Landstar Reports Revenue and Earnings Decline for Q1

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Landstar System Inc. experienced a year-over-year decline in revenue and earnings during the first quarter of 2023, the company reported April 26.

The Jacksonville, Fla.-based company posted net income of $78.2 million, or $2.17 per diluted share, for the three months ending March 31. That compared with $124.8 million, or $3.34, the previous year. Total revenue decreased by 27.1% to $1.44 billion from $1.97 million.

“Given the current freight environment with soft demand and readily available truck capacity, Landstar performed relatively well in the 2023 first quarter,” CEO Jim Gattoni said during an April 27 conference call with investors. “Heading into the 2023 first quarter, demand for truck transportation services was somewhat soft. In addition, Landstar was faced with probably the most challenging quarterly financial comparison in its history.” Gattoni was referring to Q1 2022, when Landstar reported the best quarterly financial performance in its history after revenue soared 53% over the year-ago period.

“In contrast, the freight environment was dramatically different in the 2023 first quarter,” he said. “Looking back at the 2022 first quarter, consumer demand was very strong and supply chain disruption was at its peak. Those conditions resulted in a lack of available truck capacity, driving truck transportation pricing to all-time highs.”

Broadly, Gattoni noted that past trends have been less useful in recent years due to the impact of the coronavirus pandemic, but he now expects truck revenue per load and sequential truckload volume trends to move closer to historic pre-pandemic patterns heading into May. He said number of loads hauled via truck through the first several weeks of the second quarter has sequentially trended a bit below these historical patterns.

Gattoni 

“Following the 2022 first quarter, the demand began to soften and supply chain bottlenecks began to clear,” Gattoni said. “Beginning the summer of ‘22 and carrying through today, we are clearly in a different freight environment. Truck capacity is more readily available with market conditions currently favoring the shipper.”

Landstar’s Q1 2023 results topped expectations by investment analysts on Wall Street, which had been looking for $2.07 per share and quarterly revenue of $1.41 billion, according to Zacks Consensus Estimate.

Landstar said during the quarter, truck transportation revenue hauled by independent business capacity owners (BCO) and truck brokerage carriers decreased 24.4% to $1.32 billion from $1.75 billion during the same time last year. The segment includes truckload operations such as van equipment as well as unsided/platform equipment. It also includes less-than-truckload and other truck transportation operations.

Specifically, it said van equipment revenue decreased 30.1% to $755.1 million from $1.08 billion, while unsided/platform equipment revenue decreased 7.6% to $377.6 million from $408.8 million. Other truck transportation revenue decreased 29.9% to $159.5 million from $227.6 million.

“One metric we follow is revenue per mile on loads hauled by BCO trucks, which tends to be a more pure indicator of pricing as data excludes fuel surcharges,” Gattoni said. “Revenue per mile on van equipment hauled by BCOs in the 2023 first quarter was 26% below the 2022 first quarter. In contrast, revenue per mile on unsided platform equipment hauled by BCOs in the 2023 first quarter was only 6% below the 2022 first quarter.”

Gattoni said the perseverance of unsided/platform revenue relative to the other two categories is generally correlated to consumer demand, but also noted that spot market pricing pressures and heightened capacity during the quarter also affected revenue.

Here again, he referenced a return to pre-pandemic trends.

“It should also be noted that although the market has softened significantly from a year ago, Landstar revenue per mile on BCO van and unsided platform equipment both remain above the pre-pandemic 2020 first quarter by approximately 30%,” Gattoni said. “I believe the rates will remain higher than pre-pandemic levels given the significant amount of additional cost pressure to operate a truck today as compared to three years ago.”

The company’s rail intermodal segment saw Q1 revenue decrease 39.9% to $25.7 million from $42.7 million during the prior year quarter. The number of loads hauled by this segment decreased 38.6% to 7,760 from 12,630. Revenue per load decreased 2.2% to $3,306 from $3,380.

The ocean and air cargo carriers segment saw Q1 revenue decrease 59.8% to $61.1 million from $152.1 million last year. The number of loads hauled by the segment decreased 27% to 8,440 from 11,560, while revenue per load decreased 45% to 7,239 from 13,154.

Landstar ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 19 on the TT Top 100 list of the largest logistics companies.