Freight broker Landstar System again called out elevated insurance and claims expenses ahead of a quarterly earnings report. In a Wednesday filing with the Securities and Exchange Commission, the company outlined $22 million in insurance-related charges taken during the recent quarter.
The filing said, “highly elevated insurance and claims costs of $56 million,” included $22 million (49 cents per share) in unfavorable claims activity.
It flagged $11 million (24 cents per share) in charges from two separate “tragic vehicular accidents” that occurred in the fourth quarter. The company is also increasing self-insured claim reserves by $5.3 million (12 cents per share) following an actuarial review.
Landstar also noted an adverse development in a Texas court.
On Aug. 6, a Texas jury found that Landstar Ranger acted as a broker, not a motor carrier in a 2021 “tragic vehicular accident” involving Eduardo Cabral. The verdict assigned $3.42 million in damages (15% of the $22.8 million in total monetary damages) to Landstar. The remaining 85% of the damages were attributed to MyUniverse — the motor carrier hauling the brokered load.
A Jan. 13 judgement from the trial court said Landstar is now responsible for 100% of the monetary damages plus pre-judgement interest. Landstar has recorded an additional charge of $5.7 million (13 cents per share) for the accident.
“The Company intends to vigorously appeal the Cabral Matter, including the Judgment; however, no assurances can be provided as to the probability of success with respect to any potential appeals relating to the Cabral Matter, generally, or the Judgment, specifically, or the ultimate outcome of any such appeals,” the Wednesday filing read.
Lastly, Landstar booked $2.1 million (5 cents per share) in additional noncash impairment charges tied to its divestiture of Mexican subsidiary, Landstar Metro.
Landstar (NASDAQ: LSTR) said it now expects fourth-quarter earnings per share of just 70 cents, which would be well below the $1.22 consensus estimate at the time of the print, and EPS of $1.31 in the year-ago quarter. Landstar’s consensus EPS estimate has since been updated to $1.04.
(Operating income in the quarter is expected to be $30 million.)
Landstar said fourth-quarter revenue will total $1.17 billion, which is just below the $1.18 billion consensus estimate, and the $1.21 billion reported in the year-ago quarter. The company said the revenue change was driven by a 1% year-over-year decline in truck loads, which was partially offset by a 1% increase in revenue per load (yield). It said strength in flatbed loads and yields were offset by softer dryvan trends.
Truck revenue per load increased 6% from October to December, due to “supply driven catalysts in the truck capacity marketplace.”
The company disclosed several one-off charges in August ahead of its third-quarter report.
Landstar will report fourth-quarter results after the market closes on Jan. 28.
Shares of LSTR were off 1.7% at 10:18 a.m. EST on Thursday compared to the S&P 500, which was up 0.4%.
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