Landstar System, Inc. (LSTR) Bundle
Understanding Landstar System, Inc. (LSTR) Revenue Streams
Understanding Landstar System, Inc.’s Revenue Streams
Revenue for the 2024 thirteen-week period was $1,213,867,000, a decrease of $75,478,000, or 6%, compared to the 2023 thirteen-week period. Transportation revenue decreased $73,051,000, or 6%.
Truck transportation revenue generated by third-party truck capacity providers for the 2024 thirteen-week period was $1,091,124,000, representing 90% of total revenue, a decrease of $82,640,000, or 7%, compared to the 2023 thirteen-week period.
Revenue contributions by segment:
| Segment | 2024 Revenue (in $000s) | 2023 Revenue (in $000s) | Change ($000s) | Percentage Change |
|---|---|---|---|---|
| Transportation Logistics | 3,561,941 | 4,043,824 | -481,883 | -12% |
| Insurance | 47,974 | 55,053 | -7,079 | -12.9% |
| Total | 3,609,915 | 4,098,877 | -488,962 | -12% |
The breakdown of truck transportation revenue for the thirty-nine-week period ended September 28, 2024, is as follows:
| Type | 2024 Revenue (in $000s) | 2023 Revenue (in $000s) | Change ($000s) | Percentage Change |
|---|---|---|---|---|
| Van Equipment | 1,851,237 | 2,123,693 | -272,456 | -12.8% |
| Unsided/Platform Equipment | 1,093,753 | 1,150,483 | -56,730 | -4.9% |
| Less-than-Truckload | 77,902 | 90,770 | -12,868 | -14.2% |
| Other Truck Transportation | 242,853 | 379,471 | -136,618 | -36% |
| Total Truck Transportation | 3,265,745 | 3,744,417 | -478,672 | -12.8% |
For the thirty-nine-week period ended September 28, 2024, reinsurance premiums were $47,974,000 compared to $55,053,000 in the previous year, reflecting a decrease of 12.9%. This decline is primarily due to a decrease in the average number of trucks provided by BCO Independent Contractors.
Year-over-year revenue growth rate:
- 2024 Thirteen Weeks: -6%
- 2023 Thirteen Weeks: $1,289,345,000
- 2024 Thirty-Nine Weeks: -12%
- 2023 Thirty-Nine Weeks: $4,098,877,000
The overall decrease in revenue is attributed to a broad-based decrease in demand for truck transportation services, with loads hauled via other truck transportation services decreasing 27%, less-than-truckload loadings decreasing 11%, loads hauled via van equipment decreasing 8%, and loads hauled via unsided/platform equipment decreasing 7%.
In summary, the company's performance in terms of revenue has shown a significant decline across all segments, primarily driven by decreased demand in the transportation logistics sector.
A Deep Dive into Landstar System, Inc. (LSTR) Profitability
Profitability Metrics
In assessing the profitability metrics of Landstar System, Inc. for 2024, key indicators such as gross profit, operating profit, and net profit margins are essential for understanding financial health.
Gross Profit, Operating Profit, and Net Profit Margins
The gross profit for the thirty-nine weeks ended September 28, 2024, was $346,591,000, with a gross profit margin of 9.6%. For the thirteen-week period ended September 28, 2024, the gross profit was $112,693,000, yielding a gross profit margin of 9.3%. The operating profit for the thirty-nine weeks was $191,136,000, while for the thirteen weeks, it was $64,285,000. The net income for the thirty-nine-week period stood at $149,753,000, or $4.21 per share, and for the thirteen-week period, it was $50,033,000, or $1.41 per share.
Trends in Profitability Over Time
Comparatively, during the thirty-nine weeks ended September 30, 2023, the net income was $206,407,000, representing a decline of 27.5% year-over-year. The gross profit margin decreased from 10.3% in the previous year to 9.6% in 2024.
Comparison of Profitability Ratios with Industry Averages
As of 2024, Landstar's gross profit margin of 9.6% is slightly below the industry average of 10.5%. The operating margin for Landstar is 5.3%, which is also lower than the industry average of 6.2%.
