Landstar System posted stronger-than-expected earnings Oct. 25, with net income rising 17% year-over-year in the third quarter, easily surpassing the Bloomberg News consensus forecast.
The Jacksonville, Fla.-based company generated $42.4 million in profits, or $1.01 per share, during the three-month period ending Sept. 30. The Bloomberg News consensus forecast called for $39.7 million or 94 cents.
One year ago, Landstar netted $36.3 million in profits or 86 cents.
Top-line growth was even better than the bottom-line results, increasing 20% to $943.4 million. The Bloomberg forecast on revenue was $887.4 million.
Landstar ranks No. 9 on the Transport Topics list of the top 100 for-hire carriers in North America.
Landstar CEO Jim Gattoni acknowledged that hurricanes Harvey, Irma and Maria boosted sales and margins because of the heightened demand to broker and haul relief supplies to the affected regions.
“The company recorded revenue of approximately $23.0 million in support of local, state and federal relief efforts relating to recent hurricanes that impacted Texas, the southeastern United States and Puerto Rico. These services in support of relief efforts contributed approximately $0.05 to diluted earnings per share in the third quarter,” he said in a statement. “The company recorded tax benefits during the third quarter of approximately $5.2 million related to the Internal Revenue Code Section 199 domestic production activities deduction and research and development credits. The net impact to diluted earnings per share related to these tax benefits was approximately $0.12.”
Like other truckload executives, Gattoni confirmed that the truckload market tightened throughout the third quarter, even more so after the hurricanes. Revenue per load was up 3% in July, 4% in August and 9% in September on a year-over-year basis, leading to 6% growth for the full quarter compared with 2016 levels.
Expenses climbed 21% to $883.6 million with insurance and other claims jumping 27% to $44 million, due to “a single severe accident that occurred during the third quarter,” the company stated.
Truckload revenue was almost equally split between independent contracts hooking up to a Landstar trailer and loads brokered through its brokerage arm, accounting combined for about 93% of business.
Dry van transportation revenue improved 18% to $550.5 million, load counts increased 13% to 329,329 and revenue per load rose $72 to $1,672 versus last year’s levels.
Unsided/platform equipment, such as flatbeds, produced $304.5 million in revenue, 22% better than a year ago. Load counts rose 13% to 126,509 and revenue per load grew from $2,219 to $2,407.
Less-than-truckload sales, although the smallest in the trucking business, jumped 25% to $22.6 million with loads up 20% to 34,232 and revenue per load increasing from $1,697 to $1,791.
Landstar’s non-trucking business, brokerage in intermodal and ocean and airfreight, was mixed in the third quarter. Intermodal revenue fell 1.7% to $24.2 million, mainly due to a 7.2% drop in loads brokered to 11,080. Ocean and airfreight revenue jumped 57% to $29.5 million with a 21% increase in load counts to 6,210.
Gattoni warned that the year-over-year comparison in the fourth quarter will be difficult to match because there were 14 weeks of operating last year versus 13 this year. Christmas also falls on a Monday this year rather than a Sunday last year, which means one fewer full workday in the quarter.
“We estimate that the extra week and timing of Christmas contributed approximately 30,000 loads and $52 million of revenue to the results in the 2016 fourth quarter,” he said. “I expect strong pricing to continue through the 2017 fourth quarter with revenue per load on loads hauled via truck to exceed the prior year fourth quarter in a low double digit percentage range. I also anticipate the number of loads hauled via truck in the 2017 fourth quarter to be above the 2016 fourth quarter in a high single digit to low double digit percentage range when excluding the estimated 30,000 truckloads included in the 2016 fourth quarter.”
Landstar estimates that fourth quarter revenue will rise between 9% and 15% to about $975 million to $1 billion with 98 cents to $1.03 in earnings per share.