Apr 21, 2011
Executives
Jim Gattoni - Chief Financial Officer, Principal Accounting Officer and Vice President Patrick O’Malley - Chief Operating Officer and Vice President Joseph Beacom - Chief Compliance officer, Chief Safety & Security Officer, Vice President, Chief Compliance Officer of LSHI, Chief Safety & Security Officer of LSHI and Vice President of LSHI Henry Gerkens - Chairman of the Board, Chief Executive Officer, President, Member of Strategic Planning Committee, Member of Safety & Risk Committee, Chief Executive Officer of Landstar System Holdings Inc, President of Landstar System Holdings Inc and Director of Landstar System Holdings Inc
Analysts
John Barnes - RBC Capital Markets, LLC Matthew Young Thomas Albrecht - BB&T Capital Markets Justin Yagerman - Deutsche Bank AG Thomas Wadewitz - JP Morgan Chase & Co Todd Fowler - KeyBanc Capital Markets Inc. David Campbell - Thompson Davis & Co Anthony Gallo - Wells Fargo Securities, LLC Christopher Ceraso - Crédit Suisse AG Jon Langenfeld - Robert W.
Baird & Co. Incorporated Edward Wolfe - Bear Stearns Donald Broughton - Avondale Partners, LLC Nathan Brochmann - William Blair & Company L.L.C.
Jason Seidl - Dahlman Rose & Company, LLC Matthew Brooklier - Piper Jaffray Companies Alexander Brand - SunTrust Robinson Humphrey, Inc.
Operator
Good afternoon and welcome to Landstar System Inc.' s First Quarter 2011 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, Vice President and Chief Financial Officer; Pat O'Malley, Chief Operating Officer; and Joe Beacom, Vice President and Chief Compliance Security and Safety Officer.
Now I would like to turn the call over to Mr. Henry Gerkens.
Sir, you may begin.
Henry Gerkens
Thanks, Barb, and good afternoon, and welcome to the Landstar 2011 First Quarter Earnings Conference Call. This conference call will be limited to no more than one hour.
[Operator Instructions]. But before we begin, let me read the following statements.
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, I and other members of Landstar's management, 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 2010 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.
The 2011 first quarter was another very good quarter for Landstar and a great start to what appears to be an exciting year. Freight demand continues to be strong and pricing continues to increase as a result of a tight capacity market.
In our 2011 first quarter mid-quarter update call, I stated that I expected our operating margin for the 2011 first quarter would be approximately 35%, and that I was comfortable with the range of analysts' earnings estimates per diluted share, as reported by FIRST CALL, of $0.38 to $0.45 per diluted share. Actual first quarter 2011 operating margin was 35.4%, up from 31.3% in the 2010 first quarter.
And actual earnings per diluted share for the 2011 first quarter was 43%, that was $0.43 per share, a 26% increase over the earnings per diluted share reported in the 2010 first quarter. Consolidated revenue in the 2011 first quarter was approximately $572 million, up approximately 4% from the revenue generated in the 2010 first quarter.
It is important to note two factors when analyzing our consolidated revenue performance in the 2011 first quarter. First, the quarter-over-quarter revenue increase was net of a $57.8 million or 75% revenue decline in the low-margin substitute line haul service offering.
This decline had been well-previewed on prior earnings conference calls. Excluding the substitute line haul revenue from both the 2011 and 2010 quarters, all other revenue increased approximately 17%.
Second, our revenue increase was despite the negative effect of some very adverse weather conditions in the 2011 first quarter. Total truck transportation revenue represented 91% of consolidated revenue in the 2011 first quarter versus 92% in the prior year quarter.
Revenue hauled by BCOs [business capacity owners] represented 54% of total revenue in 2011 versus 52% in 2010. Total brokerage revenue was 37% of consolidated revenue in the 2011 quarter versus 40% of revenue in the 2010 quarter.
This composition shift is reflective of the decline in substitute line haul revenue. Revenue generated through all broker carriers, excluding substitute line haul revenue, increased 36% and revenue generated through BCOs increased 7%.
From a load volume and revenue per load standpoint, total loads hauled, excluding loads hauled in our substitute line haul service offering, increased approximately 5%, while revenue per load, again, excluding the revenue per load associated with our substitute line haul service offering, increased 12%. In the 2011 first quarter versus the 2010 first quarter, total van revenue, excluding substitute line haul revenue, increased 18% with a little more than 1/2 of the increase due to rate.
Total platform revenue increased 16%, entirely due to increased revenue per load, which is reflective of how tight flatbed capacity was in the 2011 first quarter. I might add, that I expect the tight capacity environment to continue as we move further into 2011.
First quarter 2011 over first quarter 2010 revenue increases in all our other transportation modes were impressive, as rail intermodal revenue increased 11%, air and ocean cargo revenue increased 56% and transportation management fee revenue increased approximately 18%. From a price volume standpoint, the rail intermodal increase was approximately 50% price and 50% volume, while the increase in air and ocean cargo revenue was more than half volume related.
Our gross margin in the 2011 first quarter improved to 16.9%, up from 16.5% in the 2010 first quarter. The increase in Landstar's gross margin was driven by the replacement of the low-margin substitute line haul revenue, which is an approximately 2% gross margin business with higher gross margin BCO and Brokerage business.
Jim will go into further detail on that improvement shortly. From a new agent revenue standpoint, revenue generated from all new agent locations added over the past year amounted to $25.2 million in the 2011 first quarter.
We continue to recruit quality, productive agent locations. Prospective agents continue to be attracted to Landstar because it is a 100% agent-based company whose operations are geared towards supporting its agent base.
Our list of prospective new agents remains long. From a profit and loss standpoint, operating income in the 2011 first quarter increased 20% over the 2010 first quarter.
And as I said before, operating margin was 35.4% in the 2011 first quarter compared to 31.3% in the 2010 first quarter, a very healthy increase. Jim, I'll turn it over to you for the P&L analysis.
Jim Gattoni
Thanks, Henry. Henry has already discussed certain information regarding the release.
I'll cover various other financial information included in the first quarter report. Gross profit, representing revenue less the cost of purchased transportation commissioned to agents, was $96.4 million or 16.9% of revenue in the 2011 quarter compared to $90.5 million or 16.5% of revenue in the 2010 quarter.
During the 2011 and 2010 first quarters, revenue hauled under contracts to generate a fixed profit margin contributed 68% and 76%, respectively, of total revenue. This compares with 70% in the 2010 fourth quarter.