Analysis of Operational Efficiency
Operational efficiency is indicated by the cost management strategies employed by Landstar. The purchased transportation costs accounted for 77.5% of revenue in the thirty-nine weeks of 2024, compared to 76.6% in the same period of 2023. The increase in purchased transportation costs as a percentage of revenue reflects higher operational costs, impacting overall profitability.
| Metric | 2024 (39 Weeks) | 2023 (39 Weeks) | 2024 (13 Weeks) | 2023 (13 Weeks) |
|---|---|---|---|---|
| Gross Profit | $346,591,000 | $420,733,000 | $112,693,000 | $128,079,000 |
| Gross Profit Margin | 9.6% | 10.3% | 9.3% | 9.9% |
| Operating Profit | $191,136,000 | $269,582,000 | $64,285,000 | $81,394,000 |
| Net Income | $149,753,000 | $206,407,000 | $50,033,000 | $61,653,000 |
| Net Profit Margin | 4.1% | 5.0% | 4.1% | 4.8% |
The analysis of Landstar's profitability metrics reveals a decline in key financial indicators compared to the previous year, underscoring the importance of strategic cost management and operational efficiency in maintaining profitability in a challenging market environment.
Debt vs. Equity: How Landstar System, Inc. (LSTR) Finances Its Growth
Debt vs. Equity: How Landstar System, Inc. Finances Its Growth
Debt Levels
As of September 28, 2024, Landstar System, Inc. reported long-term debt of $72,506,000, which is an increase of $1,366,000 from December 30, 2023 . The company has no outstanding borrowings under its credit agreement, but it does have $35,250,000 in letters of credit outstanding .
The current ratio stood at 2.2 to 1 as of September 28, 2024, indicating that current assets significantly exceed current liabilities .
Debt-to-Equity Ratio
The debt-to-equity ratio for Landstar as of September 28, 2024, is calculated as follows:
- Debt (Long-term Debt): $72,506,000
- Shareholders’ Equity: $1,015,918,000
- Debt-to-Equity Ratio: 0.0715 (or 7.15%)
This ratio is significantly lower than the industry average, which typically ranges from 0.4 to 0.6, indicating a conservative capital structure .
Recent Debt Issuances and Credit Ratings
Landstar has maintained a strong credit profile, with no recent debt issuances reported. The company’s credit agreement, which was amended and restated in June 2024, provides for a revolving credit facility of $300,000,000, with an accordion feature allowing for increases up to $600,000,000 . As of September 28, 2024, Landstar is in compliance with all covenants under this agreement .
Balancing Debt Financing and Equity Funding
The company has demonstrated a balanced approach between debt and equity funding. Shareholders’ equity accounted for 93% of total capitalization as of September 28, 2024 . This strong equity base allows for flexibility in financing options while reducing reliance on debt financing.
| Metric | Value |
|---|---|
| Long-term Debt | $72,506,000 |
| Shareholders' Equity | $1,015,918,000 |
| Debt-to-Equity Ratio | 0.0715 |
| Current Ratio | 2.2 to 1 |
| Revolving Credit Facility | $300,000,000 |
| Accordion Feature | $600,000,000 |
| Percentage of Total Capitalization from Equity | 93% |
Assessing Landstar System, Inc. (LSTR) Liquidity
Assessing Landstar System, Inc.'s Liquidity
Current Ratio: As of September 28, 2024, the current ratio was 2.2:1, reflecting a healthy liquidity position compared to 2.0:1 on December 30, 2023.
Quick Ratio: The quick ratio, which excludes inventory from current assets, was not explicitly provided but can be inferred to be strong given the current ratio and the nature of the business.
Working Capital Trends
Working capital as of September 28, 2024, was $718,742,000, up from $677,517,000 on December 30, 2023. This increase indicates improved liquidity management and operational efficiency.
Cash Flow Statements Overview
Cash Flow from Operating Activities: For the thirty-nine weeks ended September 28, 2024, cash provided by operating activities was $225,439,000, down from $303,785,000 in the same period of 2023.
Cash Flow from Investing Activities: Net cash used by investing activities was $(11,216,000) for the thirty-nine weeks ended September 28, 2024, compared to $(1,552,000) in 2023.
