LSTR revenues fall 28% YoY in soft freight environment

Landstar System (LSTR) released its earnings report for the fourth quarter of the year, showing earnings per share of $1.62, in line with Street expectations. However, the company experienced a decline in revenues, which fell 28.1% year over year to $1.2 billion, slightly below consensus. The decline in revenue can be attributed to several factors, including a soft macro-freight environment throughout the year and a weaker than typical peak season. 

Landstar's truck revenue per load and volumes in the fourth quarter were below prior-year levels, with the number of loads hauled via truck declining by 22% compared to the fourth quarter of the previous year. This decline was at the low end of the company's guidance provided in the third quarter earnings release. 

Landstar President and CEO, Jim Gattoni, acknowledged the challenging comparison between the fourth quarter of 2023 and the prior year's fourth quarter due to the soft freight environment and an additional operating week in 2022. He mentioned that the continuation of soft demand, driven by weakness in the U.S. manufacturing sector, along with a loose truck capacity market, affected the company's performance in the fourth quarter. 

Looking ahead to the first quarter of the current year, Landstar expects revenue per load on loads hauled via truck to be in a range of 8% to 10% below the first quarter of 2023, with the number of loads hauled via truck anticipated to be in a range of 14% to 16% below the same period last year.

Based on these trends, the company forecasts revenue for the first quarter of 2024 to be in the range of $1.10 billion to $1.15 billion. Gattoni further estimated that earnings per share for the first quarter of 2024 would be in the range of $1.25 to $1.35. This estimate includes insurance and claims costs of approximately 5.5% of BCO revenue, similar to the previous fiscal year, and an estimated effective income tax rate of 24.5%. 

Landstar System is a technology-enabled, asset-light provider of integrated transportation management solutions. The company employs a network of agents, third-party capacity providers, and employees to deliver safe and specialized transportation services to a wide range of customers. As a Fortune 500 company, Landstar System plays a significant role in the transportation industry.. While the decline in revenue and load volumes presents a short-term challenge for Landstar, it is essential to monitor the company's ability to adapt to market conditions and leverage its technology and network to generate growth opportunities.