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Landstar System (NASDAQ:LSTR)

Q4 2012 Earnings Call

January 31, 2013 2:00 pm ET

Executives

Henry H. Gerkens - Chairman, Chief Executive Officer, President, Member of Safety & Risk Committee and Member of Strategic Planning Committee

James B. Gattoni - Chief Financial Officer, Principal Accounting Officer and Vice President

Pat O'Malley - President-Landstar Carrier Group

Joseph J. Beacom - Chief Safety & Operations Officer and Vice President

Analysts

Nathan Brochmann - William Blair & Company L.L.C., Research Division

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

William J. Greene - Morgan Stanley, Research Division

Justin B. Yagerman - Deutsche Bank AG, Research Division

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division

Scott H. Group - Wolfe Trahan & Co.

Thomas S. Albrecht - BB&T Capital Markets, Research Division

David P. Campbell - Thompson, Davis & Company

John G. Larkin - Stifel, Nicolaus & Co., Inc., Research Division

Matthew S. Brooklier - Longbow Research LLC

Ryan T. Bouchard - Avondale Partners, LLC, Research Division

Operator

Good afternoon, and welcome to the Landstar System Inc.'s Year-End 2012 Earnings Release Conference Call. [Operator Instructions] Today's call is being recorded. If you have any objections, you may disconnect at this time.

Joining us today from Landstar are Henry Gerkens, Chairman, President and CEO; Jim Gattoni, Executive Vice President and CFO; Pat O'Malley, Vice President and Chief Commercial and Marketing Officer; and Joe Beacom, Vice President and Chief Safety and Operations Officer.

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

Henry H. Gerkens

Thanks, Dory. Good afternoon, and welcome to the Landstar 2012 Fourth Quarter and Year-End Earnings Conference Call. This conference call will be limited to no matter than 1 hour. [Operator Instructions] Before we begin, let me read the following statements.

The following in the 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, I, and other members of Landstar's management team, may make certain statements containing forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies and expectations.

Such statements are, 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 2011 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 statements, and Landstar undertakes no obligation to publicly update or revise any forward-looking statements.

2012 was a record-setting year for Landstar as revenue finished just shy of $2.8 billion and diluted earnings per share was $2.77 per diluted share, both metrics, the best in Landstar history. Operating income was $206 million, 12% above that of the prior year, and represented 46.2% of gross profit. Yes, 2012 was a very good year.

Keep in mind that the fiscal year 2012 was a 52-week year whereas the 2011 fiscal year was a 53-week year, which makes our record revenue and earnings per diluted share performance even more impressive. As you may recall, our goals set after the 2009 recession was to be at a 45% annual operating margin within a 3- to 5-year time frame. As we move into the future, Landstar's objective is to continue to increase gross profit dollars and drop that increase to the bottom line, thereby improving our operating margin.

As stated in this morning's press release, Landstar new operating margin goal is to be at a 50% operating margin within a 3- to 5-year time horizon. To accomplish this goal, one of our objectives is to drop at least 70% of the incremental gross profit dollars to operating income. Increased gross profit dollars, effective cost management, continued safety improvement and increased productivity of our capacity and agent base through technology improvement will be the formula to get to our new goal.

Let me now address the 2012 fourth quarter results. As I said in the 2012 third quarter conference call and, again, on our fourth quarter mid-quarter update call, it is important to keep 3 points in mind when looking at the 2012 fourth quarter when compared to the 2011 fourth quarter.

Point one was that the 2011 fourth quarter included an extra week, which I estimate added approximately $25 million to $30 million in additional revenue and approximately $0.06 to diluted earnings per share, thus making absolute comparisons between the 2012 fourth quarter to the 2011 fourth quarter very difficult if not impossible.

Point two was that the 2011 fourth quarter also included a $0.03 per diluted share increase from a favorable tax benefit. As pointed out in this morning's press release, the 2012 fourth quarter included an $0.08 per diluted share increase from a favorable tax benefit.

So if you take these 2 items together and add up the estimated favorable impact to each quarter, you are looking at an estimated $0.08 per diluted share effect on the 2012 fourth quarter earnings per share versus an estimated $0.09 per diluted share effect on the 2011 fourth quarter.

Finally, the third point was that the fourth quarter of any year has historically been the most difficult to forecast. The 2012 fourth quarter was no different. Revenue for the 2012 13-week fiscal fourth quarter was approximately $691 million compared to $718 million in the 2011 14-week fiscal fourth quarter. As I said before, the extra week in the 2011 period makes the 2012 quarter versus the 2011 quarter just about the incomparable.

There were 61 full workdays in the 2012 quarter versus 66 full workdays in the 2011 quarter. On a per full workday basis, loads per day transported via truck were 3.2% higher in the 2012 fourth quarter versus the 2011 fourth quarter. Overall, it was the best Landstar fourth quarter consolidated revenue performance for any 13-week fourth quarter in Landstar's 25-year history.

That being said, revenue for the 2012 fourth quarter finished a little shy of our internal expectations as December load volume was a bit lower than our expectations.

For the 2012 quarter, truck transportation revenue per load was $1,772 versus $1,744 in the 2011 quarter, a 2% increase. Total brokerage revenue represented approximately 45% of consolidated revenue in the 2012 quarter versus 43% in the 2011 quarter. Revenue hauled by BCOs for the 2012 fourth quarter was approximately 47% of consolidated revenue versus 49% in the 2011 quarter. All other revenue represented 8% of consolidated revenue in both the 2012 and 2011 fourth quarters. Revenue derived through air cargo providers was again very weak.

Total operating income for the 2012 13-week fourth quarter was approximately $50 million versus $51 million in the 2011 14-week fourth quarter, and Landstar operating margin was 45% in both the 2012 and 2011 fourth quarter. The 2012 fourth quarter operating margin of 45% was particularly impressive when compared to the 45% in the 2011 fourth quarter because the 2011 fourth quarter included approximately $25 million to $30 million of incremental revenue due to the extra week.

Earnings per diluted share for the 2012 fourth quarter was $0.73 per diluted share compared to $0.70 in the 2011 fourth quarter. But as I said before, there are items to consider in both years to put the numbers on an apples-to-apples basis.

