LSTR
#<UNK>, this is Pat.
No, there were not any major customer wins in the quarter that moved the needle.
Certainly, we are out winning business, but I think it bears repeating from <UNK>'s opening remarks.
It's the model and it's the model executing.
If you think about that market penetration that we have with our $1 million agents, that's 500 plus salespeople out in market that are calling on customers face to face, fundamentally different than a call center environment.
I think what you are seeing is customers are more welcoming to sales calls.
I think there's concerns about where does capacity line up in 2017.
And so I think we have been in the right place at the right time and executing around the diversification of the model.
I was looking for my notes there.
We ---+ yes, Q2, the spend was $2 million, and that compares to about $0.5 million last year in Q3.
From a comparative stance, about $0.5 million last year, almost $2 million this year.
We are going to kind of continue on this pace and maybe increase this pace through 2017.
I think what we said for this year, for 2016, we expect it to be within a range of $0.5 to $0.10 impact on EPS.
Year to date, I think we are at $0.7 and I expect we will probably be at that higher end, $0.10, when we get through the year.
Next year, we have not finalized next year yet, but some of the preliminary numbers I'm looking at.
Hopefully we are at launch and we're doing a lot of training, and stuff like that and there's some cost in there.
We are looking ---+ we probably will be higher than that $0.10, but I don't want to commit to a number right now until we finalize what we are looking at for next year's plan.
I don't believe any of it is hurricane related.
The most I heard is we hauled 25 loads or something.
I don't think that is going to be anything significant in the quarter.
I don't think that's the sequential volume trend.
I think we saw those trends ---+ even before the hurricane hit, we were looking at trends that looked better than the seasonal pattern from September to October.
Again, when I touch on the better seasonal pattern, it's hard to put your hands around it because it's slightly better.
We are not talking about a huge breakout where things are getting better.
It's just a nice sign to see because we hadn't had that for awhile.
Again, it's broad based.
It's hard to say where it's coming from.
Again, it's good.
We saw the flatbed volumes increase over the prior year based on ---+ taking out those automotive loads from last year and the 6% growth in van volumes that we got through the third quarter.
And that just continued through October, or at least for the first three weeks of October.
It's hard to put our hands on what's driving it.
I think we have a lot of demand on our drop-and-hook operations on our trailers.
You can see ---+ (technical difficulty) third quarter.
And I think we agreed it was 6% in the second quarter.
So we are seeing acceleration of growth on our van equipment, so it's a combination of everything.
I think there's good execution.
Pat has done a good job of bringing new agents in.
I think we are over $110 million in new agent revenue for the first nine months of the year, and our target is usually $100 million and so we're beating that.
I think the combination of everything that's going on, whether it's our drop-and-hook operations, a little bit better flatbed environment for us, it feels a little better.
It's still flat to last year, but that's good.
Then the execution on some of the new agents coming onboard.
The tax rate we are modeling the 38.2%.
That's our effective rate we have had over the years.
As far as the share repurchases, we are going to do what we normally do.
We are going to watch the share price and let history be your guide there.
We modeled about 1 million shares.
Year to date, we are at 773,000 I do believe, or $50 million, so I would expect something similar to that run rate.
2017 probably the same number of shares.
And we are probably going to budget for 1 million shares.
<UNK>, this is Pat.
No, there is not a lot of optimism in that segment of the business.
Morning.
Yes, <UNK>, this is <UNK>.
About 67% of our BCO fleet is ELD compliant as we speak.
So we don't really anticipate much, if any, impact as we continue to roll out ELDs prior to the mandate with the BCO fleet next year.
Well, if the number ---+ if the amount of revenue leans more towards brokerage because there's fewer BCOs, is that your question, <UNK>.
I think the best way, <UNK>, for you to ---+ take a look at the last five years of the percentage of contribution from BCO and the percentage of contribution from brokerage, and you can see the trend of what happens to our gross margin there and then you could probably model it to show ---+ bring BCO down and you should be able to model what your gross profit is.
We don't specifically get into the margins on BCO or brokerage.
We kind of talk about it as a whole and we don't really discuss our margins on brokerage or BCO.
I think if you take a look at the historical trends, you can make some assumptions.
You can probably get pretty close to what that margin is going to do if you reduce or increase BCO as a percent of the total.
I would like to say, yes.
At this point I am being told, yes.
But it's slow rollout.
In our business model, we are dealing with over 1,100 independent business owners being our agents.
We can't just say here it is, use it.
It's almost where you're rolling out ---+ at the very beginning, we're rolling out with very few agents and then we accelerate the growth rate.
It's going to be a rollout that takes more than a year.
We are thinking two years by the time ---+ two to three years we get every agent on it as we slowly roll it out.
In March at our agent convention, we had an agent stand up and he described basically his business process.
It is the one agent that's utilizing the system today, but he's basically using it with one customer.
Where he was doing a lot of manual type interactions between his carriers and the customer, the system we put in place now is a lot of automated, a lot of EDI, a lot of electronic communications, and our goal really is to provide to make sure that the agents have tools that they can generate say let's say $2 million of revenue.
At that point, they have to add an employee, and we'd like it push that to $3 million.
Our goal is to build efficiencies out there and one of his comments was that before we rolled out this tool, he was probably about $1 million ---+ for every $1 million he had that drop in an employee, and now he looks like it's more of a $5 million per employee.
Now there's ---+ you got to consider his business was very manual and went very automated.
We are not going to see that kind of outcome with every agent, but he's our only example.
We would like to see an agent be able to do anywhere maybe $3 million of freight with a single employee.
That's kind of our goal and our target, and we'll see out that rolls out as we start rolling it out to the agent base.
There's more automation to it, a little bit more simplification to the process.
That's what we are shooting for.
<UNK>, this is <UNK>.
It really hasn't to date.
I mean, the interest from owner/operators looking to come to Landstar is at a very high level, and we continue to again, pretty flattish, from a growth rate standpoint, but the interest is very high.
We are not seeing any particular signs of increased competition that we can't meet.
We think we are really the home of owner/operators, and being a completely owner/operator non-asset based fleet, I think has its advantages in many of the programs and the way we distribute freight and all those kinds of things I think went out at the end of the day against most of the asset-based models who were trying to be both.
Good morning.
I think if you look quarter over quarter, we did have a slight increase in our PT rate.
The brokerage buy rate was up about 48 basis points.
[Good point, <UNK>].
Yes, yes, yes.
<UNK>, this is Pat.
Again, the customer base that we are attracting is broad based, and if you just think about the business model and the natural diversification that the agent model kind of brings to the table, it's not surprising that it's very broad based.
As it relates to contractual versus spot pricing, clearly in some of these accounts there is contracted pricing.
We feel very comfortable with the pricing that we have in those situations, but in some of it, it's also spot business.
So again, it's broad based.
It's multiple accounts.
It's many industries, and it's just a reflection of the Landstar business model.
That is correct.
Hey, <UNK>.
This is <UNK>.
In the third quarter, the year-over-year decrease was about $2.5 million.
It should be about $1.5 million in the fourth quarter.
Thank you, Danica.
I look forward to speaking with you again on our 2016 year end earnings conference call currently scheduled for February 2, 2017.
Have a nice day.
