Landstar System, Inc. (NASDAQ:LSTR) Q2 2023 Earnings Conference Call July 27, 2023 8:00 AM ET

Company Participants

Jim Gattoni - President & CEO

Jim Todd - VP & CFO

Joe Beacom - VP, Chief Safety & Operations Officer

Conference Call Participants

Jonathan Chappell - Evercore ISI

Scott Group - Wolfe Research

Jack Atkins - Stephens

Bascome Majors - Susquehanna

Stephanie Moore - Jefferies

Bruce Chan - Stifel Nicolaus

Scott Schneeberger - Oppenheimer

Operator

Good morning, and welcome to Landstar System, Inc.'s Second Quarter Earnings Release Conference Call. All lines will be in a listen-only mode until the formal question-and-answer session. Today's call is being recorded. [Operator Instructions]. Joining us today from Landstar are Jim Gattoni, President and CEO; Jim Todd, Vice President and CFO; Joe Beacom, Vice President and Chief Safety and Operations Officer.

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

Jim Gattoni

Thank you. Good morning, and welcome to Landstar's 2023 Second Quarter Earnings Conference Call. Before we begin, let me read the following statement. The following is a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts are forward-looking statements.

During this conference call, we may make statements that contain forward-looking information that relates to Landstar's business objectives, plans, strategies and expectations. Such information is by nature subject to uncertainties and risks, including, but not limited to, the operational, financial and legal risks detailed in Landstar's Form 10-K for the 2022 fiscal year described in the section Risk Factors and other SEC filings from time to time.

These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking information unless or undertakes no obligation to publicly update or revise any forward-looking information.

Given the current freight environment with soft demand and readily available truck capacity, Landstar performed relatively well on the 2023 second quarter. Before beginning my discussion of our 2023 second quarter financial performance, I want to briefly discuss two big picture items, freight cycles and seasonal trends that provide context to this year's results.

Landstar's revenue performance through the freight cycles that occurred over the past three years, ultimately set the stage for where we are today. Generally in the ordinary course of our business, we experienced spot market down-cycles that drive revenue from peak to trough as well as up-cycles that drive revenue from trough to peak. In both cases, the typical spot market freight cycle from peak to trough or trough to peak occurs over a period of six to eight quarters. And these cycles are typically driven by three main factors: the level of industry demand for freight services; the level of a truck capacity industry -- in the industry; and the differential between industry-wide contract and spot pricing at any given point in time during the cycle.