Landstar finished the year with 504 agents who generated over $1 million in Landstar revenue, the same amount as in 2011. I had anticipated a slight increase in the number of million dollar agents in 2012, but as I said before, December load volume was a bit shy of our expectations. That being said, there were 83 agents who generated between $750,000 and $1 million in 2012 versus 69 agents in 2011, and our 504 agents who generated over $1 million in revenue in 2012 averaged $5 million apiece. Overall, for the 2012 full year, new revenue from 2011 and 2012 agent additions amounted to approximately $107 million.

From a capacity standpoint, Landstar ended the 2012 year with a BCO count of 8,010 and a broker carrier count of 31,545 versus 7,871 and 28,495, respectively, in 2011. As an aside, our BCO turnover rate for 2012 was a low 23.8%.

I'm now going to turn over to Jim for his financial revenue.

James B. Gattoni

Thank you, Henry. Henry has already discussed certain information regarding the 2012 fourth quarter. I'll cover various other financial information included in our fourth quarter release.

As Henry mentioned, due to the company practice of closing a fiscal year on the last Saturday of December, the 2012 fourth quarter, which was a 13-week period, had 8% fewer full workdays than the 2011 fourth quarter, which was a 14-week period, resulting in difficult operating result comparisons quarter over prior year quarter. However, it should be noted that 2012 fourth quarter revenue gross profit operating income and diluted earnings per share were all the highest amounts reported in any 13-week fourth quarter in Landstar history.

Gross profit, representing revenue less the cost of purchased transportation and commissions to agents, was 15.9% of revenue in the 2012 fourth quarter compared to 15.8% of revenue in the 2011 quarter.

The rate of purchased transportation paid to truck brokerage carriers in the 2012 fourth quarter was 20 basis points lower than the rate of purchase transportation paid to truck brokerage carriers in the 2011 fourth quarter and on a sequential quarter basis, 60 points -- 60 basis points lower than the rate of purchased transportation paid to truck brokerage carriers in the 2012 third quarter.

The cost of purchased transportation was 76% of revenue in the 2012 fourth quarter compared to 76.3% in 2011 fourth quarter. This decrease was primarily due to a higher percentage of revenue, followed by BCO independent contractors, followed by company-provided trailer equipments and a decrease in the rate of purchased transportation paid to truck brokerage carriers in the 2012 fourth quarter.

Commission to agents was 8% of revenue in the 2012 fourth quarter compared to 7.9% of 2011 quarter. The increase in commissions to agents as a percent of revenue was primarily due to the decreased rate of purchased transportation paid to truck brokerage carriers.

Other operating costs were 4.8% of gross profit in the 2012 quarter compared to 6% in the 2011 quarter. This decrease was primarily due to a lower provision for contractor bad debt in the 2012 fourth quarter.

Insurance and claims costs were 8.2% gross profit in 2012 quarter compared to 7.7% in the 2011 quarter. The increase in insurance and claims as a percentage of gross profit was primarily attributable to the decrease in gross profit due to fewer full workdays in the 2012 period and an unfavorable development of prior year claims in the 2012 fourth quarter, partially offset by lower severity of claims in the 2012 period.

Selling, general and administrative costs were 36% of gross profit in the 2012 fourth quarter and 35.9% of gross profit in the 2011 fourth quarter. The increase in selling, general and administrative costs as a percent of gross profit was primarily attributable to lower gross profit due to fewer full workdays in the 2012 period and an increase in the cost of claims under the company's employee benefit programs, partly offset by lower provision for incentive compensation under the company's incentive compensation programs and a lower provision for customer bad debt in the 2012 fourth quarter.

Depreciation and amortization was 6.3% of gross profit in the 2012 fourth quarter compared to 5.7% of gross profit in the 2011 fourth quarter. The increase in depreciation as a percent of gross profit was primarily attributable to lower gross profit due to fewer full workdays in the 2012 period and increased trailer depreciation as we replaced older fully depreciated equipment with new trailing equipment.

The effective income tax rate was 30.3% in 2012 fourth quarter compared to 35% in 2011 fourth quarter. The effective income tax rate in both periods was favorably impacted by reductions in the provisions for uncertain tax positions.

Operating income in the 2012 period was a record 13-week fourth quarter $49.5 million. Due to 8% fewer full workdays in the 2012 fourth quarter compared to the 2011 fourth quarter, gross profit in the 2012 fourth quarter was $3 million lower than gross profit in the 2011 fourth quarter. However, operating income decreased only $1.4 million compared to the 2011 period. Excluding the additional full workdays from the 2011 fourth quarter, it is estimated that operating margin in the 2011 fourth quarter was 43% compared to 45% in the 2012 fourth quarter.

The company's variable cost business model is supported by a relatively fixed-cost infrastructure designed to pass a significant amount of any incremental gross profit through to operating income on an annual basis.

On an annual basis, the company increased fiscal year 2012 operating income by $22.6 million over 2011 operating income from an increase of $13.8 million in gross profit over the same period. As a result, operating income increased from 42.4% of gross profit in fiscal year 2011 to 46.2% in fiscal year 2012. As Henry mentioned, our goal is to continue to pass approximately 70% of incremental gross profit through the operating income going forward on an annual basis.

Looking at our balance sheet. We ended the quarter with cash and short-term investments of $110 million. Fiscal year 2012 cash flow from operations was $126 million. Cash capital expenditures was $7 million in fiscal year 2012. Trailing 12-month return on average shareholders' equity was 38% and trailing 12-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 28%. At September 29, 2012, shareholders' equity represented 77% of total capitalization.

Back to you, Henry.

Henry H. Gerkens

Thanks, Jim. Overall, truck transportation revenue load count trends experienced in January 2013 compared to January 2012 were choppy. And as with the December load volume, we're below our internal expectations. Revenue per load was virtually flat when compared to the prior year.

I believe what we have seen in January of 2013 correlates a little bit to current economic forecasts. GDP and industrial production forecasts were for slower growth in the first half of 2013 and better growth in the back half of 2013. If forecasts are correct, load volume should begin to stabilize as we move through the first quarter and the balance of the year. But before I provide specific 2013 revenue and earnings guidance, I want to see evidence that the economy will indeed show improvement as per forecasts.