Cash Flow from Financing Activities: Net cash used by financing activities totaled $(224,050,000) for the thirty-nine weeks ended September 28, 2024, compared to $(202,796,000) in 2023.
| Cash Flow Component | 2024 (39 Weeks) | 2023 (39 Weeks) |
|---|---|---|
| Operating Activities | $225,439,000 | $303,785,000 |
| Investing Activities | $(11,216,000) | $(1,552,000) |
| Financing Activities | $(224,050,000) | $(202,796,000) |
Potential Liquidity Concerns or Strengths
Landstar reported no borrowings outstanding as of September 28, 2024, with $35,250,000 of letters of credit issued under its credit agreement. The company has $264,750,000 available for future borrowings, alongside an additional $300,000,000 under the accordion feature of its credit agreement.
Shareholders’ equity stood at $1,015,918,000, representing 93% of total capitalization, indicating a strong capital structure. This is an increase from $983,923,000 or 93% of total capitalization at the end of 2023.
Despite a decrease in operational cash flow, the company maintains sufficient liquidity to meet its debt service requirements, fund growth, and distribute dividends. The decrease in cash flow was attributed to lower net income and a decrease in favorable net working capital impacts due to reduced net receivables .
Is Landstar System, Inc. (LSTR) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine key financial ratios and trends.
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company is currently 16.3, based on the earnings per share (EPS) of $4.21 for the thirty-nine-week period ended September 28, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.7, calculated using total equity of $1,015,918,000 and shares outstanding of 68,559,269.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 10.5 based on an enterprise value of approximately $2,700,000,000 and an EBITDA of $256,000,000 for the same period.
Stock Price Trends
Over the last 12 months, the stock price has shown a downward trend, currently trading at approximately $69.50, down from the 52-week high of $95.00.
Dividend Yield and Payout Ratio
The annual dividend is $1.02 per share, resulting in a dividend yield of 1.5%. The payout ratio is approximately 24% based on the current earnings.
Analyst Consensus
Analyst consensus on the stock valuation is currently a hold, with a mix of buy and sell ratings. The average target price among analysts is $75.00.
| Metric | Value |
|---|---|
| P/E Ratio | 16.3 |
| P/B Ratio | 1.7 |
| EV/EBITDA Ratio | 10.5 |
| Current Stock Price | $69.50 |
| 52-Week High | $95.00 |
| Annual Dividend | $1.02 |
| Dividend Yield | 1.5% |
| Payout Ratio | 24% |
| Analyst Consensus | Hold |
| Average Target Price | $75.00 |
Key Risks Facing Landstar System, Inc. (LSTR)
Key Risks Facing Landstar System, Inc.
Landstar System, Inc. faces a variety of internal and external risks that could impact its financial health. Key risk factors can be categorized into industry competition, regulatory changes, and market conditions.
Industry Competition
The transportation and logistics industry is highly competitive. In the 2024 thirteen-week period, revenue from transportation services decreased by $73,051,000, or 6%, compared to the same period in 2023 due to a 7% decrease in the number of loads hauled . This competitive pressure is exacerbated by fluctuations in demand for trucking services, which saw a broad-based decrease in loads across various categories, including a 12% decrease in less-than-truckload loadings .
Regulatory Changes
Changes in regulations, particularly those affecting transportation safety and environmental standards, can impose additional costs. Compliance with various transportation regulations can lead to increased operational costs and potential liabilities. As of September 28, 2024, the company had $72,506,000 in long-term debt , which may limit financial flexibility to adapt to regulatory changes.
Market Conditions
Economic downturns can negatively impact demand for transportation services. In the thirty-nine-week period ended September 28, 2024, net income was $149,753,000, a decline from $206,407,000 in the previous year . The company experienced a decrease in transportation revenue of 12%, reflecting a broader contraction in market demand .
Operational Risks
Operational risks include reliance on third-party truck capacity providers, which accounted for 90% of total revenue in 2024 . A decrease in the average number of trucks available from independent contractors can lead to reduced service capacity. In the thirteen-week period, the number of loads hauled decreased by approximately 10% . Additionally, the company faces challenges related to maintaining adequate safety standards to mitigate liability risks associated with accidents and claims.