In the 2011 first quarter, purchased transportation costs made to Truck Brokerage Carriers as a percent of revenue, excluding the revenue and cost of purchased transportation on the substitute line haul service offering, increased 150 basis points over the 2010 first quarter. Although the rate of purchased transportation, excluding the cost of purchased transportation on substitute line haul revenue, increased over the prior year quarter on revenue hauled by Truck Brokerage Carriers, gross margin increased to 16.9% in the 2011 first quarter from 16.5% in the 2010 first quarter.
Although, one would expect gross margin compression due to tighter capacity in the 2011 quarter, Landstar expanded gross margins over the 2010 first quarter by 40 basis points as a result of 68% of the company's first quarter 2011 revenue being generated on a fixed margin, plus a significant decrease in the company's substitute line haul service offering, which generates a 2% gross margin. Overall, the cost of purchased transportation was 75.4% of revenue in the 2011 first quarter compared to 76.1% in the 2010 first quarter.
This decrease was primarily due to the significant decrease in the company substitute line haul revenue, which has a higher rate of purchase transportation partially offset by an increased rate of purchased transportation made from revenue all by Truck Brokerage Carriers, as mentioned earlier. Commissions to agents were 7.7% of revenue in the 2011 first quarter compared to 7.4% in the 2010 quarter.
This increase was due to the significant decrease in the company's less-than-truckload substitute line haul revenue, which has a lower rate of agent commission, partially offset by decreased commission to agents on revenue haul by Truck Brokerage Carriers due to the increased rate of purchased transportation on revenue hauled by Truck Brokerage Carriers. Other operating costs were 8.2% of gross profit in the 2011 quarter compared to 8.3% in the 2010 quarter.
This decrease is primarily attributable to the effect of increased gross profit, partially offset by increased maintenance cost on the company-owned trailer equipment. Insurance and claims costs were 11.7% of gross profit in the 2011 quarter compared to 13.6% in the 2010 quarter.
The decrease in insurance and claims, as a percent of gross profit, is primarily due to decreased cost of cargo planes in the 2011 first quarter. Selling, general, administrative costs were 38.6% of gross profit in the 2011 first quarter and 40.7% of gross profit in the 2010 first quarter.
The decrease in selling, general and administrative costs as a percent of gross profit was primarily due to increased gross profit of 2011 first quarter, and the low provision for bonuses under the company's incentive compensation plan. Depreciation and amortization was 6.6% of gross profit the 2011 first quarter compared to 6.4% the 2010 first quarter.
This increase was primarily due to depreciation on trailer equipment acquired during 2010 to replace older, fully depreciated equipment, partially offset by the effective increase in gross profit. Investment income was $528,000 in the 2011 quarter compared to $285,000 in the 2010 period.
The increase in investment income was primarily due to an increased rate of return on investments held by Insurance segment. The effective income tax rate was 38.2% in both the 2011, 2010 first quarter.
Looking at our balance sheet. We ended the quarter with cash and short-term investments of $76 million.
2011 first quarter cash flow from operations was $16.6 million. Cash CapEx was $2 million in 2011 first quarter.
Trailing 12-month return on average shareholders' equity was 33% and trailing 12-month return on invested capital, representing net income divided by the sum of average equity plus average debt was 23%. In March 26, 2011, shareholders' equity represented 69% of total capitalization.
Henry, it's back to you.
Henry Gerkens
Okay. Thanks, Jim.
With capacity tight and the freight environment relatively strong, I expect a strong 2011 second quarter. I believe we are well-positioned to take advantage of all the opportunities this marketplace presents.
From new agent signings to further expansion into other transportation modes, to the complete management of a customer's transportation requirements, to what Landstar does best: providing safe, reliable truckload transportation capacity, whether platform or van. Landstar has now put together 5 consecutive solid quarters since the end of the 2009 year.
I anticipate that trend will continue for many more years to come. The 2011 second quarter revenue will again be negatively impacted by the loss of a significant amount of the low-margin substitute line haul revenue.
I anticipate 2011 second quarter substitute line haul revenue to be 70% to 80% lower than the 2010 second quarter substitute line haul revenue. And like the 2011 first quarter, I expect that loss revenue should be more than offset by increased higher gross margin revenue.
As such, I currently anticipate our operating margin to be about 42% in the 2011 second quarter, a significant sequential improvement from the 2011 first quarter of 35%. I currently estimate earnings per diluted share to be in the range of $0.56 to $0.61 per share.
One other note, the lower end of the range of our second quarter EPS estimate is equal to the highest second quarter diluted earnings per share in Landstar history. In closing, I believe Landstar is well on its way to achieving new heights in 2011.
And with that, Barb, we can open it up for questions.
Operator
[Operator Instructions] And our first question today comes from Jon Langenfeld with Baird [Robert W. Baird & Co.
Incorporated].
Jon Langenfeld - Robert W. Baird & Co. Incorporated
So when you look at the volume on the Trucking business, the BCO business, specifically, my recollection is not a lot of substitute line haul in there, but can you talk about the trends there and how it progressed through the quarter? But then more broadly, about the recruiting efforts, Henry, that you've alluded to here over the last couple of quarters and how that's gone?
Henry Gerkens
Yes, a couple things and I'll let Pat add on, on the recruiting side. As we move through the first and second months of the quarter into the third month, I mean the BCO number of loads hauled, I believe have improved sequentially January to February to March.
One of the things that we probably had a little bit of a miscalculation as far as what we were looking at, we thought there was going to be more of a BCO mix, and that really has to do probably to your second question. We underestimated where the BCO cap was going to be in the first quarter.
Typically, in the first quarter, however, you do get a downplay on BCO count. If you go back in history, I think you'll see that.
We have put a renewed emphasis on recruiting. I mean again, it's important for us to haul the customers' freight.
We are revisiting what we're doing from the recruiting standpoint and we've clearly put some more emphasis on that, and I'm really not worried about where that count is. But Pat, why don't you tell John what we're doing in that regard?
Patrick O’Malley
John, we have initiated several new programs to bring on BCOs. If you take a look at the first quarter, the turnover rate in the first quarter was the best it's been in the history of Landstar for the first quarter.
So it's really it's a function of bringing more people in, getting the phone to ring and again, we've got several initiatives that we have embarked on. I think Henry said it best, it's not something that we're worried about, but we're certain that we can change the outcome and we think we're well-positioned.
This is the best place for an owner-operator to be. We need to get that message out better than we have recently and we've already embarked on it.