Yesterday, there was a negative GDP print, the first since the first quarter of 2009, not very reassuring. As a result, I am not providing specific revenue and earnings guidance at this time. Right now, being cautious, my best estimate is that the 2013 first quarter operating results will mirror that of 2012.

And with that, Dory, I think we can take some questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Nate Brochmann with William Blair & Company.

Nathan Brochmann - William Blair & Company L.L.C., Research Division

I wanted to talk just a little bit in terms of -- I certainly understand the economic uncertainty and a lot of folks have mirrored that. I think there's a sense of less pessimism out there but definitely not a great sense of optimism. But given kind of your niche focus within the flatbed and a little bit greater exposure than average to favorable end markets such as housing, auto, energy, how do you think that plays out throughout the year beyond just the average GDP trends?

Henry H. Gerkens

Well, I think -- look, when you look at Landstar, I think, we're probably more -- we probably are more correlated to industrial production than any other stat that's out there. I think what you saw is part of the resolution to the fiscal cliff -- well, maybe there wasn't a resolution, but the tax increases that were passed, part of that, I mean, you had an extension of the tax credit. I think what you'll start to see, that will help as we move throughout the year. And I think people are still waiting little bit as far as when we go forward with 35% flatbed. I think what we saw in December and has continued into January, if forecasts are correct, as I said, I mean, that was predicted or if you look at any -- the blue-chip indicators as far as industrial production, and it is -- the forecast is for that to get better and that, obviously, impact us on a favorable basis as we move forward. But as I said, right now, I want to see a little bit of evidence. January is always a tough month to base anything off because it is one of our slowest, if not the slowest month we have. So rather than coming out with something currently, we'll wait until I get another month under my belt before I basically step up. And Pat, I don't know if you want to answer any of that also.

Pat O'Malley

Well -- Nate, this is Pat. I think a couple of things. We mentioned last conference call that on the platform side, we believe, because of our size, scope, reliability, we're kind of the first in and the last one out. So if the platform business starts to turn favorably, we believe we're brought in early to help companies manage their transportation of that type of cargo. Conversely, if things are slowing down in that marketplace, we think we're the last one asked to leave. All that said, I think one of the things that Henry mentioned that's worth repeating is the production tax credit. No one thought that was going to be a part of the going forward here in 2013. That production tax credit remains in place. It was renewed. We've seen some movement around those companies that participate in that alternative energy business. So I think -- again, I think it's important to note that if there's a turnaround in this area, we believe that we're kind of first in, last out.

Nathan Brochmann - William Blair & Company L.L.C., Research Division

Okay. Then just a follow-up to that, and this is a little bit more longer-term thinking. But how do you guys think about the impact of, on the margins, some of this heavy manufacturing coming back in terms of ideal near-shoring. I would assume, obviously, being closely tied to IP, that they can only help your business. But have you seen any evidence of that and how do you think about that longer term?

Pat O'Malley

Well, I think near-shoring is a reality. And to the extent more manufacturing moves either back to the United States or certainly to North America, that benefits Landstar. As it relates to margins, it really depends upon the type of capacity that we use to move that shipment.

Henry H. Gerkens

Well, in general, I'd agree with Pat. I think that in theory should have a favorable impact on our margins.

Operator

Our next question comes from Jason Seidl with Dahlman Rose.

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

Listen, a question, what percent in your business right now is exposed to the military?

Henry H. Gerkens

It's probably at its lowest point since -- in its 25-year history. I think last year, I want to say, was about 3.5%.

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

3.5%. Okay.

James B. Gattoni

3.4%

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

So I think exposure on any sequestration is really going to be negligible for you guys. I mean, it might hit a little but not that big.

Henry H. Gerkens

We've already absorbed a bulk of that. At that point in time -- I mean, at one point in time, it was close to 10%. Historically, it's been 5%, 6%. We basically absorb the bulk of that already.

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

Okay. Fantastic. Also, when I hear you talking about the longer-term goals in terms of sort of just layering on more revenues in your business. Can you talk a little bit about some of the ways that you guys are going to do it and some of the signs that investors should look for, that it's actually taking hold?

Henry H. Gerkens

I think a couple of things. I think as you see our brokerage revenue continue to grow, that means, obviously, we're putting more loads in the system. We've already said that there's a fine group of owner operators out there. We want to recruit as many of those as we can, but we have to recognize as far as qualification into the system is going to be different. So as we improve our brokerage ability and have more relationships, it feeds into the fact that we can take more revenue from a customer. Because with more capacity you can go into a customer with to say that I've got this capacity, the more they're willing to basically give you your revenue. So obviously, from a revenue standpoint, we are looking to bring on more agents. I think Pat -- I'll turn it over to Pat in a second. He'll describe what occurred in 2012, what we've got going on in 2013. We're very encouraged with, I think, where we are as far as what's in the pipeline for our agent base. But there's other things that

[Audio Gap]

We will continue to stress our safety performance. It was very good in 2012. We got to continue to drive those costs down. And when you add that all up in put it into a hopper, I think, again, over the -- I can't point out and say that next year we're going to be here or next year to be there. But I think over that time horizon, our goal is to drive that to 50%. And clearly, that is something we can do. Pat, do you want to talk a little bit about agents and what we're doing there?

Pat O'Malley

Yes. Jason, I think that we're the home for small businesses. And as we've detailed in conferences and on this call in the past, we think that those small brokers and the challenges that are facing those small brokers are really going to drive them to a Landstar solution. In an uncertain world, we think that Landstar is kind of a certain bet. And so we continue to reach out to those small brokers that are challenged by sourcing capacity, funding their growth, funding their existing business and then meeting the demands of the customers. And the underlying technology that takes to do all that, we think we've got the best mousetrap. If you look at our -- Henry outlined the revenue production for new agents. The number of new agents we brought on was fewer than before but not that many fewer. It's just that the revenue that was produced by those agents -- we had some large agents that had produced revenues in previous years, we didn't have those big hitters if you will. But listen, our strategy remains the same. It remains sound and effective, and that is we're going to go after these small brokers who need to have someone like Landstar with the scale, systems and support to help them grow their business.

Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division

So if I had to look at it between your brokerage business and just bringing on additional BCOs, would you say it's more targeted toward the brokerage, more to the BCOs or is it more of an even split in how you want to grow this?

Henry H. Gerkens

Again, I think -- let's make sure we get this clear. I want to grow both types of capacity. What we have to recognize and we've recognized in the past is that there's only a finite number of owner operators that we can bring on that will qualify as Landstar business capacity owners. That being said, the growth will come from brokerage. That's not to say I don't want to recruit both types of capacity. I want that to be perfectly clear. I want to bring in as many owner operators to be BCOs as possible. But again, I just -- you got to realize that with our qualification standards, that's not probably going to happen because there's a finite number that I can basically bring on. But there's a lot of small carriers out there, and that's where we think the growth is going to come from.

Operator

Our next question comes from Tom Wadewitz with JPMC.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

It's Tom Wadewitz. Let's see, did you give the tons by month, overall tonnage by month? Or is that something you can provide or loads by month?

Henry H. Gerkens

No, we didn't do that. We did not. You have that for the quarter?

James B. Gattoni

Yes, if you want to give it. Let me put it up on the chart [indiscernible]

Henry H. Gerkens

Yes, so we can give truck load.

James B. Gattoni

This is all truck. It does not...

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Yes, yes, yes. That's fine.

James B. Gattoni

115,400 in October.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Can you give me the year-over-year growth or you want to just -- or you can give the loads in both periods?

James B. Gattoni

115,400 this year versus 113,400 last year quarter-over-quarter. November was 110,300 versus 116,400 last year. December was 135,100 over 148,400 last year. Now there's some clarifiers on it. It's not just -- when you look at November, it looks like we shrunk. But even November, with the way we close our books, Tom, is that November actually only had 18 workdays this year compared to 20 last year. So it gets a little bit squishy. If you really -- even at month-by-month, it's kind of tough to compare. That's why we try to look at just quarter-over-quarter and number of days.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Okay.

James B. Gattoni

Just to clarify, it's not that November got weak. It's just that it had 2, 3 fewer workdays.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Okay. All right. And so -- and how are you viewing January as being flat in loads or down in loads? Or how are you thinking about how January has started to play out?

Henry H. Gerkens

January is not where we thought it was going to be and, therefore, a little shy of our expectations, and I don't have the final counts on that. But based on what we see on daily load counts, it's shy of where we want it to be. Yesterday's daily load count was a little bit better, not much, I mean, but it's hard for me to make a statement based on January. That's why I've basically given the projection -- I've given no guidance other than -- right now, if I had to make a guess, I would say that, overall, we're going to be close to what we did last year or perhaps what we did last year. And now things should hopefully improve.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Right. Okay. Are there -- I know you talked a little bit about some of the customer groups, and government, I guess, or military is less than it used to be. But was there anything interesting in the way that customer groups changed in fourth quarter or how you see them changing going into this year in terms of what's relatively strong or what had gotten weaker?

Henry H. Gerkens

I think automotive has been pretty strong all year and remains pretty strong. I think flatbed was very strong but it sort of tailed off a little bit in the fourth quarter. I think you clearly saw that in January. And again, when you've got to think about that were flatbed industrial production, and that really is where, I think, you saw most of the issues. Government has been weak all year last year. And I mean, those are the 3 basic -- Pat, I don't know, do you want to add anything else?

Pat O'Malley

No, I would agree.

Henry H. Gerkens

I mean those are the major categories, highs and lows.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

Okay. So you don't have a lot of visibility on loads. Do you have any on pricing? Or is that also kind of tough to tell...

Henry H. Gerkens

No, pricing, again, was virtually flat.

Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division

But in terms of what you think it might be for 2013, any sense of...

Henry H. Gerkens

Yes, I'm not going to -- again, let's back up. You got to go -- if industrial production forecasts are correct, all right, and things start to get better as we move through the year, I would anticipate that pricing and revenue per load would get stronger. I'm not -- as I said in my prepared remarks, I'm not going to make any this until I start to see some announcements that, yes, those trends are going to continue.

Operator

Our next question comes from William Greene with Morgan Stanley.

William J. Greene - Morgan Stanley, Research Division

Henry, there's sometimes a sense out there that you guys can benefit from things like recovery. So like we think about Superstorm Sandy in the Northeastern stuff, is that sort of a false impression? Or could we see a pickup for noneconomic reasons as things sort of get rebuilt in the Northeast for you guys.

Henry H. Gerkens

A couple of things. I mean, obviously, people -- and Bill, that's a good point. The -- back in 2005, 2006 and prior to that when we have the contract with the FAA, which we provided all the relief work for disasters, and I think that's where people get the association that "Landstar is going to participate in disaster recovery." We did to a very small degree with Superstorm Sandy. But clearly, there's no master contract. I think there's a whole bunch of companies that participated in that, and it was pretty well spread. Where I think the potential incremental revenue comes from is as things are being rebuilt, all right, whether we participate in some of that, it's clearly going to suck up capacity. All right? And anytime you suck up capacity, it's going to have a favorable effect on rates overall. And if you get any kick from demand, if, in fact, forecasts are correct, that things will improve as you move throughout the year. Consider that when the Northeast is being rebuilt and capacity is being diverted there, that's going to drive revenue up, plus you've got demand going up. So that's what I think potentially plays out. And I think 2013 could be a very, very good year. But right now, it's starting off slow, which basically everybody said it was going to start slow, and I just want to see some evidence. And I know I've heard a lot of chatter about the negative print that was on GDP, that's for this and that and what not. But fact of the matter, it was negative, so that sort of spooked me a little bit. So before we go out, I want to see if there is going to be a pick-up.

William J. Greene - Morgan Stanley, Research Division

Okay. No, that's fair enough. And then when we look at your -- the long-term guidance you provided, you gave some of the metrics that were to watch. What kind of -- is there one of those that's particularly critical or important like in other words if you're at the -- if you hit your guidance early or late or what really is the big lever there?

