Landstar System Reports Revenue Decline for Q4
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Landstar System Inc. experienced a year-over-year decline in revenue and earnings during the fourth quarter of 2022, the company reported Feb. 1.
The Jacksonville, Fla.-based truckload carrier posted net income of $93.3 million, or $2.60 a diluted share, for the three months ending Dec. 25. That compared with $113.3 million, $2.99, during the same time the previous year.
Revenue decreased by 13.9% to $1.67 billion from $1.95 billion.
The results fell below expectations by investment analysts on Wall Street, which had been looking for $2.62 per share and quarterly revenue of $1.77 billion, according to Zacks Consensus Estimate.
“The 2022 first quarter proved to be a peak following six consecutive quarters of strengthening in the macroeconomic freight environment,” Landstar CEO Jim Gattoni said during a call with investors Feb. 2. “As we move further into the year, supply chain congestion began to ease and the macroeconomic freight environment, although still relatively strong by historical standards, began to weaken.”
Gattoni noted the current macroeconomic environment made for challenging comparisons against the year-ago period. He also noted softer demand during a weaker than typical peak season resulted in more readily available truck capacity.
“Not unlike typical cyclical patterns historically experienced in the domestic freight environment,” Gattoni said. “Beginning in the 2022 second quarter, Landstar experienced a deceleration in quarter over prior-year quarter growth rates for both truck revenue per load and the number of truckloads that ultimately led to truck revenue per load and the number of loads hauled via truck in the 2022 fourth quarter to both be below the 2021 fourth quarter.”
Landstar reported that revenue, gross profit, variable contribution, operating income and diluted earnings per share all reached annual records for the full year 2022. The company reported net income of $430.9 million, or $11.76, on revenue of $7.44 billion, compared with net income of $381.5 million, or $9.98, on revenue of $6.54 billion in 2021.
“Once again, Landstar delivered record financial results in fiscal year 2022,” Gattoni said. “Among the many new annual financial records we established in 2022, Landstar achieved record annual revenue of $7.4 billion, $900 million higher than the previous annual records set in 2021. The earnings per share in fiscal year 2022 was an annual record of $11.76, an increase of $1.78 or 18% above our prior fiscal record of $9.98 in 2021.”
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The number of loads hauled via truck decreased 5.5% year-over-year in fourth-quarter 2022. This was below the low end of fourth-quarter guidance issued by the company during its third quarter earnings Oct. 19. Revenue per load on loads hauled via truck decreased 7% year-over-year.
Landstar ended the year with fourth-quarter truck revenue per load 11% below Q1 2022. The company expects that lower truck revenue per load to carry forward into Q1 2023. It also expects a normal seasonal decrease in rates in a mid-single-digit percentage range to carry over as well.
Gattoni noted the company began the year with a much softer freight environment compared to the beginning of 2022. He noted because of that year-over-year comparisons will be difficult. He believes recent trends in truck revenue per load and load volumes indicate the continuation of a softer freight environment consistent with cyclical trends.
“We believe we have seen return to the marketplace over the last three quarters,” Gattoni said. “As for the truckload count, we generally experience a 2% to 3% sequential decrease in volume from the fourth quarter to the first quarter. Excluding the extra week from the 2022 fourth quarter, a truckload volume assumption has volume decreasing at a slightly more rapid rate than the historical typical range as demand softening has continued.”
The truck transportation segment revenue hauled by independent business capacity owners and truck brokerage carriers decreased 12.1% to $1.53 billion from $1.74 billion during the same time the previous 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.
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Van equipment revenue decreased 15% to $869.8 million from $1.023 billion during the year-ago period. Truckload transportation revenue hauled via unsided/platform equipment decreased 3% to $423.4 million from $436.7 million. Revenue from other truck transportation, which is largely related to power-only services, decreased 19.2% to $204 million from $252.4 million. Less-than-truckload revenue increased 14% to $36.4 million from $32 million. Revenue hauled by rail, air and ocean cargo carriers decreased 34.1% to $115.1 million from $174.6 million the prior year. Rail intermodal operations reported that revenue decreased 20.7% to $31.3 million from $39.4 million. Ocean and air cargo carriers operations revenue decreased 38% to $83.8 million from $135.2 million.
Landstar ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 18 on the TT Top 100 list of the largest logistics companies.