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July 23, 2020 3:15 PM, EDT

Landstar Reports Lower Net Income in Q2

Landstar System truckLandstar CEO Jim Gattoni said independent business capacity operators and agents were paid an extra $50 for hauling loads starting in April. (Landstar System Holdings Inc.)

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Landstar System Holdings Inc. on July 22 reported second-quarter net income and revenue were down compared with last year’s levels.

The Jacksonville, Fla.-based transportation and logistics company posted net income of $24.3 million, or diluted earnings per share of 63 cents, for the three months ending June 30. That compared with $61.1 million, or $1.53, in 2019.

Total revenue decreased by 21.2% to $824 million from $1.05 billion.

Revenue for truck transportation provided by independent business capacity owners (BCOs) and truck brokerage carriers was $753.3 million, or 91% of total revenue. Truck transportation revenue was $968.2 million during 2019’s second quarter.

Revenue for truckload transportation involving van equipment was $483 million compared with $605.4 million. Revenue for truckload transportation provided by platform equipment during the quarter was $247.4 million compared with $338.1 million. Revenue for transportation involving rail, air and ocean cargo carriers accounts for the rest.

Although the ultimate impact that the coronavirus pandemic will have on the freight transportation industry continues to be unpredictable, we believe Landstar remains in a solid operational and financial position as we enter the third quarter.

Jim Gattoni, Landstar CEO

Landstar CEO Jim Gattoni

“The resiliency of Landstar’s variable cost business model performed as expected given the unprecedented economic decline caused by the coronavirus,” CEO Jim Gattoni said in a statement. “We entered the 2020 second quarter knowing we would face a very soft freight demand environment as a result of actions taken by governmental authorities and businesses to reduce the spread of COVID-19.”

Gattoni added that demand for freight services slowed significantly, and capacity became readily available during the quarter as anticipated. The number of loads and revenue per load hauled by truck decreased 16% and 7% from the prior year.

“The 2020 second quarter presented operating conditions and challenges unlike any other quarter in Landstar’s history,” Gattoni said. “Nevertheless, Landstar did not take any drastic cost-reduction measures that could have disrupted our ability to service Landstar’s customers, agents, BCOs or other third-party capacity providers or slow the progress on our technology initiatives.”

 

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He also noted that the company instituted a pandemic-relief incentive program in April. BCOs and agents were paid an extra $50 for hauling loads. The Q2 results included about $12.6 million of these incentive payments.

“Although the ultimate impact that the coronavirus pandemic will have on the freight transportation industry continues to be unpredictable, we believe Landstar remains in a solid operational and financial position as we enter the third quarter,” Gattoni said.

The results were mixed based on the expectations of investment analysts, who were looking for 72 cents per share and quarterly revenue of $782.6 million, according to Zacks Consensus Estimate.

Landstar ranks No. 9 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 41 on the TT Top 50 list of the largest logistics companies.

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