Henry H. Gerkens

I think, when I look at -- that's obviously load count and revenue per load. I need industrial production, I think, to start to move forward. I think we're starting to see some -- I think the tax credit, the production tax credit for the alternative energy, I think, is very big for us. I mean, things started -- were in their completion phases in the fourth quarter. It takes a little bit of time to ramp all that stuff up. As Pat alluded to, we've gotten this contact from our providers that they're going to start ramping that up, and it's going to be, I think, better than we initially thought. So -- but again, I'm being cautious here, Bill, because I -- January was a little bit slow, although we anticipated it to be slow. But it was a little bit slow than we thought. And we'll see how we progress throughout the year. If all forecast are correct, I think it could be a very good year.

William J. Greene - Morgan Stanley, Research Division

Yes. And just one last question. I know you prepaid some of the dividends, but you still have a very strong balance sheet. So would you revisit that? Or is that set in stone, you wouldn't reintroduce a dividend in '13.

Henry H. Gerkens

Nothing is set in stone. So I wouldn't say it's set in stone. I think what we would more than likely do with the excess cash is buy stock back though. But I'm not saying we wouldn't do that. I mean -- but right now, I think the -- I discussed it with the board to see which direction the board wants to go, but I think right now the board is favorable to buying back stock.

Operator

Our next question comes from Justin Yagerman with Deutsche Bank.

Justin B. Yagerman - Deutsche Bank AG, Research Division

So I mean, I feel like beating a dead horse here a little bit, but you said industrial production feels like it's tailed off a little bit. But that doesn't -- I guess, I'm trying to figure out if you're seeing something that nobody else is in the economy here in the first half of the year because my presupposition would be that with housing getting better and the rest of the economy kind of stabilizing, both domestically and globally, that we should start to see a little bit of resurgence. And maybe that's what you're hoping for in the back half and you're just not ready to start talking about it yet because you're not seeing it. But I guess, what I'm trying to find out is if you're seeing something that gets you incrementally more worried or if it's just the lack of seeing any strength that has you a little bit cautious here in the beginning of the year.

Henry H. Gerkens

I can answer that a whole bunch of different ways because you actually answered to how I feel, all right, on almost just about every statement you made there. Look, we're tied at 35% flatbed. Industrial production is very key to us. Forecasts offer slow first half, quite frankly, building later. Yes, and I think you heard from my prior comments to Bill that, in fact, things could be very good depending on how things play out. I'm cautious here because I don't -- I saw December, I see January. I see all the favorable comments as far as projections out into the future. And I want to see a little bit before I take that and go with it, and that's the way I've been. I think we've been a pretty good leading indicator as far as how we look at things in the future and based on what we have. And right now, I'm going to be cautious because I don't want to be caught when I see a negative GDP print and people are making all sorts of different excuses for why it's negative, when, in fact, it was negative. All right? And let me see some change in some of the stats. And as I said, I'm starting to hear from customers now that deal with this wind energy, for example, which is flatbed, that, hey, we're going to start kicking in again. So that gives me confidence, but I want to see some of that before I go out on a limb and say, "This is what we're going to do." But again, let me repeat, this could be a very good year. I'm just saying, right now, January started off slow, very similar to what we saw in December. And until I start to see some of that pick up, I'm going to be a little bit cautious.

Justin B. Yagerman - Deutsche Bank AG, Research Division

Okay. And maybe just a little bit of color. I know in the past you've said margins in brokerage versus BCO are similar when you take insurance into account. Is there any better breakdown that you can give us at this point? I mean, we've seen the load growth, obviously, on the broker side materially outstripped the BCOs now and wanted to see what that mix is going to the overall margin.

Henry H. Gerkens

Jim?

James B. Gattoni

We generally don't disclose the profitability on the individual line items on the broker side for obvious reasons. But we generally tell you what direction they're moving in but don't give you a profit margin on that line.

Justin B. Yagerman - Deutsche Bank AG, Research Division

Okay. Just a housekeeping question. How big was -- you talked about this tax credit. How big is alternative energy as an end market for you guys?

James B. Gattoni

Can you repeat that, Justin?

Henry H. Gerkens

How big is alternative energy as an end market?

James B. Gattoni

You mean the industry or for Landstar?

Justin B. Yagerman - Deutsche Bank AG, Research Division

Yes, for Landstar. I'm not asking you what the industry is. For Landstar, what is it as a percent of sales? So flatbed is x and o of that. How much is the alternative energy?

James B. Gattoni

Last year, approximately $60 million.

Operator

Our next question comes from Chris Ceraso with Credit Suisse.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

So that $60 million, that was the amount of wind? Or is there other stuff in the energy category?

James B. Gattoni

Wind.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

And then it sounds like -- I just want to make sure I understand how you characterize this, that these programs were ramping down but then the tax credit got renewed, so they're going to ramp back up again. But maybe you've got a period of a quarter or 2 where you don't have that activity. Is it fair to say that may be you'll miss half a year worth of that volume in '13 versus '12?

Pat O'Malley

Chris, this is Pat. So the production tax credit, everyone's expectation was it was not going to be renewed. It was renewed. If you read maybe the financial pages and some industry stuff, they'll talk about how long it takes them to get that supply chain ramped back up in order to satisfy some of these orders. What we've understood from our customers is that they are in the process of doing that and they plan on delivering greater number of towers in wind energy this year than they had previously thought because of the production tax credit.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Okay. But you'll have some down -- some dead space here between the end of last year and when it ramps back up again?

James B. Gattoni

You think about last year, Chris, because everyone believed that 2012 was going to be the last year for the PTC, production tax credit. They were going full board at the beginning of the year to make certain that they could get everything in, assembled and producing electricity in order to qualify for that tax credit. So if you think about it that way, it was really kind of front-loaded last year because they want to make sure they had all of those installed in order to get the production tax credit.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Okay. So it's probably going to be down regardless because they went bananas in '12 doing this stuff.

Pat O'Malley

It will be down compared to 2012 but up compared to what they had anticipated when there was no production tax credit.

Operator

Our next question comes from Todd Fowler with KeyBanc Capital Markets.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Jim, can you give us the number of days in December. I think you gave Tom the load count, but I was hoping we could have the days in '11 and the days in '12 so we could work that into a...