Jon Langenfeld - Robert W. Baird & Co. Incorporated
And if you kind of look at your peak owner-operator capacity in the first quarter, anyways, if I go back to maybe '07, your 10% or 11% off that level. The factors I think about in terms of that decline, I mean, one is just the qualifications of some of these guys that have knocked themselves out.
Another is that, the general decline in the population out there, and 1/3 maybe is more internal to Landstar, in terms of the recruiting focus. I mean, is that a fair way to think about the factors impacting that decline from '07 till today?
Henry Gerkens
Absolutely. I mean if you look at -- and my recollection is '09 is when we probably lost the most, and that was probably due to a lot of things tied to recession.
Pat, I think that's correct.
Patrick O’Malley
Right. Yes.
Jon Langenfeld - Robert W. Baird & Co. Incorporated
Yes. Okay.
And then the last two, for clarification, the numbers you were throwing out for volumes and revenue per load, excluding the substitute line haul, was that overall company volume or just truck, trucking volumes?
Henry Gerkens
Trucking.
Jon Langenfeld - Robert W. Baird & Co. Incorporated
Trucking. Thank you.
Henry Gerkens
Thanks, Jon.
Operator
And our next question comes from Alex Brand with Suntrust Robinson Humphrey.
Alexander Brand - SunTrust Robinson Humphrey, Inc.
I just want to tag on to Jon's question there on the load trends. Can you talk about has it accelerated?
How strong was March? And what April has looked like so far?
Henry Gerkens
I think what I would categorize as far as the trend, if you go back to the first quarter of last year, the first quarter was, again, you were looking over the product. It was weighted much more towards volume.
Whereas if you look at what's occurred this year, it is a lot of price. I mean, demand is strong and it's hard to -- when you look at the volume levels in the first quarter, you were impacted by a good 8 to 10 days of some weather.
And if you look at our daily load reports and where we expected load volumes to be in relation also then to the prior year, you could literally tell which days you were impacted by snow and adverse weather. And these are squishy numbers, but we would estimate that volume-related declines just due to weather were probably $10 million to $12 million in the first quarter.
So volume has been pretty strong, demand is there. But what's happening now is that price is just moving north.
And if I look sequentially so far in April from March. Again, April price is much stronger than it was in March so you continue to see that upward movement, and demand remains relatively strong.
Alexander Brand - SunTrust Robinson Humphrey, Inc.
So that segues beautifully, Henry, thank you for that. To my net revenue margin question, I mean, it didn't impact you in the quarter, but did you get more pressure towards the end of the quarter and is that something you expect going forward?
I mean, do you have enough business that's tied to some contractual rate that you promised that you can get hurt?
Henry Gerkens
Are you talking about brokerage fees? Jim, do you want to answer that?
Jim Handoush
Yes, we got a little more pressure coming into March. If you look at the quarter-over-quarter sequentially, we -- the fourth quarter rate for truck brokerage, excluding substitute line haul, obviously, was the same as it was in the first quarter but March was a little more pressure on in March than it was in January and February.
Maybe about 30 or 40 basis points from January to March.
Alexander Brand - SunTrust Robinson Humphrey, Inc.
Okay, great. Thanks for the color, appreciate the time.
Henry Gerkens
Thanks, Alex.
Operator
And our next question comes from Jason Seidl with Dahlman Rose [Dahlman Rose & Company, LLC].
Jason Seidl - Dahlman Rose & Company, LLC
Let's talk about good things, your earnings. A couple of quick questions.
When I look at the Intermodal segment, this is the first time in a while that you guys have shown some nice growth. Can you talk a little bit about that double-digit growth?
Do you expect that to pick up as the year progresses with tight capacity in the truckload sector?
Henry Gerkens
Yes, I think one of the things that you've seen is and we've tried to, again, we had some difficult comps because of some of -- the two agents that we had lost, if you will. One being terminated.
One had left that were very large intermodal agents, but we have continued to work at that. We brought in some agents that a replacement, if you will, to replace that volume and things are moving up north of that, if you want to give some color on that?
Patrick O’Malley
Jason, I think it's two things. I think it's what we've been able to do relative to bringing in agents that have a solid book of business on the intermodal side coupled with our existing agents doing a much better job of going out and penetrating their customers and securing better buy rates in how we, what I call "rationalize the system" and take advantage of all of the movements and not view each movement individually, but evaluate our Intermodal business collectively.
And I think we've done a nice job of that.
Jason Seidl - Dahlman Rose & Company, LLC
All right, great. Thanks for the color on that one.
My other question, it's just regarding the revenue per load. I guess I was a little surprised to see a little bit of a sequential downtick.
I guess that has to do with some of the mix in terms of your BCO and your Truck Brokerage Carriers. Are you expecting that to...
Henry Gerkens
I think, Jason, I think if you actually analyze, and Jim, you can verify this, I think if you go back fourth quarter compared to first quarter in every year, there is typically -- sequentially, a different kind of relationship. As I've just explained, April's revenue per load is higher than March and you're starting to see a pickup.
But you can't sequentially compare the fourth quarter to the first quarter. The first quarter is very -- it's the one quarter that's pretty -- I won't call it an odd ball quarter, but it's got lower volume, you've got typically your lower margin and you do have your lower -- typically your lower rates.
So it's really not an accurate comparison to try to compare fourth quarter to first quarter from a lot of different metrics.
Jason Seidl - Dahlman Rose & Company, LLC
Yes, I understand. Just if I look at it from '99 to 2010, truck brokers from 4Q 2009 to 1Q 2010 it actually went up a little bit and we went down here.
So I guess, just especially more that it feels like I was a little bit surprised at that number.
Henry Gerkens
There's a significant influence on how much substitute line hauls in there. Substitute line haul's average on truck brokerage is a little bit higher than the norm.
So that really, if you take that out, your average -- if you go with the same factors, you were just saying in '09 and stuff like that, well, we've been anywhere from fourth quarter to first quarter, anywhere from minus 1.2% to minus 14% going from fourth quarter to the first quarter. And this year, without the sub line hauls [substitute line hauls] it might as well as 0.7%.
That's really not that unusual. Really, sub line haul has a lot of influence over that pricing because it's a little bit higher than you're normal van.
Jason Seidl - Dahlman Rose & Company, LLC
Okay, fantastic. Guys, I appreciate the time, as always.
I'll get back in the queue if I want something else.
Henry Gerkens
Right. Take care.
Operator
And our next question comes from Justin Yagerman with Deutsche Bank.
