Landstar System Inc (NASDAQ:LSTR) Q2 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 08:00 am ET

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Landstar System Inc (NASDAQ:LSTR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to Landstar System Incorporated, Second Quarter 2020 Earnings Release Conference Call. [Operator Instructions]. If you have any objections, you may disconnect at this time. Joining us today from Landstar are Jim Gattoni, President and CEO; Kevin Stout, Vice President and CFO; Rob Brasher, Vice President and Chief Commercial Officer; Joe Beacom, Vice President and Chief Safety and Operations Officer.

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

Executive
Jim B. Gattoni

Thank you, Missy. 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 2019 fiscal year, described in the section Risk Factors and other SEC filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated.

Investors should not place undue reliance on such forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information.

Through the end of Landstar's first quarter, the COVID-19 pandemic began to have a significant adverse impact on the US economy. The rapid decline in industrial output that began in mid-March accelerated into April, and carried through most of the second quarter. Although conditions in the industrial markets Landstar serves improved somewhat in June, the 2020 second quarter experienced the most significant and rapid reduction of US industrial output in decades.

The Company's truckload volume began to experience the adverse economic impact caused by the pandemic in late March when state and local governments began to issue shelter in place mandates and manufacturing facility started to close. Several weeks later, as truck capacity began to loosen due to the severe reduction in demand, revenue per load on loads hauled via truck began to rapidly deteriorate.

These conditions persisted through April, and most of May, followed by relative volume and pricing improvement in June that has continued into the first few weeks of July. At the beginning of the crisis, the response to the pandemic generated a high demand for perishable consumer goods and much needed medical supplies, while the US manufacturing sector began closing facilities and furloughing workers. The speed at which the freight environment deteriorated at the end of the first quarter was like nothing experienced in the history of the Company.

In the second week of April, Landstar's dispatched truckload volume reached a peak decrease of almost 27% below the same week of 2019, yet only four weeks prior it was actually 1% above the comparable prior year week. A few weeks later, the downturn in revenue