Another Quarter, Another Record At Landstar

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After logging the highest sequential improvement in truck volumes from the third to fourth quarters in company history, freight broker Landstar System said normal seasonality still hasn't kicked in as there has been no letup in demand so far in January.

The Jacksonville, Florida-based company reported fourth-quarter earnings per share of $2.99 Wednesday after the market closed. The result was a quarterly record and 11 cents ahead of its raised expectations (at the midpoint of the range) at the end of November. A lower tax rate did provide a 4-cent-per-share tailwind versus management's expectations.

"Following a record-breaking 2021 third quarter … 2021 fourth-quarter revenue, gross profit, variable contribution, net income and diluted earnings per share each set all-time quarterly records," stated Jim Gattoni, president and CEO, in a press release.

Landstar LSTR reported a 50% year-over-year increase in revenue to $1.95 billion in the quarter, which was also above the high end of management's increased expectations. Total truckloads were up 22% year-over-year and 7% higher than the third quarter.

"We attribute this unseasonal increase in volume to ongoing, broad-based demand for freight transportation services, with particular strength in sectors benefiting from consumer spending that, similar to the rest of 2021, continued to be a big driver of freight activity," Gattoni continued.

He said the upside to fourth-quarter revenue guidance was "entirely due to continued strength in revenue generated by ocean and air cargo carriers." Air and ocean revenue more than tripled in the period to $135 million.

Dry van loads increased 21% year-over-year in the fourth quarter with revenue per load coming in 20% higher. Those metrics were 17% and 20% higher, respectively, for flatbed freight. Landstar's business capacity owner network increased 8% year-over-year to more than 11,000. Total truck capacity providers on the platform were up 28% to more than 101,000.

Variable contribution, or revenue less purchased transportation and agent commissions, increased 44%, with the margin dipping 50 basis points to 13.5%. Purchased transportation expense as a percentage of revenue was 80 bps higher year-over-year as spot rates remained elevated throughout the quarter. Gross profit margin, which includes other variable costs like trailer depreciation and certain IT and insurance-related expenses, was down 10 bps at 10.8%.

Table: Landstar's key performance indicators

Normally revenue in the first quarter falls off sequentially from the fourth quarter as peak season and holiday spending are in the rearview mirror. However, Landstar hasn't seen a decline yet.

"As we look to the 2022 first quarter, we anticipate continued solid performance on the expectation that ongoing capacity constraints will support a strong freight environment in the near term," Gattoni said. "The strength in revenue per load on loads hauled via truck and the number of loads hauled via truck experienced in 2021 has continued into the first few weeks of January."

The company's first-quarter guidance calls for loads hauled via truck to increase between 12% and 14% year-over-year with truck revenue per load up between 14% and 17%. Revenue is forecast to be in a range of $1.7 billion to $1.75 billion, a 34% year-over-year increase at the midpoint of the range, and 8% higher than the current consensus estimate.

A first-quarter EPS expectation of $2.70 to $2.80 is 15% higher than an average of consensus estimates.

"These 2021 achievements speak to the strength and depth of the Landstar network, the ability of the company and our agents to profitably scale operations to handle significantly higher volumes and the power of our unique capacity network to execute," Gattoni concluded. "I am extremely pleased by our continued organic load volume growth and our ability to attract productive agents and capacity to the network."

Full-year 2021 revenue of $6.5 billion was $1.9 billion higher than the prior record set in 2018. Earnings per share of $9.98 were 61% higher than the 2018 period.

Landstar will hold a conference call to discuss these results at 8 a.m. Thursday. Stayed tuned to FreightWaves for continuing coverage of Landstar's fourth-quarter results.

The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Landstar (No. 6),

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