Justin Yagerman - Deutsche Bank AG
I wanted to ask, I guess trying to get at exactly how strong your environment is right now and a sense of your confidence and your outlook, if I look at my model and right now, just without adjusting anything. I've got some modest revenue deceleration in terms of the growth rate growing sequentially from Q1 to Q2.
You guys have much more difficult comps, as I look at Q2 '10 and Q3 '10 on a year-over-year basis for the next two quarters. Do you think that with the backfill that you're getting, I guess, the strengthening environment, replacing that loss of Substitution Line Haul business, that at current, you could actually see some year-over-year revenue acceleration as we move sequentially through the year?
Or do you think -- I mean Q2 is going to be tough to see things better than we saw in Q1 here.
Henry Gerkens
Well, I think you've got a bigger impact on substitute line haul in the second quarter, if you're referring to that, all right? And that you're going to have in the second and third quarter.
And again, that's that low margin business. I believe, based on what we see, we will more than offset that decline and that Substitute Line Haul business with higher paying freight, if you will, higher margin freight, and that's what's going to get you that 42% margin.
But I expect that revenue to continue to -- if I take out the substitute line haul, I mean I anticipate that revenue will continue to move north and about the same amount.
Justin Yagerman - Deutsche Bank AG
Okay. All right, that's...
Henry Gerkens
The one thing that's a little more challenging for us though, as you could see and we share with everybody is, rates last May on the truckload started to spike on us. That's about when it started to climb, so truckload rates, the rates of others, they're pretty high than they and our rates were a lot higher than they were in the last year's first quarter.
But you saw them starting to creep up in May of 2010, so that's really a little bit of the tougher comp. But we still see that we're going to be, we're still going to produce the growth rate that we thought we saw in about the first quarter, somewhere in that range maybe a little less, but nothing significant at this point.
Justin Yagerman - Deutsche Bank AG
That ties in, I guess, to my next question vis-à-vis kind of potential for spikes. We had a, I guess what sounded like a pretty unseasonably weak Q1 on the West Coast from talking to a few of your asset base competitors.
And it sounds like things have picked up here in the first three weeks of April. But I wanted to get a sense of: a, maybe what you guys think was driving that West Coast weakness, if you saw it at all; and b, what you guys are seeing and what your expectations are as we move through the quarter in terms of that picking up and maybe driving some of the price spikes that there would be maybe expected around this time of the year?
Henry Gerkens
Pat?
Patrick O’Malley
Justin, I can't agree with you on the West Coast weakness. Frankly, I will say that the West Coast in April, late March and April has been a strong area for us, but I would not characterize the first part of the year being weak out on the West Coast.
Justin Yagerman - Deutsche Bank AG
All right, great. Better for you guys, appreciate it.
Henry Gerkens
Thanks.
Operator
And our next question comes from Todd Fowler with KeyBanc Capital Markets.
Todd Fowler - KeyBanc Capital Markets Inc.
Great. Thank you.
Henry, could you talk a little bit about the business at this point? How much of the Truck business is contractual versus how much is elevated as spot?
Does that mirror the revenue that you get on the BCO side versus the brokers or is there a little bit of a different mix? And if you could also talk about what you're seeing with contractual pricing, that would be helpful.
Henry Gerkens
Well, Todd, as we've said before, about 50% of our business is spot and about 50% of our business is contractual. We won't commit to a price and guarantee a truck, but we will guarantee a truck if we don't commit to a price.
So about 50% of our business is contract and 50% is pricing, as it relates to bids coming in the door Joe, do you have an idea on that?
Joseph Beacom
Yes, bids volume is a little behind prior year and I'll kind of dovetail with what Pat said. We have about 50% of our customers under a contract, but there's a lot of business that's moving at a higher rate than previously that would have been in place, just because of the demand being where it is.
Operator
And does that conclude your question, Todd?
Todd Fowler - KeyBanc Capital Markets Inc.
[Technical Difficulty] So Joe, I might have missed the last part of that. You said that it's roughly the same as what Pat was talking about the 50-50 split, but you've got more freight, I'm sorry, moving at a higher rate?
Joseph Beacom
What we have is if you look at our customer base, about half of our customers we have under a contract. That doesn't necessarily mean that we have contracted rates that we are bound to.
We move freight for those same customers at rates higher than their negotiated as the environment dictates, they be negotiated to move the customers' products. So while in one sense, we have a contract with that customer, where in some cases, we don't have a formal contract, the pricing that moves that business can be variable, depending upon the demand that the customer has.
Todd Fowler - KeyBanc Capital Markets Inc.
Got it, that makes sense. And then what are you seeing right now on contractual rates that are resetting and what's kind of your expectation for the rest of the year?
Joseph Beacom
They're continuing to increase, and I think you see a lot more customers trying to have committed capacity going forward, to kind of alleviate some of their concerns, which again, I think bodes well for the pricing environment as you look out for the balance of the year.
Todd Fowler - KeyBanc Capital Markets Inc.
And is mid single digits the right way to think about the increases or is something better or worse than that?
Joseph Beacom
I think that's a very -- that's a tough one to predict right now. I wouldn't, I would not be fair to say double-digit at this point.
Todd Fowler - KeyBanc Capital Markets Inc.
The second part I had, Henry or Jim, I'm not sure if you gave the number of agent locations. I think recently you've been talking about kind of a same-store sales number from the agents, if you had both of those, that would be helpful.
Henry Gerkens
What I stated was that I believe the agent locations that we added were about $25 million of new revenue, and I think that's what we've disclosed, am I correct, Jim?
Jim Handoush
Yes.
Henry Gerkens
And that's all we've said, Todd.
Todd Fowler - KeyBanc Capital Markets Inc.
Okay. So you didn't want to share a specific number of agent locations?
Henry Gerkens
No, we don't have that on the -- I don't think we've released that. No.
Todd Fowler - KeyBanc Capital Markets Inc.
Well, it's okay.
Patrick O’Malley
It's over -- slightly over 1,300, we're just not putting the specific number out.
Todd Fowler - KeyBanc Capital Markets Inc.
Okay, fair enough. Thanks a lot guys.
Operator
And our next question comes from Donald Broughton [Avondale Partners, LLC].
Donald Broughton - Avondale Partners, LLC
EOBRs [electronic on-board recorders], how do you intend to assist your BCOs and what will eventually be the required adoption of this technology? And is it possible that once you've integrated them into your platform that the requirement of EOBRs could actually aid you in BCO recruiting?
Or because you can say, "Well, we can still get you the miles," even with an EOBR in your cab? Or is that a stretch?
