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Landstar System Inc. reported lower first-quarter net income of $40.9 million, or diluted earnings per share of $1.04, compared with $63.3 million, or $1.58, in the same period a year ago.
Revenue was $927.6 million in the quarter, down from $1.03 billion a year ago.
Truck transportation revenue hauled by independent business capacity owners (BCOs) and truck brokerage carriers in the quarter eased to $854.6 million, or 92% of revenue, from $953.1 million a year ago, also 92% of revenue.
Analysts forecast better results of $1.12 cents per share on revenue of $936.7 million, according to Zacks Consensus Estimate.
But CEO Jim Gattoni said Landstar performed as anticipated until the final week of the quarter, saying week-to-week trends in the number of loads hauled and revenue per load on loads hauled via truck met expectations based on historical experience.
“Unfortunately, these positive signs were completely extinguished by the impact of the coronavirus (COVID-19) pandemic,” Gattoni said April 22.
But dispatched truck load volume in the final week of the quarter “decreased significantly from the previous week,” after government and businesses gave shelter-at-home mandates and closed manufacturing facilities, he said.
“That significantly affected demand for transportation by many industry segments we service. We expect those conditions to persist throughout the 2020 second quarter,” Gattoni said.
Revenue slid across the board for the Jacksonville, Fla.-based transportation and logistics company:
Truckload transportation revenue hauled via van equipment in the first quarter was $545.3 million compared with $619 million in the same quarter a year ago.
Truckload transportation revenue hauled via unsided/platform equipment was $286.3 million compared with $310.7 million the year before.
And revenue hauled by rail, air and ocean cargo carriers was $54.7 million, or 6% of revenue, compared with $60.7 million a year ago, also 6% of revenue.
Gross profit — revenue minus the cost of purchased transportation and commissions to agents — was also down: $142.9 million in the quarter from $155.6 million in last year’s first quarter.
Gattoni said the decentralized nature of the Landstar model, where independent agents provide truck dispatch, freight tracking, trailer management and numerous other operational functions from over 1,200 agent locations throughout North America, gives it an advantage.
During the first quarter Landstar generated $99.2 million in operating cash flow, Gattoni said.
Wolfe Research analyst Scott Group sees more leverage to an eventual tightening in the truckload market for the asset-based carriers. “The company continues to generate really strong free cash flow and should ultimately weather the storm well,” he said.
Landstar System Reports 2020 First Quarter Results and Its Response to the COVID-19 Pandemic: https://t.co/6ngl3DR2IA— Landstar System (@LandstarSystem) April 22, 2020
Gattoni said during the second quarter the company will provide additional financial support to agents and BCOs during the coronavirus crisis that will impact earnings in the second quarter.
“Most notably, for each load delivered by a BCO with a confirmed delivery date from April 1 through April 30, 2020, Landstar will pay an extra $50 to each of the BCO hauling the load and the Landstar agent dispatching the load,” he said. “We estimate Landstar BCOs will deliver between 60,000 and 70,000 loads in April of 2020.”
Also, if a Landstar BCO tests positive for COVID-19 or is placed under a mandatory quarantine by a public health authority, Landstar will provide up to $2,000 to the affected BCO, said Gattoni.
Landstar ranks No. 8 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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