to grow volume. We don't necessarily have a lot of control over the spot market pricing. So our team has been pushed for years to focus on volume necessarily because we can't do a lot about price. It's really hard to measure where it comes from when you build an organization, the way we've built it, and the baby steps and the small steps and the ladder. Clearly, I'd like to take a lot of credit for the technology we put out there over the last 4 or 5 years with a new -- brand new -- we didn't have visibility in tracking. We didn't have a pricing tool for the agents until 2 years ago. All these things that we're doing for technology, I think helps retain the trucks. So once they're here, I think we improve retention. I hope it builds -- our new TMS and visibility now that's automated as opposed to where agents used to have employees to call trucks to find out where their freight is, I think that builds efficiencies within the agent's offices and lets them gain more throughput, more loads per employee at that level, right? So I think it's all these little things we do to drive efficiencies within the agent family and to retain the trucks and access third party capacity, too, and giving them the tools. So I think it's all those little things that we do to just keep pushing that rock up the hill, right, and focus on that. Along with the industry trends too and I just think the agents execute very well when they see opportunities. They chase the opportunities, right? The consumer demand is skyrocketing. That's where they go, right? So I think it's a little bit of the model, and it's all the stuff we do to support it. So it's hard to just really put your finger on it and the superior management team. I know you...

That's right. We mentioned that in the interim.

I know you wanted to, but the strength of the manage -- I'm just kidding there. But you think of us as the baby steps. And every time you ask about what's going on here and there, you'll hear us talk about diversification, all the things we do. And it's not just because we've 25,000 customers. We're diversified loads bigger than 3%. It's because we attack that market that way. It's baby steps of everything we do, and we attack the small customers, and it just all adds up over time.

Well, and Jim, maybe to that point -- and Jim Applegate, maybe if you've got some thoughts to chime in. Obviously, I mean, there's a lot of competition in the market around all of these things. And so is it something unique to your business model where you've had the success in the history of basically having the business model to be able to build this, and people who are coming into the space and trying to emulate and kind of replicate this business model. What have been the biggest challenges that they've had? Or why haven't we seen more people have success in developing a similar model?

Well, I think when you look at us, we've been doing this for 30 years, right? And some of these, what you call the digital freight program, stuff like that, they're kind of new to it. And when they pitch their -- all their pitch is describing stuff we've been doing forever, right? But we have the people who have been doing it, too, right? So everybody in this organization has got a 25-year plaque on their wall. It's -- we've all been here a long time. We know what levers to push, and we know what the shippers want, we know what the carriers want. And it's kind of the -- you take that technology, but you've got a full management team standing behind it to know what drives the growth, right? And I don't want to discount the value that the digital freight brokers bring. There's a place for them. You don't win with technology here. I just don't think that's the winning play. Anybody can build an app. It's how you execute using it. And I think our agents know how to execute it. Our employees know how to execute it. And then our carriers know how to use the technology we have. I don't think there's anything different in the marketplace than we have or anything better than what we have on the technology side. But Jim could probably comment on that, too, because he's deeply involved. He's my business intelligence strategy guy, and he's been doing it since end of '13, beginning of '14. He follows the industry, And he's also -- he's the intermediary between my IT team and my business side. He drives the organization forward with what we need to make sure we're leading edge on when it comes to what the carriers are using and what the customers want.

Yes. And Todd, from your question standpoint, I think what makes Landstar truly unique, and Jim touched on it, right? We're doing all the little things. We've looked at the shipment life cycle, and we're looking at automating that shipment life cycle, and we're hitting a lot of things that are really kind of core to making sure that we're giving efficiencies, attracting customers, making life easier for carriers to do business with Landstar. Where we're at an advantage over some of the other competition that's out there in the space trying to do the same thing, is our entrepreneurs. And we're engaging them into the process. We're engaging our agents into the process. We're engaging our BCOs into the process. We've got our corporate people supporting that whole process and just really making sure that we're hitting the market the right way, and they're executing with those tools. And not a lot of other companies can actually kind of reach the niches like we do and really be personally vested from an entrepreneurial standpoint. You look at our agents, you give them a tool and you explain to them, "Hey, this is going to save you money. This is going to make it more attractive to your customers. This is going to help you attract capacity." And they're the first to really jump in and say, "Hey, you know what, yes, this is great. Oh, and by the way, you can do these additional things and make it that much better for us." And I really think that, that type of culture really helps drive better development and execution when you come out there with the technology. And I think with a lot of these other kind of company store-type models or even platform models that really don't have the breadth of customers that we service and really active and engaged and motivated entrepreneurs that are really kind of helping drive this adoption. I think they're at a disadvantage. I think we're -- our model really helps us accelerate that technology.

Yes. No. And I mean it makes sense, and we see it in the numbers. We see it in the results. And obviously, we see in the performance of the stock. So Jim, maybe just a comment on gross margins because it's another topic within the industry. I know your business model is a little bit unique relative to some of the pure transactional players. But your margins have been relatively consistent, kind of 14.5% to 15.5% and haven't really changed too much over time. So how do you think about kind of gross margins, the sustainability of those going forward? Any risk around the splits that you have to pay to the BCOs or the agents? And it's that kind of the right level that the margins need to be at to support what the agents are doing, what the BCOs are doing and ultimately what you're providing to them from a support standpoint?