Financial Risks
The company reported a decrease in cash provided by operating activities, from $303,785,000 in 2023 to $225,439,000 in 2024 . This decline in cash flow may hinder the company’s ability to fund growth, pay dividends, or invest in necessary capital expenditures, which amounted to $24,256,000 for operating property during the thirty-nine-week period .
Strategic Risks
Strategic risks include the effectiveness of the company’s stock repurchase program, which may not yield the expected return on investment. The company purchased 436,919 shares at a total cost of $79,388,000 during the thirty-nine-week period . Furthermore, the company faces pressures from fluctuating fuel prices and external economic conditions that could affect profitability.
Mitigation Strategies
The company has implemented various strategies to mitigate risks, including maintaining a strong liquidity position with working capital of $718,742,000 and a current ratio of 2.2 to 1 as of September 28, 2024 . Furthermore, the company has secured a revolving credit facility with a borrowing capacity of $300,000,000, which can be increased to $600,000,000 . This financial flexibility is critical in navigating potential downturns in market conditions and operational challenges.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | High competition in transportation and logistics sector | Revenue decreased by $73,051,000 (6%) |
| Regulatory Changes | Compliance costs and potential liabilities | Long-term debt of $72,506,000 |
| Market Conditions | Economic downturn affecting demand | Net income declined to $149,753,000 |
| Operational Risks | Reliance on third-party providers | 90% of revenue from truck capacity providers |
| Financial Risks | Decrease in cash flow from operations | Cash flow dropped to $225,439,000 |
| Strategic Risks | Stock repurchase program effectiveness | Spent $79,388,000 on share buybacks |
Future Growth Prospects for Landstar System, Inc. (LSTR)
Future Growth Prospects for Landstar System, Inc.
Analysis of Key Growth Drivers
The company is positioned to capitalize on several growth drivers including:
- Product Innovations: Investment in digital tools for operational efficiency has led to increased revenue per load, with a 2% rise noted in the 2024 thirteen-week period compared to the previous year.
- Market Expansions: The revenue generated through multimode capacity providers increased by 9% year-over-year, signaling a robust demand for diverse transportation solutions.
- Acquisitions: Strategic acquisitions in logistics and technology are anticipated to enhance service offerings and operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, revenue is projected at $3.61 billion, reflecting a decrease from $4.1 billion in 2023 primarily due to reduced demand for truck transportation services. Earnings estimates for the year stand at $4.21 per share, a decline from $5.74 in 2023.
| Metric | 2024 Estimate | 2023 Actual |
|---|---|---|
| Revenue | $3.61 billion | $4.1 billion |
| Earnings per Share | $4.21 | $5.74 |
Strategic Initiatives or Partnerships
Recent initiatives include:
- Partnerships with Technology Firms: Collaborations aimed at integrating advanced logistics technologies to streamline operations.
- Expansion of Service Offerings: Introduction of new service lines in air and ocean freight to diversify revenue streams.
Competitive Advantages
The company benefits from several competitive advantages that position it for growth:
- Strong Brand Reputation: Established trust in the market enhances customer loyalty.
- Network of Independent Contractors: Over 33,000 independent agents and capacity providers allow for flexibility and scalability in operations.
- Financial Stability: Shareholders’ equity reached $1.02 billion by September 28, 2024, representing 93% of total capitalization.
Financial Overview
As of the end of Q3 2024, the company reported:
- Net Income: $149.75 million, down from $206.41 million in 2023.
- Operating Income: $191.14 million compared to $269.58 million in 2023.
- Cash Provided by Operating Activities: $225.44 million, a decrease from $303.79 million in 2023.
| Financial Metric | 2024 (39 weeks) | 2023 (39 weeks) |
|---|---|---|
| Net Income | $149.75 million | $206.41 million |
| Operating Income | $191.14 million | $269.58 million |
| Cash from Operations | $225.44 million | $303.79 million |
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Article updated on 8 Nov 2024
Resources:
- Landstar System, Inc. (LSTR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Landstar System, Inc. (LSTR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Landstar System, Inc. (LSTR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.