On October 29, 2024, Landstar System Inc (LSTR, Financial) released its 8-K filing for the third quarter of 2024, reporting earnings per share (EPS) of $1.41 and revenue of $1.214 billion. These figures fell short of analyst estimates, which projected an EPS of $1.47 and revenue of $1.223 billion. Landstar System Inc is a leading agent-based, asset-light third-party logistics provider, primarily focusing on domestic truck brokerage, which constitutes 90% of its revenue. The company also offers intermodal, global air and ocean forwarding, and warehousing services.
Performance and Challenges
Landstar System Inc faced a challenging freight environment in the third quarter of 2024, which impacted its financial performance. The company's revenue decreased to $1.214 billion from $1.289 billion in the same quarter of the previous year. The decline in revenue was primarily due to a reduction in truck transportation revenue, which fell to $1.091 billion from $1.174 billion. This decrease was attributed to a 7.7% decline in the number of loads hauled via truck compared to the third quarter of 2023.
Consistent with the first half of 2024, the freight environment during the third quarter remained challenging. The Landstar team of independent business owners and employees continued to perform admirably given this backdrop," said Landstar President and Chief Executive Officer Frank Lonegro.
Financial Achievements
Despite the challenging environment, Landstar System Inc achieved a 3.2% sequential increase in truck revenue per load compared to the second quarter of 2024, outperforming typical seasonality. This was driven by a strong month-over-month truck revenue per load increase in July. The company also continued to return capital to stockholders through its stock purchase program and dividends, purchasing approximately 121,000 shares of its common stock at an aggregate cost of $22.4 million during the third quarter.
Key Financial Metrics
Landstar System Inc's gross profit for the third quarter of 2024 was $113 million, down from $128 million in the same period of 2023. The variable contribution, defined as revenue less the cost of purchased transportation and commissions to agents, was $171 million, compared to $187 million in the third quarter of 2023. The company's balance sheet remains strong, with cash and short-term investments totaling approximately $531 million as of September 28, 2024.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $1,214 million | $1,289 million |
| Gross Profit | $113 million | $128 million |
| Variable Contribution | $171 million | $187 million |
| EPS | $1.41 | $1.71 |
Analysis
The decline in revenue and earnings for Landstar System Inc highlights the ongoing challenges in the freight environment. The company's ability to increase truck revenue per load sequentially is a positive sign, indicating resilience and adaptability in a tough market. However, the overall decrease in loads hauled and revenue underscores the need for strategic adjustments to navigate the current landscape effectively. The company's strong balance sheet and continued capital returns to shareholders are positive indicators of financial stability and commitment to shareholder value.
Explore the complete 8-K earnings release (here) from Landstar System Inc for further details.