Yes. As it relates to the splits, whether it be the BCOs or the agents, those have been pretty steady for the 30 years we've been doing this, right? We pay a market rate. And if you think about our model, they get paid off for their performance, right? The -- if they can charge more for a load, they make more money, right? They kind of control their own destiny. So I think when you talk about the rates we provide, it's kind of -- if a BCO wants to make more money, find more -- find a load that gets him where he wants to be at a higher price. It's those kind of things. So we haven't touched those splits in quite a long time. Now if you go back when I first took this job or even before that -- as the CEO and even before that, everybody's talking about market pressure with the digital freight brokers coming in. That was even talked back in 2010 that XPO is going to eat everybody's lunch and come in undercut rates and grow their brokerage business in the U.S. Well, where did that go? They went international and their best operating is LTL. Not that they're not doing a good job at it, but they didn't really crack the U.S. brokerage market as much as people were talking about. So no, we haven't seen market compression due to new entrants into the market. It's still more of a cycle trend than it is anything to do with new entrants. So when we see our margin expand or contract, oftentimes, it's mixed because we have 50% of our business on a fixed margin, which is the BCO business, plus a part of a third-party truck. So we do have stable margins because as rates to the shipper go up, we just keep our 17% or 20%, right? So you make more money on a per-load basis. But what we do is we do see contraction. I'll tell you right now, it looks like our PT rates of third-party truck is a little bit higher now than they were in the first quarter. We anticipated they go up a little bit. I think they went up a little bit more. So we're feeling a little compression on that variable business side. And when we talk about our margins being 14.5% to 15.5%, I think we're going to dip below 14.5% maybe in the second quarter and maybe third and fourth quarter. And it's really more of a mix because we're going to beat the second quarter on revenue that's getting hauled by third-party trucks. And the margins on that are lower than the margins on our BCO. So it's really just the way the model is built. And it's not really a market compression more than a mix thing. So that's what we anticipate. If you look at 2018, we dip below 14.5%. And it's really about what percentage of the revenue comes from the third-party trucks. Because the margin there is less. And if we could quickly go over it, it's -- you just say 17% on a BCO gross profit margin where you're talking, if the industry on third-party trucks is 15%. Well, we share half and out with the agent, so we get 7.5%, right? So as more of that 7.5% business comes on top of the model, the margin gets compressed, right? But there's not a lot of infrastructure cost underneath gross profit for that third-party truck business. So we're fine with what happens on the gross margin. The key is to just keep as much as that you can as it gets down to operating income. Just keep pushing through the gross profit on that third-party trucks straight through to operating income.

Yes. It sounds like it's mix in cyclicality and when the BCOs are running full, and there's not a lot of available miles for the BCOs, then you have more of the third-party step in and its indication that the market is tight, and that's a very high incremental margin. I'm guessing there's not a lot of cost with it so...

Exactly.

Just same sort of kind of thought process about the operating margins. You've targeted that 50% for a period of time. Yes, you've been there for a handful of quarters recently. That's currently where you're running. Is that the right target range to have out there? And I'm obviously not expecting to provide a big update here on the fire side. But how do we think about the fact that the target has been 50%, you're at the low 50%. You haven't seen a lot of cost inflation other than maybe insurance. So how do you flow through kind of the longer-term targets with where you're running near term?

Yes. I don't remember our exact first number, but I thought -- first quarter number, I think it was 54.6% and...

It's give or take.

I think it's give or take, 0.05, but I don't know. But Todd, you know the first quarter seasonally is usually softer for us. So we would never have thought that we'd have a first quarter over 50%. Not never, but I think it would have taken us 3 to 5 years. I think we talked about when do you get to that 50% on a full year basis. Now I used to talk about the first quarter dragging down the rest of the quarters because we had a couple that -- a couple of quarters over 50%. So from an annual basis, that 54.6% in the first quarter is looking pretty good. That will be at 50% for the year. I have not come up with a new goal, but I was kind of surprised that we hit it because I think it was in January, I was talking about 3 to 5 years out. And with that kind of gross profit growth, you know the model. We don't have the -- we don't add a lot of infrastructure cost below the gross private line for this kind of growth. We probably have to add some payables and receivables people but that's the extent of the growth in the underneath. So I don't necessarily have a new target. I think maybe in -- let's get through this year, and we'll start talking about our next goal. My goal of 50%, clearly, we're achieving it. I anticipate we'll achieve it for the full year of 2021, and we'll put a new target on it. We don't have a lot of incremental spend coming across it, I think. I think we talked about we are going to see a little more depreciation on the hardware-software relates to IT as we started rolling out some of the technologies we've finally implemented. The depreciation will start there. But again, I don't expect to see the infrastructure cost grow a lot and, therefore, any incremental dollar of gross profit, I still anticipate we can put 70% of that through, which is naturally to grow that gross profit margin. You're pushing 70% down to the bottom if you're 50% target, it's achievable. And I think that's still our goal, is the 70%. Where does that operating margin end up? I'll let you know after we get through this year.

