The improved outlook for trucking continues with a guidance raise from Jacksonville, Florida-based freight broker Landstar System Inc. (NASDAQ: LSTR).
In a filing with the U.S. Securities and Exchange Commission, the company announced it was increasing its previously issued third-quarter earnings per share (EPS) guidance to a range of $1.40 to $1.46, well above the company’s prior guidance of $1.11 to $1.17 and the current consensus estimate of $1.14.
The company now expects loads hauled by truck and truck revenue per load to be higher year-over-year by a low single-digit percentage during the quarter. In its second-quarter report on July 22, Landstar’s expectations called for loads and revenue per load to be down in the mid-single-digit range year-over-year.
In a virtual appearance at Cowen’s 13th annual Global Transportation & Sustainable Mobility Conference on Thursday, Landstar President and CEO Jim Gattoni reported that August gross profit was the second highest ever for the company. The year over-year increases in load counts and revenue per load in August have continued into September with August load counts only slightly lower than those in August 2018. Gattoni said rates are getting closer to 2018 but still aren’t there yet.
Gattoni believes recent capacity tightening was partly the result of some drivers being concerned about contracting COVID or passing it to a family member. Also, he said unemployment benefits provided during the pandemic allowed drivers to sit out, especially when rates were low.
The increase in spot rates has helped the freight broker as half of its business is fixed margin, meaning as rates increase the company captures more gross profit. Landstar’s third-party business is more contractual in nature, with the company sharing margin compression and expansion on a 50-50 basis with the providers.
In addition to improvement in the dry van market, Gattoni said flatbed trends are firming. Flatbed loads, roughly one-third of Landstar’s business, were down 5% year-over-year in July and off 4% in August, but rates per load have improved from a 9% year-over-year decline during July to up 1% in August.
Landstar’s new revenue guidance is in a range of $1.02 billion to $1.06 billion, significantly higher than the previous range of $885 million to $935 million and the current consensus estimate of $914 million.
The company’s second quarter reflected the depths of the pandemic, with revenue declining 21% year-over-year and EPS of $0.63.
Shares of LSTR are flat on the day.
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