Henry Gerkens
Well, I'll let Joe comment. I mean we've got our current game plan at this point in time is that all new BCOs that we've put on-board, starting sometime in the fourth quarter, will be required to have an electronic on-board recorder.
Two, those BCOs that we find out that are violating or have some problems with their hours of service, we will mandate that they put electronic on-board recorders in, as far as for the rest of the BCO population that basically does it right, we're not going to require them at this point to put them in. However, we would encourage early adoption if they want.
And Joe, you want to add?
Joseph Beacom
Yes, Donald, we're in the process of testing a couple of vendors right now, with the intent of testing a couple more. I think what we've seen from some of the test units that we've got in the field and some of the feedback we've gotten from those guys, and we bring them into our appreciation event, it can be viewed as a negative, initially.
But then when you look at the piece of mind and some of the administrative benefits that it comes with, it tends to be a little bit more palatable. I think over time, what you'll see and what we'll be able to demonstrate is that the increased visibility along with the ease of the administrative issues, makes it a pretty palatable addition to a BCO's business.
That's our goal, that's our plan, but again, we're in the throes of implementation of some test units and then negotiating price. Obviously, price will be a part of that process as well.
Donald Broughton - Avondale Partners, LLC
Very good.
Operator
Our next question comes from Tom Wadewitz with JPMorgan Chase.
Thomas Wadewitz - JP Morgan Chase & Co
Let's see, I wanted to ask you, I think you were asked a little bit about the pricing trends, but I don't know if you gave the truck pricing trend in March and April. I don't know.
Are you willing to give the numbers so price, I guess, revenue per load growth year-over-year by months, and let's say in BCO?
Henry Gerkens
Jim is looking that up. I mean it's -- I know from March to April, it's higher.
I don't know.
Jim Gattoni
These are the price range.
Henry Gerkens
Revenues per load is what he's looking for. Sequential.
Thomas Wadewitz - JP Morgan Chase & Co
Yes, looking for revenue per load in BCO.
Jim Gattoni
I got it in dollars, if you want it per load.
Thomas Wadewitz - JP Morgan Chase & Co
Do you have the year-over-year growth in that or...
Jim Gattoni
Hold on, I got that. I got the growth that's better, 10%, 11% and 10%.
10% in January; 11% in February; 10% in March.
Thomas Wadewitz - JP Morgan Chase & Co
And what does beginning of April look like?
Henry Gerkens
Higher than what it was in March, which I'm going to guess, it's similar to that type of rate.
Thomas Wadewitz - JP Morgan Chase & Co
So it's probably similar type of year-over-year? Let's see, why when we look at the BCO, you asked about BCO recruiting and so forth in your BCO account earlier.
If I just look at -- so BCOs were down a little bit, but your loads in BCO, I think were down more than the BCO count. Why wouldn't we, and into a strong market, like you're seeing, where pricing is going up a lot.
Why wouldn't you see some growth with the BCOs in terms of volumes? Are they already utilized at a high level?
Henry Gerkens
You got to remember one thing, we don't force dispatch anything. Loads are out there and all the -- and people can pull them down.
We don't -- it's not a matter of we push it towards one or the other. The other impact I think, our BCOs are normally a, what I'm going to call, a safer breed.
And you had a good, as I said, 10 days at least of weather that was not good. Our BCOs more than likely were not going to pull load down to do that.
So I think that's part of the reason. When you take a look at the -- I think what you're trying to do is a correlation as far as the loads hauled versus the decline.
That's what we would basically, I think, actually point to, if you will. And I believe, when you look through January, February, March, that percentage increased.
And, Pat?
Patrick O’Malley
Utilization improved as you went through the quarter. That utilization was really impacted negatively by the poor weather.
Thomas Wadewitz - JP Morgan Chase & Co
Okay so if you assume that the BCO count doesn't change a lot or maybe it's down a touch then it would be reasonable to think if you don't have a weather impact in second quarter, then maybe BCO loads could grow?
Patrick O’Malley
Correct.
Henry Gerkens
That's correct. And yes, it's again from the BCO standpoint, we looked at the week-over-week small decline, numbers in and numbers out.
As Pat alluded to before, it's been really the recruits coming in because we've actually -- there's less deletions that's why our turnover rate still maintains at around 30%. But the recruiting has been not so much and it's been 5 this week, 5 the next week and 10 whatnot.
But I will tell you, the last two weeks has been the first time in probably a while that we had positive week increases in the last two weeks. And I think that is partly in part from some of the things we're doing, as far as our refocused reemphasis on bringing, letting people know about Landstar.
Thomas Wadewitz - JP Morgan Chase & Co
Right, right. Okay.
Thank you.
Operator
And our next question comes from Chris Ceraso with Credit Suisse.
Christopher Ceraso - Crédit Suisse AG
A couple of quick questions. The expected -- your typical revenue growth from Q1 to Q2 is, I don't know, 10% or something like that.
Do you think it will be better than that this quarter? Because weather was extra bad in Q1 or is it going to be a little bit worse than that because substitute line haul is still declining?
Henry Gerkens
Well, obviously, it's going to be better because I don't anticipate any snow in the second quarter and I don't anticipate any bad weather. Now the substitute line haul impact is going to be greater in the second quarter, because I think that was Jim, correct me if I'm wrong, it was like 13%, 14% of the total revenue last year.
So it is probably the biggest impact in the second quarter. On the other hand, we've got a lot of good initiatives going on and plus, as I've said, the price, revenue per load is moving north very nicely.
So we anticipate the same type of growth, if you will, excluding substitute line haul that we experienced in the first quarter. I think it's the way to look at it.
Christopher Ceraso - Crédit Suisse AG
Okay but if I'm looking from Q1 to Q2, will that be your normal seasonal growth or will it be better than normal seasonal growth?
Henry Gerkens
X substitute line haul, all right? And then x substitute line haul, I believe it will be better, only because I think the pricing environment is stronger.
Christopher Ceraso - Crédit Suisse AG
What about with substitute line haul?
Henry Gerkens
Well, that's what I was trying to explain before, with substitute line haul, it depends on where that is. It's a big number and it's set between 70% and 80%, it's what I anticipate losing.
So my best way to gauge that would be in the comparison to the prior year. Unless Jim, you got a better answer than that?
Jim Gattoni
Sub line haul in the second quarter was -- of 2010, was $70 million and the first quarter last year was $77 million. And we're saying that it's going to be down the same percent in the second quarter as in the first quarter.