James B. Gattoni

These are full workdays. So October over last -- October was -- each October had 20 full workdays. November had 18 this year and 20 last year, and December had 23 this year and 26 last year. It's the holidays that's the non-full workday really.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay, good. I can do the math on that. And then, Henry, on the net operating margin goal, I think back in 2009, you also talked about some top line expectations and I want say that, that was mid-teen revenue growth over a couple of year period. Do you have any comments on what you'd expect to grow the top line yet? And then for some of the other components that aren't variable within the model, something like SG&A, what's the expectation for -- should we see 2% or 3% type inflation in SG&A over the next couple of years as well?

Henry H. Gerkens

I think our objective is really I'm looking more towards the growth in gross profit dollars because that's really what's important, to grow that operating income margin, if you will. So when I look at gross profit dollars, I'm looking upper single-digit numbers, which is what our goal is and what would make that 50% as we move forward into the future.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. And then what about something thinking how SG&A should trend. I understand that you've got a pretty fixed-cost base in place, but I do know that, obviously, there's some moving parts with that. I mean, is it fair to think that over the next couple of years, that would move up 2% to 3%? Or is there some investment that's going to come that would need to support higher revenue rates at some point in the foreseeable future?

James B. Gattoni

Todd, this is Jim. Our SG&A is really -- is about 65% to 70% that's headcount. It's mostly administrative. It's not really on the revenue side, the revenue-generating side. I mean, of course, we have some people on the revenue-generating side. But the majority of the staff is really just administrative from the -- whether payables or receivables or customer calls, stuff like that. So if you just look at the model infrastructures built, if you assume that 70% of that SG&A line is people and we give 3% to 4% to 5% raises each year, that's what you expect the growth rate of the SG&A. The big variable was the bonus program, whether we hit targets or not. But other than that, pre-bonus estimates, your 3% to 4% a year growth in that line item.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

And you can handle upper single-digit gross profit growth with kind of the current staffing level that you have at this point?

James B. Gattoni

Yes.

Henry H. Gerkens

Todd, just let me just make a -- I'm just looking at my 5-year projections here as far as what we got to -- actually, to get us to that 50% margin, I need to grow gross profit dollars in, what I'll call it, a mid-single-digit pace. And that's dropping 70% of that increase to the bottom line, which is another one of our objectives.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. That's actually seems a little bit better. I thought that, that was -- I thought that your numbers were conservative, and I thought that it implied more of kind of like a mid-single-digit growth rate. So that makes sense.

Operator

Our next question comes from Scott Schneeberger with Oppenheimer.

Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division

Staying on the theme of getting to the 50% operating margin. How important is what you're doing in IT? And kind of the derivative question off that, what are you thinking of spending on CapEx is? Is IT a big component of it? And then following up with views on free cash flow going forward.

Henry H. Gerkens

Well, IT is a very big component of trying to get to that margin because what you're trying to do is make our capacity more efficient so they -- more nimble so they can select loads. You're trying to get our agents to basically electronically get that capacity. So that's what we're trying to get to even more so. We've got load alerts, the load alerts going out to broker carry. We got a lot of things that we're working on that we are working at that makes our capacity more efficient. The next thing is to get our agents more efficient as far as the source of the capacity, and that we're working on. So that over a 5-year time frame is going to make them generate more of those gross profit dollars because they don't have to spend as much time on that. We want them out there actually selling as opposed to doing some of this administrative stuff. Jim, you want to address capital?

James B. Gattoni

Yes, on the capital side, it's really infrastructure on the IT side. Our cash CapEx -- like I said in 2012, our cash CapEx was $7 million, and the majority of that was just IT equipment. And if you look back in history, we're going to spend $4 million to $6 million, $4 million to $7 million a year on CapEx related to IT infrastructure-type stuff and expansion on -- into other areas. But that's really the cash CapEx. On the trailer side, you don't see it coming to cash CapEx because we finance it with capital leases. We own about 8,000 van trailers, 53-foot trailers that we swap out about every 7 years. So you're replacing 1,000 to 1,200 vans a year at about $30,000 a pop. So you're constantly going to see that rolling through $30 million to $35 million coming to capital expenditures just to keep the fleet up within 7 or 8 years of age.

Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division

And then any thoughts on free cash flow in the coming year? And then also, you touched on it earlier on the dividend return question and thinking about buybacks. It sounds like you might be a little bit more active there, and I don't really associate you guys much with M&A. But any thoughts across the board on those topics?

Henry H. Gerkens

Well, as I said before, a couple of things. Everything clearly is always in the hopper, so we could revisit a dividend. I think the -- and I would talk to the board if that's the case, but I really think the board is more inclined to buy back shares. I think that would be probably the use of our cash flow. As far as M&A, again, if there are companies out there that fit our business model, we would clearly be more than willing to talk and look at that. And that's the way I would answer those questions.

Operator

Our next question comes from Scott Group with Wolfe Trahan.

Scott H. Group - Wolfe Trahan & Co.

So this kind of the softer volume trends in December and January, can you give us some color if you're seeing that in BCO or brokerage or both?

Henry H. Gerkens

I think it's pretty much across the board. If I had to -- Joe, is that -- would that be a reserve fair statement?

Joseph J. Beacom

Yes, I'd say both.

Henry H. Gerkens

Pretty much across the board.

Scott H. Group - Wolfe Trahan & Co.

Okay. And Henry, can you give us some color, you had some good progress earlier in the year on adding some BCOs. It dropped off sequentially in the fourth quarter. Is that seasonal or something going on there and maybe your expectations for growing the BCOs this year?

Henry H. Gerkens

I'll let Joe answer that but -- go ahead.

