Freight broker Landstar System (NASDAQ: LSTR) lifted second-quarter guidance ahead of an appearance at an investor conference on Tuesday. The company now expects revenue and earnings per share to be “slightly above” the high end of its previous guidance ranges of $1.4 billion to $1.45 billion and $2.20 to $2.30, respectively.

The Jacksonville, Florida-based company is calling for truckload volumes to increase by a low-double-digit percentage from the first quarter with revenue per load increasing by a high-single-digit percentage. The prior guidance called for sequential increases of 4%-6% for both truck loads and yields.

Through the first seven weeks of the second quarter, truckload volumes are 11% higher than the first quarter, with yields up 7%-9%. Normally, volumes increase 6%-7% from the first to second quarter with yields up only 1%.

Appearing at KeyBanc’s (NYSE: KEY) industrials conference Tuesday, Jim Gattoni, Landstar president and CEO, said the improved outlook would only translate to a slight increase in EPS guidance as “a lot of the growth is coming from third-party trucks, which has a lower gross profit margin.”

While the year-over-year comparisons get tougher in the back half of the year, Gattoni said consumer-related freight demand is still strong and e-commerce freight, mostly linehaul shipments, hasn’t slowed like he thought it would earlier in the year. He noted a transition in spending to favor services versus durable goods could be a headwind to freight demand, but not to the degree that he believed entering the year.

“I don’t see any indication that it’s going to slow down,” Gattoni said.

Chart: (SONAR: OTVI.USA). To learn more about FreightWaves SONAR, click here.

He said supply constraints, a lack of both drivers and equipment, are likely to keep the truck market tight moving forward. “I don’t recall a year where we had shippers talking to us in January and February about trailers for the back half of the year.”

Chart: (SONAR: OTRI.USA). The number of carriers rejecting loads under contract remains at nearly one out of four.

Landstar’s long-term target for operating margin, which it defines as operating income divided by gross profit, has remained at 50% on a full-year basis for a few years now. The first quarter of each year is seasonally the toughest operating period for the company. However, with this year’s first-quarter record operating margin, 1,680 basis points higher year-over-year at 54.6%, management was pressed for a revision.

“Clearly, we’re achieving it. I anticipate we will achieve it for the full year of 2021,” Gattoni said.

He said he doesn’t see any material increases in costs on the horizon, noting only modest administrative headcount additions to accommodate the higher load counts as well as an increase in depreciation expense due to recent spending on technology enhancements. He believes that 70% of each incremental dollar of gross profit can be pushed through to the operating line moving forward.

“Where does that operating margin end up, I’ll let you know after we get through this year,” Gattoni added.

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