Landstar System Inc.’s truckload business could face a $100 million hit during March should the two independent agencies that serve Ukraine on its behalf completely shut down operations there, the company said Monday.
In an 8-K filing with the Securities and Exchange Commission, Landstar (NASDAQ: LSTR) said the U.S.-based agencies with operations in Ukraine generated about $860 million in revenue in its 2021 fiscal year, which ended near the end of the calendar year. The revenue brought in by the agencies equaled 13% of the Jacksonville, Florida-based broker and third-party logistics provider’s total 2021 revenue, the company said. Landstar generated $6.53 billion in 2021 revenue.
One agency’s Ukrainian operations are in the eastern part of the country, while the other does business in the western portion, Landstar said. The agency with operations in eastern Ukraine is Landstar’s largest based on its 2021 annual revenue, according to the company. The agency serving the western part of the country is also a large contributor to Landstar’s annual revenue, the company said. Landstar did not disclose how much of the combined revenue was generated by the agencies’ Ukraine operations.
The agency serving eastern Ukraine has experienced significant disruption since fighting began with Russia’s invasion on Thursday, Landstar said. The fighting has been concentrated in Ukraine’s eastern half, which is at or near the Russian border. In the filing, Landstar made no mention of any impact on the agency serving Ukraine’s western half.
Landstar operates through thousands of independent sales agents and a network of owner-operator drivers known as business capacity operators. Landstar’s drivers don’t operate under a forced dispatch system and can pick up any loads they want.
Landstar said it stands to lose between $20 million and $25 million in weekly truckload revenue should the operations of both agencies be completely disrupted through the end of March, which coincides with the end of its 2022 first quarter. A $100 million revenue hit for the month would reduce the company’s first-quarter earnings per share by as much as 18 cents per share.
However, Landstar said that it would still beat first-quarter revenue guidance of $1.7 billion to $1.75 billion and come in at the high end of its earnings per share range of $2.70 to $2.80 per share. Both estimates were provided on Jan. 22.
Through the first two months of the year, systemwide per-load revenue for truckload service rose 27% year-over-year, while the number of loads hauled by truck increased 24%, the company said.
Landstar turned in a terrific performance in 2021, culminating in an extraordinary fourth quarter in which it set all-time quarterly records for revenue, operating and net income, and diluted earnings per share. In late 2021, the company’s board declared a one-time cash dividend of $2 per share.
Landstar’s shares were down about 1.2% in late Monday morning trading.
T. Roach
The story makes it seem that Landstar is actually moving freight within Ukraine. These agencies move (broker) freight that moves within the US and Canada.
JOE HOWARD
Landstar’s trucks will be 100% fine. Landstar’s double-brokerage division might take a hit though.
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