Landstar System (LSTR 1.54%), a transportation logistics company known for an asset-light model that relies on third-party capacity providers, released its fiscal third-quarter results on Oct. 29. The company's earnings report showed a reduction in both revenue and earnings per share (EPS) compared to the previous year, highlighting ongoing challenges in the freight market. Revenue fell to $1.214 billion from $1.289 billion year-over-year, and EPS declined from $1.71 to $1.41. The results overall reflected a challenging quarter for Landstar, with continued pressure on its primary revenue source -- truck transportation.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Total revenue | $1.214 billion | $1.289 billion | (5.8%) |
| Earnings per share (EPS) | $1.41 | $1.71 | (17.5%) |
| Truck transportation revenue | $1.091 billion | $1.174 billion | (7.1%) |
| Gross profit | $112.7 million | $128.1 million | (12.1%) |
Landstar System Business Overview
Landstar System is a transportation logistics firm that utilizes a network of independent sales agents and third-party capacity providers for freight transportation. This model allows flexibility and scalability with minimal capital investment in physical assets.
Critical to Landstar's success is its network of over 1,000 independent sales agents who source freight and coordinate transportation. Its ability to generate revenue stems from the performance of these agents and the efficient use of over 85,000 third-party trucking capacity providers.
Quarter Highlights and Analysis
The fiscal third quarter, which ended Sept. 28, presented significant challenges for Landstar. The company's revenue and earnings were impacted due to market dynamics and reduced freight demand. Revenue from its primary business segment, truck transportation, declined by 7.1%.
Landstar observed a sequential quarterly increase of 3.2% in truck revenue per load, signaling some resilience, although year-over-year growth was just 0.7%. The metrics illustrate the balancing act Landstar faces in maintaining its pricing amid fluctuating market conditions.
The company sustained its quarterly dividend at $0.36 per share.
The company faces broader margin pressures, as shown by a decrease in gross profit from $128.1 million to $112.7 million and a reduction in variable contribution to $171 million from $187 million in the prior-year period. Truck load volumes fell by 7.7%, illustrating the weakness in demand.
Van equipment revenue decreased from $703 million to $604 million, while platform equipment revenue dropped from $378 million to $370 million.
Landstar's rail, air, and ocean transport unit is a small piece of the business, but it displayed modest growth, with revenue rising to $97 million.
Looking Ahead
Amid a challenging freight market, management expressed hopes for stabilization in the number of loads, with fluctuating expectations around load pricing due to ongoing market adversities. Looking ahead, Landstar investors should pay close attention to trends in freight demand, shifts in pricing power, and the company's ongoing efforts in capital management and network diversification.