You can probably figure that the effect of sub line haul, I just can't do it in my head. But I gave you the numbers you can probably work it yourself.
But we're still saying that without that, we'd probably have at or better than the historical trend than what you see in first, second quarter.
Christopher Ceraso - Crédit Suisse AG
Okay and then just a question on automotive. Have you seen any kind of disruption related to downtime at the Japanese car companies or anything related the supply disruptions?
Henry Gerkens
Nothing that is negligible.
Christopher Ceraso - Crédit Suisse AG
Okay. Thank you.
Operator
And our next question comes from Matt Brooklier from Piper Jaffray.
Matthew Brooklier - Piper Jaffray Companies
Henry, I just wanted to go back and clarify something that was said earlier regarding your BCOs and the associated volume, it's almost like the "chicken or egg conundrum" if you will. And I think, as I understand it, you indicated that you would -- the ability to grow BCO volumes is less dependent upon the number of owner operators that you have in your network?
Or do you need to grow the BCO count in order for volumes to reaccelerate within that part of your business?
Henry Gerkens
Well, first of all, you're looking at it all wrong. I mean, we basically, again, we don't push -- first of all, the overriding premise is satisfy the customer, whether it's on the brokerage, truck or BCO truck.
All right? You got to understand this.
So you got to look at the revenue growth in total. We want to grow both revenues of BCO and brokerage, but you've got to understand that as long as I move the customers freight, that's all that matters.
The BCO numbers when we started to look at that, we started to see that we were getting nicked 5 here, 5 there, week after week. And what it really was is that we weren't paying attention as well as we should.
All right? So basically bringing on qualified BCOs, because there really is no better home for a qualified owner operator than Landstar.
So we basically redirected some of our forces to basically try to bring that on-board. But again, the overriding premise is that I want more BCOs because it allows us also to get into different accounts.
And customers view that as a positive as opposed to just having haul brokers. So we're moving forward on both of that.
But I don't think you should be looking at it as far as this business versus that business versus whatever. It's not really the proper way to view it.
Again, I think our BCOs are the safest in the industry and we're going to basically go out and bring them on board because that's where they belong.
Matthew Brooklier - Piper Jaffray Companies
Well, I guess my question more simply put is, is your current BCO count impeding your ability to grow volume in that business?
Henry Gerkens
In what business?
Matthew Brooklier - Piper Jaffray Companies
In your recent -- if I look at your BCO volumes and your BCO agents...
Henry Gerkens
BCO has a lot of business per se, I mean, if I have less BCOs in theory, I can't put as many. There's a limit as far as the capacity that people can put on it, a BCO can haul.
Now I will tell you, that I think what happened in the first quarter is, if you looked at January, February and March, I mean BCOs picked up as far as utilization per BCO if we had that number. And that's just the function of #1, weather, and they're truly capable of hauling a lot more.
But obviously, the more BCOs I have in the system, there's more likelihood that BCOs can haul freight. On the other hand, you look at the brokerage fees, we grew brokerage x substitute line haul 36% in the quarter.
So it's again, it's about satisfying the customer
Matthew Brooklier - Piper Jaffray Companies
Okay, so we shouldn't be as focused on the BCO count and more focused on, I guess the aggregate all-in, substitute line haul revenue number?Okay.
Henry Gerkens
[indiscernible] Total revenue, and I think it's interesting because you had last year, you had the substitute line haul in, this year you got it out, so you got to talk about the numbers without the substitute line haul. But I think, when you look at that overall growth rate without the substitute line haul, we replace substitute line haul with pretty profitable business whether it be BCO or brokerage.
Matthew Brooklier - Piper Jaffray Companies
Right, I mean you grew, sales look good and picked up in the quarter and you ate your net-out margin line. So even with the revenue a little bit light, still looking better from a profitability perspective.
My other question, your share repurchase authorization, I guess what's left under the current plan? And how do you think about share buybacks going forward?
Henry Gerkens
I believe it's 700-and-some-odd thousand shares. We didn't purchase anything back in the first quarter due to a lot of different reasons, some due to windows, others due to -- the price was consistently moving up and it's we try to pick our spots to try to buy, basically.
When there is sort of a leveling off, if you will, we might step in, but there's nothing that's changed in our philosophy as far as share buyback. And I would suspect we would complete that share buyback program and probably have another one at some point during the year.
We also, by the way, we did spend, I think it was $8 million this year in the first quarter to buy out the remaining 25% interest in A3i. So it was a little bit different use of cash, but generally, our philosophy has not changed whatsoever as far as share buyback.
Matthew Brooklier - Piper Jaffray Companies
Okay. Very good.
Thanks for the time, guys.
Henry Gerkens
Thanks, Matt.
Operator
And our next question comes from Tom Albrecht with BBT.
Thomas Albrecht - BB&T Capital Markets
I'm going to ask the question I think in a little more straightforward manner. I guess first of all, on the LTL Substitute Line Haul business, is all of it or most of it in the Brokerage business?
I was thinking most of it.
Henry Gerkens
Most of it is. And when I say most, I'm looking at 95% of it is.
Thomas Albrecht - BB&T Capital Markets
Okay. So just to make it easy, as we think about loads and growth, you did 135,740 loads in the first quarter at brokers or brokerage.
About how much of that would have been LTL line haul substitute loads?
Jim Gattoni
About 9,500.
Thomas Albrecht - BB&T Capital Markets
Okay.
Jim Gattoni
First quarter 2011, right?
Thomas Albrecht - BB&T Capital Markets
Correct. Yes.
I'm just trying to get a feel for apples and oranges there. So what would it have been a year ago, if I guess let me see probably 40,000 maybe?
Jim Gattoni
43,000.
Thomas Albrecht - BB&T Capital Markets
Okay. all right.
So I think what we're all trying to figure out is in the second quarter, is it likely that there is low growth in the brokerage arena? Or maybe, that's in the second half of the year?
Certainly, you're growing and making up a...
Henry Gerkens
I'm going to repeat, I'm anticipating same type x substitute line haul. We're anticipating the same type of total revenue growth.
I believe brokerage grew 36% in the first quarter. Right now, with demand and pricing the way it is, I mean it's going to be a strong quarter.
We have substitute line haul in there that's going to come away. But if I looked at, and I haven't thrown out any revenue estimates, but when you look at what we did in the first quarter, as far as I think it was 17% revenue growth without substitute line haul, I mean, we think we're somewhere in that range.
Thomas Albrecht - BB&T Capital Markets
Okay. That's helpful.