Joseph J. Beacom

All right. Scott, this is Joe. We did see a sequential decline in the fourth quarter on BCOs. If you may recall, we introduced a program to implement onboard recorders, and it really started to take hold in September. And so we did see some decline in additions based on the introduction of onboard recorders. And what we're seeing is there's a lot of interest in Landstar by a lot of owner operators but they're kind of sitting on the sidelines a little bit. So that's impacted our inventory number, which is why we've got this strategy to continue to grow carrier count. And so as we look to our agents and have our agents move additional shipments, we feel it's our obligation to put a bunch of capacity in the system, whether it's BCOs or carriers and on an overall capacity provider base, as you saw some pretty nice improvement in 2012, nearly 3,200 additions. So we're going to continue to work the BCO angle, continue to recruit hard. And as you see the onboard recorder thing become a little more accepted across industry, we expect ourselves to work our way out of that. I guess, a little bit of a concern that you might see from owner operators as it becomes more mainstream.

Henry H. Gerkens

I think one of the important parts as far as the program we introduced in the -- we started to see, as Joe said, a little bit of a tail-off in the door adds. I think, overall, when you look at our roughly 8,000 BCOs out there, we've got 1,000 of them with EOBRs now installed. So where we started off very slow, and again this is in the door, have to have one, voluntary for people who were here, and then obviously if there are some problems, we give the owner operator a choice, either put one on or go on. So we've had actually better than I anticipated results, and it's starting to catch on now because our BCOs are starting to realize that this is a good thing to have. It saves them work. We just had our BCO Appreciation Days here in Jacksonville, and we had a lot of favorable comments from some of our old-timers who put the onboard recorded on, that they swore they'd never do it, but as far as the amount of administrative work that it saves them. So it's just going to -- it's a process. I would anticipate in the first quarter that -- typically, that's a slow recruiting anyway. But I would think, again, after the first quarter, you're going to start to see that level off as far as recruiting numbers. So I'm not concerned. We anticipated that it would have a falloff due to the requirement of electronic onboard recorders. But actually, I think we're doing a lot better than I thought we were.

Scott H. Group - Wolfe Trahan & Co.

Okay. That's great color. If I could ask one more thing. Jim, you went through brokerage numbers pretty quickly. Can you just give us a sense on how brokerage yields or gross margin percentages were in the quarter relative to what we've been seeing?

James B. Gattoni

Sure thing. The fourth quarter over 2011 fourth quarter was a 20 basis point improvement in the rate of purchased transportation paid to broker carriers. And that sequentially, the fourth quarter compared to the third quarter 2012 improved 60 basis points.

Scott H. Group - Wolfe Trahan & Co.

And that 60 basis points, is that better or normal, better or worse than you would normally think it should be compared to fourth?

James B. Gattoni

It varies quarter-to-quarter depending on the supply demand, so it's -- that, I think, if you were to ask me at the end of September, is better than I thought it would be.

Operator

Our next question comes from Tom Albrecht with BB&T.

Thomas S. Albrecht - BB&T Capital Markets, Research Division

I had kind of a simple question here on the revenue per load at brokerage was $1,825. Obviously, I was a little surprised because that was up about $85 from the September average. I think you mentioned that PT had a favorable trend even though brokerage was the only unit with growth. And that's because you were able to pay out less to the carriers that you were brokering to. But my question is, in that kind of weak environment where we saw revenue per load decline at other brokers, why did yours go up $85 sequentially? I know it can't all be fuel, and then I have a quick follow-up.

Henry H. Gerkens

Jim?

James B. Gattoni

Generally, a lot of it has to do with the mix between how much is on flats and how much is on vans. I'm going to have to actually dig into that, I want to tell you the truth, because I don't -- I'm looking at the brokerage side and I -- on a sequential basis, I'm sorry, I just don't have that right now.

Thomas S. Albrecht - BB&T Capital Markets, Research Division

Okay. Well, let me ask kind of a related question but it goes back to some comments you made both in October and on your mid-quarter call, that there was about 1/3 of your flatbed fleet, so sort of 1/3 of 1/3, was still doing very well in the fourth quarter. I think it was related to capital goods shipments. Has that -- based on everything you said today, it sounds like that kind of just finished its loads in the fourth quarter and that part of the flatbed that was strong is also now kind of sluggish like the rest of things.

James B. Gattoni

Yes, tom, I think if you go back to what we talked about earlier, whether it was alternative energy, that including wind, there was a big push to get a lot of that stuff done at the end of the year. And so if you look at the year-over-year comparison, again, they started the year strong, kind of wound down as we went through the year. But you're thesis is correct.

Henry H. Gerkens

Yes, I think, one of the things, Tom, that you -- our December numbers from a revenue standpoint without giving what our expectations were, were below our expectations in the month of December. Forgetting about the extra week and all other stuff, but just December itself was below where we thought it was going to come in, which is a little bit disappointing. And that sort of just carried on to January. And where I am actually, as I said, I'm a very optimistic guy and I'm optimistic about 2013. It's just that when I hear some of the stats that are out there, and I know I hear a lot of people being optimistic and it's all backloaded, I just want to see a little bit.

Thomas S. Albrecht - BB&T Capital Markets, Research Division

Okay. No, I hear you. I'm watching the same stuff.

Operator

Our next question comes from David Campbell with Thompson, Davis & Company.

David P. Campbell - Thompson, Davis & Company

I just wanted to ask you about Sandy. No significant effect on revenues, equipment or expenses in the quarter?

Henry H. Gerkens

No.

David P. Campbell - Thompson, Davis & Company

Kind of amazed that you didn't have any given what Reuters said and some other companies, so I'm surprised there wasn't any impact on your business.

Henry H. Gerkens

Not a lot of impact. Pat, I mean, you got any singled out? I mean, not a lot of impact.

David P. Campbell - Thompson, Davis & Company

Okay. Well, I think my other questions have all been answered.

Operator

Our next question comes from John Larkin with Stifel, Nicolaus.

John G. Larkin - Stifel, Nicolaus & Co., Inc., Research Division

If I calculated the numbers correctly, and I think you mentioned this in the press release as well, 92% of the overall revenues came from trucking broadly defined, including both the traditional owner operator, agent business and also the brokers business, and that stayed steady year-over-year. And I guess, it has stayed relatively steady for the last few years. I guess, I would have expected maybe that number to drop a little bit as some of the complementary services grew perhaps a little faster, rail intermodal, air freight forwarding, ocean forwarding, warehousing, some of the logistics services available with a couple of those acquisitions you did a few years back, like Premier and A3i. What's your read on how that's going to play out over the next few years.

