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Landstar Ups Outlook, Asserts This Cycle may not be Different

Landstar Sees Trends Improving

Landstar System Inc., truck broker, sees trends improving in the fourth quarter. They are producing a new earnings expectation “slightly above” the high end of the company’s preliminary guidance range issued during the third-quarter report.

Improvements in Fundamentals as the Quarter has Progressed

Appearing at the Stephens Annual Investment Conference, the Jacksonville, Florida-based company’s president, CEO, and interim principal financial officer, Jim Gattoni, said the improvement in fundamentals has gone up as the quarter has progressed. In fact, there is a higher demand for consumer durables and home improvement items. It has created a bigger interest in truck demand and rates upward. Gattoni pointed much of this advance to strong consumers. They have a larger wallet as they spend less on services, travel, and transportation.

Further, declines in the flatbed market. They are nearly one-third of the company’s business and have started to level off. Landstar has seen flatbed demand shake off year-over-year load declines. It is flattening closer to the levels seen in 2019. However, this results in rates increased slightly. However, Gattoni said that most of the rate improvement is related to heavy-haul, higher-premium freight. In fact, this is versus a broader rate increase in the flatbed markets such as verticals like metals and machinery remain weak.

Truckloads to be at High-End of the Prior Range

The company is now expecting truckloads to be at the high-end of the prior range. This calls for high-single-digit increases year-over-year. The revenue per load for truck shipments are reported to be averaging in a mid-teen-percentage increase currently. Moreover, they are ahead of the initial expectation for low-double-digit increases.

Original Guide Calls in Revenue in the billions

The original guide called for revenue of $1.15 billion to $1.20 billion and adjusted earnings per share (EPS) of $1.61 to $1.71. In fact, this leaves out 29 cents per share, or $15 million, in one-time expenses related to the buyouts of legacy compensation plans with independent sales agents. Moreover, the adjusted EPS number increases by 2 cents. The actual cost of the buyout will be approximately $15.5 million, or 31 cents per share. The new guidance calls for EPS to be slightly above the high end of the range, which means Landstar may go beyond its all-time quarterly earnings record set in the fourth quarter of 2018.

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