I mean, it allows me to be a little bit more granular. I know last quarter too, you talked about potentially cleansing your approved inactive carrier base in light of a CSA.
There was some decline sequentially. I can't tell if that was just an ebb and flow or whether that reflected the greater scrutiny?
Henry Gerkens
Whatever the -- go ahead, Jim.
Jim Handoush
Yes, Tom. We did put in place our CSA standards in the first quarter.
And then we've kind of adjusted them, that's still a bit of a moving target with CSA. But we did put those in and we did see a decline in the overall count from where we ended the year but then we kind of built that up pretty nicely here after that in the balance of March.
Thomas Albrecht - BB&T Capital Markets
So would you say, you're essentially done, but it's like a balance sheet, it's only a snapshot on any given day?
Jim Handoush
Yes, we're essentially done. I think our standards, we've tweaked them once, are in place.
It's really more now a function of how do the metrics, how do the CSA metrics begin to fall into place with all these carriers that are out there. That's really it.
I thought we did a pretty nice job of moving the approved active number North year-over-year by more than 1,000 carriers. So I think that's really a part of our effort, too, is to do more business with the ones that we are very comfortable with.
And who seem to do a nice job for us. So further utilizing the capacity that we know is going to be there long term.
Thomas Albrecht - BB&T Capital Markets
And back to an earlier question about owner operators?
Henry Gerkens
Let me get it, but we're running out of time and I've got other people who want to get on here. So [indiscernible] , if you like.
Operator
And our next question comes from Ed Wolfe with Wolfe Trahan.
Edward Wolfe - Bear Stearns
So substitute line haul, it looks like year-over-year was $58 million difference relative to $46 million in fourth quarter. Should we interpret that -- do you think first quarter would be seasonally less of that, that it's more than one customer now?
There is other customers? Or how do we think about that?
Jim Gattoni
No, it's one customer.
Edward Wolfe - Bear Stearns
What's left, you said there was $77 million a year ago first quarter, how much was there a year ago second quarter and third quarter, just so we can get these comp?
Jim Gattoni
$71 million in the second quarter, $48 million in the third. [indiscernible]
Edward Wolfe - Bear Stearns
Thank you. That makes sense.
Jim, do you have cash from ops in the quarter?
Jim Gattoni
15.6, I think. That's it.
Edward Wolfe - Bear Stearns
Okay, and was there any accrued incentive comp in first quarter?
Jim Gattoni
Yes, we are accruing to the target.
Edward Wolfe - Bear Stearns
Which is $7 million or $8 million a quarter?
Jim Gattoni
The target would pay out $7 million on a yearly basis.
Edward Wolfe - Bear Stearns
Okay. So $7 million to $8 million, annualized per quarter, divide that by four in other words?
Is that fair?
Jim Gattoni
It's not perfect science but sort of.
Edward Wolfe - Bear Stearns
And just understanding the terms of pricing, if pricing is going to go into a multiyear upswing, how do we think about this, Henry, in terms of -- refresh me, is it roughly the BCOs takes on 67% to 75% of that and the agent another 7% to 8% and you get the rest?
Henry Gerkens
Yes, the way that works, Ed, is when you look at that loads hauled by BCO, they typically get about 75%, the agent typically gets about 8%, so what you're dealing with is 83% out the door and the 17% basically falls outside of that.
Edward Wolfe - Bear Stearns
Okay. I just want to make sure I was thinking that.
And final thing, revenue adding everything together including the substitute line haul reduction, was 4.4 in the quarter. Can you talk about how that total revenue grew throughout the month?
And into April, year-over-year?
Henry Gerkens
Well, typically, and if I'm understanding your question, you're talking about sequential month-over-month growth?
Edward Wolfe - Bear Stearns
Your January-over-January, February-over-February and March-over-March to take the seasonality out in April-over-April?
Henry Gerkens
Yes. Shouldn't be able to get that, I mean...
Jim Gattoni
5-4-4 is relatively consistent quarter-over-quarter.
Edward Wolfe - Bear Stearns
So 5 in January, 4 in February, 4 in March?
Jim Gattoni
Yes.
Edward Wolfe - Bear Stearns
And how does April look?
Jim Gattoni
I don't...
Henry Gerkens
I don't have anything close for April. We've got it on a weekly basis and from a load report, load's look fairly good.
And this is on a month-over-prior-year-month, because I don't have that, but I'll tell you from a sequential standpoint, the pricing piece is much stronger than it was in March, as I said before.
Edward Wolfe - Bear Stearns
Okay. Thanks for the time, guys, appreciate it.
Operator
And our next question comes from John Barnes with RBC Capital Markets.
John Barnes - RBC Capital Markets, LLC
I'll try to be quick here. You've given the number of load broker loads for the first quarter of 43,000.
Do you have the same data for the second and third quarter of 2010?
Jim Gattoni
I think I do actually.
John Barnes - RBC Capital Markets, LLC
And while you're getting that, is there any concern with the DOD [Department of Defense] budget cuts? So the business that you're doing for the U.S.
military?
Henry Gerkens
John, I will tell you that we've attended several meetings. I think what you're going to see happen is we have to execute better against our strategies to enter into -- there's several other businesses that would traditionally handle just the FAK and the AAD.
This year, we hold some revenue levers on the BRAC movements. And so there's a lot of other reason we can get involved in the DOD.
But they've made it clear that they're going to cut back. It's up to us to make certain that we execute against that entering into different businesses within the government to kind of augment that revenue stream.
John Barnes - RBC Capital Markets, LLC
Okay.
Jim Gattoni
All right, John, you got 43,000 the first quarter; 37,000; 26,000; and 12,000. 2010 by quarter.
John Barnes - RBC Capital Markets, LLC
Thank you so much guys. I appreciate your time.
Operator
And our next question comes from David Campbell with Thompson Davison Company.
David Campbell - Thompson Davis & Co
Thanks. I got most of my questions answered.
I just wanted to ask you the purchase of the remaining interest in the first quarter was how much? And what were the CapEx for the year?
Henry Gerkens
$8 million for the purchase of the remaining interest. And Jim, CapEx?
Jim Gattoni
Estimated CapEx for the year will be $40 million, either between cash purchase or capital lease.
David Campbell - Thompson Davis & Co
So some of them won't be in cash flow? Okay.
And I think that's got me. Thank you very much.
Henry Gerkens
Thanks.
Operator
And our next question comes from Nate Brochmann with William Blair & Company.
Nathan Brochmann - William Blair & Company L.L.C.