Yes. No, and that makes a lot of sense. I mean basically, if the goal is still 70%, if there's not a lot of cost inflation that changed that. Some of the math comes down to what's the top line look like. And so how much of this is cyclical or seasonal or whatever, and so we can kind of back into that. So we've got a couple of minutes remaining. I do have one question that came through on the chat, and it's talking about just basically what we were talking about earlier with the mix of business on the flatbed side. I was joking around about the potential for infrastructure, which we've talked about for 15 or 20 years. But -- so the question is, "If there ever is an elusive infrastructure build that's passed, just given where the market is and how tight the market is, how would you expect your ability to kind of react to that? And what sort of potential benefit could you see from infrastructure?"

Yes. I think from a reaction standpoint, we are very good at access and capacity. I mean, we just can. I mean, it's just what we do. We're -- we used to be the largest flatbed carrier in the country, but Daseke compiled a whole bunch of companies together so they could be bigger than us. And congratulations to them for being a top line revenue growth bigger than we are in flatbed. But we are still one of the largest flatbed carriers in the country. And it doesn't -- and our infrastructure bill doesn't necessarily have to come to us, right? We don't have to be the ones hauling for the U.S. government or whoever it is to do the infrastructure, it's just a matter of tightening up the flatbed market. And if that happens, rates come up and then volumes come up outside of the infrastructure. It's good for the transportation industry overall and good for Landstar if they do an infrastructure bill. And being one of the largest coordinators of flatbed capacity in the country, it would be very good for us. As they -- if they do roads, bridges and the stuff that really demands that kind of equipment. I think it would be very good for us.

Yes. No, that makes sense. And Jim, I guess just in the last few minutes or so, your analogy, your comment around being a baby step company. It's a great comment, and we've seen that. But ultimately, as you put the baby steps together, you start to walk, you start to run. And I think that, that's been some of the success over the past several years. As you look out over the next -- if it's 3 years or 5 years, what should our expectations be? What are you hoping to accomplish? How do you -- how should we think about the business? Are there going to be any big structural changes that come into place? Or is it going to be more of kind of the gradual improvement that you've laid out? And how do you think about your next 5 years in the CEO seat?

Well, I'd like to say that we're going to continue the baby steps. And one thing we're doing that's a little bit different, we started last year as we open up a company store, which we're -- in Landstar speak is, we set up our own little agency, right? We want to live the life of an agent and we also want to take freight that the agents may not necessarily want, right? If there's dedicated lane business that's running 5%, and we can manage carriers in that environment, it's -- and everything is automated, where you just -- you're floating receivable, and that's all you're doing. The agents tend to walk from that a little bit because a split in 5% really doesn't pay their staff or really just pay their computer bill. So we've got this little incubator. And I think in 3 to 5 years, we're going to see where that can go. So we are doing some a little bit different. But again, it's a baby step, right, but it's all the things we talk about. Do I see a big splash in anything here in this organization from an acquisition standpoint? No. Because anything in the U.S. is going to disrupt my agent family. You don't want to buy a company that has the same customers that my agents are running or the same shippers, so you run into that. There's -- it's a -- where I'm going to -- my plan is just to continue to push the technology, get the execution of our technology and continue these focus groups that we started 4, 5 years ago and continue to drive that out. Like we -- it's funny, we'll go through this thing called book-it-now, right? This book-it-now capability that's really being pitched by a lot of the carriers and a lot of -- where the truck driver can just push a button and he owns the load, right? My agents -- Landstar's agents tend to shy away from that. They want to get a call from the truck, right? Our guys still live in a world of phone calls. They don't think it's a big deal to take one. It doesn't save them time and money. They want to talk to the truck. They want to recruit trucks. They want to make sure that truck knows what he's doing, when he goes to load, and they want to have that truck come back and haul freight for them next time, right? So the automation for us on a book-it-now capability for a truck to just push button, it's not being used, right? We have it. So we're moving that over the Landstar Blue, so we can use it from a company store perspective and get some traction with it. Those are the kind of things we deal with. You can build all the technology you want and you try and influence its use. But in our world, phone calls are important, and both the trucks and the ages still believe it's true. So I continue -- we will have the tools for when the agents are ready-to-use them, and that's the next 3 to 5 years. We're ready now for them to jump in and use some of these tools. They're using a lot of these, the pricing tool. They're using visibility. Book-it-now is a good example of what they're not embracing. We built it, it's ready, but we'll just move it over to the company store and get traction there. And then show them again, hey -- a year from now ago and say, "Hey, you can do this, it will work for you." So that's how we do things. And we'll continue to push this rock up the hill in the next 3 to 5 years. I mean, that's the plan. And that's kind of the direction we're going and continue to recruit more BCOs. The key is, I'd like to see more BCOs in here. I think we love the model the way it works and those dedicated capacity, really gives us an advantage.

Yes. No, all of that makes sense. Well, guys, we're a couple of minutes past the time. Great comments. Appreciate the update, both on the market, the longer-term strategy. It's great to catch up with you both, and we'll talk to you both soon. Thanks so much.

Bye. Take care.

Okay. Thanks, guys.