Landstar System sees first quarter results ahead of expectations

Landstar System, Inc. (NASDAQ: LSTR) reported first quarter earnings per share (EPS) of $1.58, compared to the consensus estimate of $1.51 and $0.21 higher than the 2018 first quarter.

LSTR saw revenue decline 1.4 percent year-over-year to $1.03 billion compared to the consensus estimate of $1.04 billion. Gross profit (revenue less the cost of purchased transportation and commissions to agents) was basically flat year-over-year at $155.6 million in the period.

LSTR had provided guidance that first quarter revenue would be in a range of $1.025 billion to $1.075 billion and its EPS in the range of $1.51 to $1.57 per share.

“I am pleased with Landstar’s financial performance during the 2019 first quarter. Landstar performed very well during the 2019 first quarter given the softening environment. Diluted earnings per share was $1.58 in the 2019 first quarter, the highest first quarter diluted earnings per share in Landstar history,” said Landstar’s President and Chief Executive Officer Jim Gattoni.

The company’s truck revenue declined 2.7 percent year-over-year as dry van revenue was down 5.7 percent, partially offset by a 3.8 percent increase in platform revenue. Dry van loads increased 1.5 percent with revenue per load declining 7 percent. Platform loads were up 4.5 percent with revenue per load down 0.7 percent.  

“We began the quarter facing very difficult year-over-year comparisons plus decelerating rates of growth in both truck revenue per load and truck loadings that began in late 2018. Truck capacity became more readily available at the end of 2018 and that market condition carried through the 2019 first quarter, putting additional pressure on rates,” Gattoni said.

Gross profit margin increased 30 basis points to 15.1 percent in the period and operating margin (LSTR calculates operating margin as operating income divided by gross profit) increased 370 basis points year-over-year to 52 percent. Lower Insurance and claims expenses and lower selling, general and administrative expenses were tailwinds in the quarter.

LSTR provided guidance for the second quarter of 2019. Management forecasted flat truck loads and truck revenue per load to decline in the high single-digit percentage range year-over-year.  In total, management anticipates revenue in the second quarter of 2019 to be $1.075 billion to $1.125 billion, with earnings per share in the range of $1.56 to $1.62 compared to the current consensus estimate of $1.60 (LSTR reported $1.51 per share in the second quarter of 2018).

LSTR will hold a call Thursday, April 25 at 8:00 a.m. to discuss these results.