Thanks for taking my call at the end. I just wanted to shift gears a little bit, Henry, in terms of I think we got the current environment pretty well, as good as can be figured out.
But when you're looking a little bit forward here and you're targeting the new agents, are you bringing them on in many particular areas with areas of expertise beyond just truckload or flatbed?
Henry Gerkens
I think it's all areas, but, Pat?
Patrick O’Malley
Yes. I think that if you look at some of the revenue growth, as we've mentioned earlier, intermodal that was a function of new agents that have that book of business.
If you look at some of the growth on the international air and ocean side, that too is new agents that have that expertise. But Nate, we don't target agents that way.
We target agents that we believe are a good fit for Landstar. So they're across the landscape of the country and across the landscape of service offerings.
Nathan Brochmann - William Blair & Company L.L.C.
Fair enough. And a year ago, I was personally really impressed with the amount of -- at your Analyst Days last annual conference, with the amount of enthusiasm regarding the cross-selling opportunity.
How is that now a year later in terms of the, is that enthusiasm still there? Or as the economy is coming back and individual agency kind of their core bread-and-butter returning, are they kind of stepping away from the idea of the cross-selling opportunity?
Patrick O’Malley
Well, I think we remain focused on the cross-selling opportunities and presenting those to our agents. And regardless of the economy, you'll get some folks that are very comfortable in selling what they want to sell and other folks that are excited about going in and penetrating their customer and all wanted unique to those service offerings.
So I would characterize it, Nate, as a continuing work in process -- or progress, I should say. And I think we're getting some traction along the air, ocean side in particular.
Operator
And your next caller is Matthew Young with Morningstar.
Matthew Young
Just to segue real quick on Nate's question on the intermodal and air and ocean Freight Forwarding business, just wanted to get a better sense of whether you guys think that growth going forward would be more from existing accounts or kind of penetration or from the new customers? Obviously, there will be probably be some new customers when you bring on new agents.
And then, again more specifically on that, over time do you expect most of your agents to handle that business or would you think that would stay more specialized, particularly on the intermodal side?
Henry Gerkens
Matthew, we expect the growth in air, ocean to come from all three of those: new customers, existing customers and new agents. And frankly that's part of our strategies, so we expect that.
Matthew Young
Okay. And just one other quick one.
Could you comment quickly on the status of your value-added warehousing business, perhaps recent trends there, any expectations? Anything...
Henry Gerkens
What we don't, warehousing we've actually changed strategy a little bit on that. We have our network of WCOs [warehouse capacity owners] rather than supplying a complete software solution to each WCO, each one of those have a various -- different systems.
So what we're going to be doing is literally just partnering up with those individual warehouses and move in that direction as opposed to a complete software package offering. But really, other than that, there's no change in how we're approaching it.
Matthew Young
Okay, great. That's all I have.
Operator
And our last question comes from Anthony Gallo with Wells Fargo Securities.
Anthony Gallo - Wells Fargo Securities, LLC
Congratulations on the quarter by the way. Is there a margin difference between brokerage and BCO?
And if so, how does that fluctuate? Or can you give us some parameters for that?
Henry Gerkens
Well, yes. It's a couple of ways, your Brokerage business, as far as when you utilize a broker carrier, it can be what I'm going to call, a variable gross profit revenue or what I'm calling, retention revenue.
The retention revenue is where we take a percentage off the top and therefore, we know what it is all the time. And that can run anywhere from 8% to 12% depending on the contract with the agent.
And I think generally, that runs about 8% or 9%, 10% of our business in total. And then you've got the variable piece, which operates where you're in an environment where you have tight capacity market.
And therefore, it does tend to put some pressure on some margin and then it's just a matter of how quickly you can get that price back. Would you just split that margin depending on, again the contract with the particular agent.
As far as how that relates to our BCO-driven revenue, as we said before, that's on a fixed gross margin basis. So you don't have any pressure as it relates to price and therefore, when prices to the customer increase, obviously, we have much more of an impact on that side of the business.
And that ran about 68%, I believe of the business in the first quarter and probably will be anywhere from 68% to 70-somewhat percent in the second quarter and beyond. From a total operating income, you could look at from just a margin standpoint, yes, that there is more margin on the BCO business.
But then again you have to factor that you have insurance costs against that. You don't have to factor against the brokerage fees, and that could run anywhere, let's call it, 2% of total revenue.
You've also got a lot of fixed costs as it relates to bringing on -- we're not bringing on BCOs, but basically, maintaining a BCO fleet, if you will, as it relates to compliance and things like that. We look at it as it becomes pretty close overall.
Anthony Gallo - Wells Fargo Securities, LLC
Okay. And part of it, I guess depends on where we are in the cycle, too.
I mean, one is not necessarily good or bad, it kind of partly depends on where you are in the cycle.
Henry Gerkens
No, absolutely correct. I mean, we like our mix and that's why, I said at the very beginning in response to, I think it was Matt's question, it's not a matter of -- it's a matter of satisfying the customer.
And I always have said, and I'm very consistent on this, I want to grow both groups. But as long as I'm hauling freight and even though our BCO count was down in the first quarter, x substitute line haul, we grew brokerage 36%.
That's pretty strong, which means we are satisfying the customer. Now that's no excuse for letting -- I think taking our eye off the ball a little bit on the BCO count, and that's easily fixed, because as we believe, there's no better place for an owner operator than Landstar.
So we've got some things that we're doing right now. And so far, two weeks doesn't make a whole year, but at least the trend now is positive over the past two weeks.
Anthony Gallo - Wells Fargo Securities, LLC
And that holds particularly true on a rising rate environment, right?
Henry Gerkens
Absolutely correct.
Anthony Gallo - Wells Fargo Securities, LLC
Okay. Right.
That's all. Thank you very much.
Henry Gerkens
Thanks.
Operator
And at this time, I show no further questions. I would like to turn the call back over to you, sir, for closing remarks.
Henry Gerkens
Thanks, Barb. And Jim, do you have anything you want to close off this?
Jim Gattoni
No.
Henry Gerkens
Pat?
Patrick O’Malley
No, thank you.
Henry Gerkens
Joe?
Joseph Beacom
I'm good.
Henry Gerkens
I guess we went over a little bit much, and I got sharp teeth, I was a little bit fired up. Look, I think it was a very good first quarter.
I think the second quarter looks even more promising, and we look forward to talking to you on our mid-quarter update call for the second quarter. Thanks.
Operator
And thank you for joining the conference call today. Have a good afternoon, and please disconnect your lines at this time.