In This Article:
Landstar System, Inc. (LSTR) has updated its first-quarter 2025 guidance, citing issues related to truckload volume, truck revenue per load, variable contribution and insurance and claims expense. Additionally, a supply chain fraud case has come into the limelight, which is likely to affect LSTR’s earnings.
Let’s delve deeper.
Landstar witnessed a stronger than typical February with respect to the number of loads hauled via truck. This performance more than offset the softness experienced on loads hauled via truck at the end of fiscal January, primarily attributable to severe winter weather across the country and the wildfires in California. With respect to fiscal March, the truck volume performance was relatively consistent with normal February to March seasonal patterns, while truck revenue per load was below normal February to March seasonal patterns.
During the first eight weeks of the first quarter of 2025, LSTR witnessed a 4% year-over-year decline in the number of loads hauled via truck. The downside was owing to decreases of 6% and 5% in loads hauled via van equipment and unsided/platform equipment, respectively, partially offset by a 26% increase in other truck transportation loadings.
Revenue per load on loads hauled via truck during the first eight weeks of 2025 was almost equivalent to truck revenue per load experienced during the first eight weeks of 2024, with a 4% increase in revenue per load on loads hauled via unsided/platform equipment. This was, however, almost entirely offset by a 2% decrease in revenue per load on loads hauled via van equipment. Variable contribution margin was within LSTR’s previously given first-quarter 2025 guidance of 14.0% to 14.3%.
Frank Lonegro, Landstar’s president and chief executive officer, stated, “I’m pleased that in a highly fluid freight transportation environment and ever-changing policy backdrop, we expect our revenue for the 2025 first quarter to finish at or near the mid-point of our 2025 First Quarter Prior Guidance.”
On the other hand, LSTR anticipates that insurance and claims costs will be significantly elevated in the first quarter of 2025 due to the development of cargo theft and truck accident claims. Considering that first-quarter 2025 revenues are now anticipated to be at or near the mid-point of the previously guided range of $1.075-$1.175 billion and raised insurance and claims costs, LSTR lowered its first-quarter 2025 earnings per share guidance to the range of 90-95 cents from the previously guided range of $1.05-$1.25 per share.
Additionally, during the last fiscal week of the first quarter of 2025, LSTR identified a supply chain fraud case that now remains under investigation and does not involve LSTR’s core North American truckload services. Despite being in the early stages of the investigation, LSTR expects this fraud case to hurt its first-quarter 2025 earnings per share in the range of 35 to 50 cents, primarily related to an impairment of a trade accounts receivable recorded on LSTR’s Dec. 28, 2024 balance sheet (before taking into account any potential insurance or other recoveries).