Henry H. Gerkens

A couple of things. It's good observation. Let's take them one at a time. The -- we were impacted -- and I made the comment as far as our air revenue has been down year-over-year pretty dramatically. A lot of reasons there, one agent gone, but really it's just been a slowdown, a general slowdown in that business. When you take a look at our rail intermodal, you got to go back a couple of years. Again, we had lost 2 years ago, 2 of -- our 2 largest agents, all right, which accounted for a bulk of that. We've slowly built that back up. Our brokerage revenue has just grown at a pretty phenomenal pace. And remember, the brokerage number is a large number. So when you start growing that double digits, for example, and you could grow air 50%, I'm making that up, but it doesn't have the same impact. It basically remains the same. So it doesn't surprise me that we've guided the same. The growth rate in brokerage has just been phenomenal. Remember, our agents understand truck more so than anything else, and that's what they're really comfortable with. As it relates to the acquisitions, the technology that we bought there, yes, we have our fee revenue embedded in that other, but that also drives margin business from the truck side. So there's a whole thing -- look, I actually -- if we're doing this right, as much as I want to grow that as a percentage, it's much more important for us to grow the total. And our guys are just more comfortable with truck. And we're going to continue to push both but that's where it is. I mean, Pat, you've got anything you want to add to that?

Pat O'Malley

No.

Henry H. Gerkens

No? Okay.

James B. Gattoni

Well, I think one of the things that bears repeating is embedded in those acquisitions were some procurement tools that have helped us generate business on the margin side, and we don't want to sacrifice margin business by going over to a fee-based business. We do that at our own peril, John. So you're not going to see that other revenue category fees accumulating, but you will see that they will be attributed to some of the procurement tools that we have that help us grow the margin business.

John G. Larkin - Stifel, Nicolaus & Co., Inc., Research Division

Okay. And then the other question I had, just may be as a final one here. You mentioned that the Million Dollar Agents count remained the same but that the Million Dollar Agents on average did $5 million per agency. And I think that was for 2002. How did that compare to 2011? Are you seeing growth within these bigger agents also?

Henry H. Gerkens

Yes, I think the average was $4.7 million. So we saw in the Million Dollar Agents. And the reason I gave the 750 to Million Dollar category because we did have growth in that particular level. And I think, as I recall my numbers, it's a growth of about 15, '11 to '12. And when you think about all of that, December was a little bit below where we thought it was going to be and, therefore, took away -- because I really felt we were going to grow that to a little bit higher than the 504. And then you've got to consider the fact we had the extra week last year. So actually, we -- from that aspect, I think, overall, that was very good and the fact that we've got a whole group of new potential Million Dollar Agents sitting in the hopper is just as important.

Operator

Our next question comes from Matt Brooklier with Longbow Research.

Matthew S. Brooklier - Longbow Research LLC

So you talked a little bit about the wind energy business, and that's been a factor here in terms of your load count. I was just curious to hear if -- I think you do a decent amount on the drilling equipment side, if that's been part of the softness story as well in the second half, and if potentially that part of the market picks up, if that could be positive for you?

Pat O'Malley

Yes. Matt, Pat here. Yes, domestic oil and gas exploration has declined as you went towards the back half of the year. And if there's a pick-up there, we believe we'll participate. Going back to the first in, last out, when things pick up, we think we're the first heavy haul provider that gets called in because of our skills, and we think we're the last one to leave as things slow down.

[

Matthew S. Brooklier - Longbow Research LLC

Okay. And in terms of the revenue per load profile on drilling equipment or the wind towers, I'm assuming it's higher maybe than some of your other flatbed on business. Is that a fair assumption?

Pat O'Malley

That's correct, yes.

Matthew S. Brooklier - Longbow Research LLC

And the margin potentially could be a little bit higher than the other flatbed business as well?

Pat O'Malley

True dollars, there would be more true dollars because it's a larger revenue per load. But the margin is typically about the same.

Operator

Our final question comes from Ryan Bouchard with Avondale Partners.

Ryan T. Bouchard - Avondale Partners, LLC, Research Division

I wonder if you could -- Jim, you talked about brokerage margins were better by 20 basis points year-over-year. Could you talk through the quarter like monthly, how did those progress?

James B. Gattoni

You just got to give me a sec.

Ryan T. Bouchard - Avondale Partners, LLC, Research Division

Okay. My other question was about a similar question, a monthly question. But if you could tell us what truck loads were in the first quarter of last year. I'm just trying to get an idea of the comps that we're facing in the first quarter of this year. I just -- I'm looking at a strong comp. I mean, it looks like the first quarter...

Henry H. Gerkens

Yes, you are. I mean, I think when you look at -- and as Jim is getting the numbers together, and I'll say part of my close, when you look at what occurred last year, you had strong industrial production numbers in the first and second quarter. And it gradually went down. When you look at forecasts for 2013, you got just the opposite is that it's a slow first half and a build in the second half. So yes, I think you're going to have just the -- you could have just the opposite of the years 2012 versus 2013. And that's what we're -- I think what we started to see in January is a slower build. And the question is how quickly does that build in? And if the forecasts are correct, as I said, 2013 is going to be fine. It's just going to be the opposite as far as how the first half compares to the first half and second half compares to the second half. So from that aspect, I mean, I'm pretty optimistic. But as I said before, I got to see a little bit of evidence, and January is no way to base anything on.

Ryan T. Bouchard - Avondale Partners, LLC, Research Division

Right.

Henry H. Gerkens

Jim?

James B. Gattoni

It was -- this was the rate paid to broker carriers, October over October prior year was 20 basis points lower this year compared to last year. November over last November was 60 basis points better. And then we're flat in December over December.

Henry H. Gerkens

Okay. With that, we're going to close this off. And do we have any final comments? Joe?

Joseph J. Beacom

No, I'm good.

Henry H. Gerkens

Pat or Jim? No? Okay. I look forward to talking to you in our first quarter mid-quarter update call, and everyone have a great rest of the day. And we'll talk to you then. Bye.

Operator

Thank you for joining today's conference. That does conclude the call at this time. Have a good afternoon. Please disconnect your lines at this time.

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