Frank Lonegro: Hi, Tom. Great to hear from you again as well. I think the first impression I would give you on the agents and the BCOs, I mean, these folks are awesome. They’re out there scratching every day on the agent side to go sell the extra load of freight and the BCOs to haul an extra load for us. So it’s been great to see just the resiliency of the folks out there. And the fact that they’re all commission based on the agent side and load based on the BCO side. So these are folks who are putting dinner on the table by load by load. So it’s really important to know. They’re not on salary and these folks are out there fighting every day for us. In terms of the Million Dollar Agent count, I mean it was down year-over-year just because of the rate environment.
I think as the rates inflect, that number will go up on a full year or full year type basis. Certainly, the exit rate if the rates we’ll operate with us the exit rate will be higher this year than it was at the end of 2023. On the BCOs, one of the things that’s really important and Joe can get into the numbers. But even though the BCO count effectively declined in line with where volumes went, the actual productivity of the BCOs went up. They hold more loads per person than they were doing last year. So that tells us that they’re out there scratching for every load. But Joe fill in again.
Joe Beacom: Yes, Tom. So in the first quarter, net declines were about 10% better than the fourth quarter. So we’re seeing some improvement there. And to Frank’s point, utilization loads per truck per week for BCOs was up 3% in the first quarter. That was flat in January, 6% better in February and then 4% better in March. So we kind of like the trend that we’re seeing there. And that continues to, I think, move in the right direction through April. And again, it is a function of just loading opportunities and rate. And I think we’ll see the BCO come back as kind of the volumes and rates come back in line.
Thomas Wadewitz: Do you think that you’ll see good responsiveness on that? Or would you — do you think it’s going to be tougher to add BCOs as you — if you have kind of gradual improvement in rates?
Joe Beacom: I think they’ll bounce back, and our history really speaks to that. If you look back in years where we’ve kind of come out of a trough, in 2017 going into 2018, we added 250 trucks in 2017. We added over 900 in 2018. We added — we were down 130 or so in the first quarter of 2020, but we added a net 748 for the year, added a bunch — 870 in 2021. So I think the model speaks to the fact that when there’s opportunity, these guys really flock to Landstar. And I think it’s not different now. I just think we’re waiting for that inflection point for that to happen. And I think as capacity comes out of the market and things turn, I mean, I think we’re still a home for owner-operators who want to have the freedom to make decisions and provide for themselves.
I just — it’s going to be a gradual thing, in my opinion, as rates and volumes come back. They’ll come back. There’s not a systemic issue. I don’t think — it’s more about when and at what pace it happens. And as we’re as anxious as anybody to see that happen quickly.
Thomas Wadewitz: Yes. Okay. So it’s about kind of cycle duration and profile, not structural change. Okay. Thank you for the time. Appreciate it.
Frank Lonegro: Thanks, Tom.
Operator: Thank you. We will move now to the next question coming from the line of Jon Chappell of Evercore. Your line is now open.
Jonathan Chappell: Thank you. Good morning. I want to circle back to February and March, especially. Jim, you noted February, 8% good guy to the model marks 3.5%. I mean that is very contrary to everything we’ve heard throughout this earnings season for the last 1.5 weeks. So is there any way you can kind of dig a little deeper on where the relative outperformance came from, how things changed to the positive when it seemed to be changing the negative for most of rest of the industry post the January conference call?
James Todd: John, I’m happy to. So in February, the biggest good guy was truck revenue per load in February was 60 basis points higher than January. That compares to a down 220 historically, if you look at 2019 to 2015 pre-pandemic patterns. In addition, truck volume beat on seasonality as well. And I would tell you, John, we saw this too in — not just on the revenue side, but we saw it on the net revenue side on the brokerage side of the house. So from the fourth quarter of 2023 to the first eight weeks of the first quarter of 2024, we saw our net revenue margin compress 105 basis points. And then from the first eight weeks of first quarter 2024, the last five weeks, it widened back out 85 basis points, right? So I think that’s consistent with kind of that underperformance on the top line that we saw relative to pre-pandemic seasonality off that tougher launch point in February.
Jonathan Chappell: Okay. And then I don’t want to, again, extrapolate the last couple of weeks or whatever. But if you were kind of a real good guy in February, March, and people are kind of looking for green shoots, sounds like maybe February was a little bit worse in the back half, but to typical seasonality, but April a little bit better. Are there any signs that you’re seeing that there’s really a more sustainable uplift in demand? Or a more accelerated removal of capacity that’s putting a floor below rates? Or do you think that this is pretty specific to kind of your business, your business model and your customer base?
Frank Lonegro: Yes, John, let me take a shot at that one, and it a little bit harkens back to the conversation we were having with Scott a moment ago. We are watching this thing very, very closely. We’ve got, as we said in our prepared remarks, we’ve got areas which are doing quite well relative to the broader market and relative to the corporate average. And then we’ve got other areas like the power only and some of the 3PL business that’s not doing as well. And you would expect that kind of super cyclical side of things to be really good in good times and more difficult in more difficult times. When I look at the commodity groups that are performing well in April. There are things like the automotive business, metals, electronic packaging, building materials, the government business.
