What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-05 compared with 2022-10-28 · 95 added, 163 removed, 253 unchanged (50% of the section changed)

14 unchanged sentences

decreased demand for transportation services;

U.S trade relationships;

trade relationships;

substantial industry competition;

2 unchanged sentences

dependence on key vendors;

changes in fuel taxes;

potential changes in taxes;

status of independent contractors;

2 unchanged sentences

intellectual property;

and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2021 fiscal year, described in Item 1A “Risk Factors”, Landstar’s Form 10-Qs for the 2022 first and second quarters, described in Part II, Item 1A “Risk Factors”, and in this report or in Landstar’s other Securities and Exchange Commission filings from time to time.

and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2022 fiscal year, described in Item 1A “Risk Factors”, in this report or in Landstar’s other Securities and Exchange Commission filings from time to time.

These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated.

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and its subsidiary, Landstar System Holdings, Inc.

(collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), a Fortune 500 company, is a worldwide, technology-enabled, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees.

(collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), is a worldwide technology-enabled, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees.

The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs.

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Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I.

de C.V., and as further described below, Landstar Blue.

Transportation services offered by the Company include truckload, less-than-truckload and other truck transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage.

de C.V., and as further described below, Landstar Blue, LLC.

Transportation services offered by the Company include truckload, less-than-truckload transportation and other truck transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage.

Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment.

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Billings for freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue.

During the thirty-nine-week period ended September 24, 2022, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 35%, 53% and 2%, respectively, of the Company’s consolidated revenue.

Collectively, revenue generated by air and ocean cargo carriers represented approximately 8% of the Company’s consolidated revenue in the thirty-nine-week period ended September 24, 2022.

During the thirteen weeks ended April 1, 2023, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 36%, 56% and 2%, respectively, of the Company’s consolidated revenue.

Collectively, revenue generated by air and ocean cargo carriers represented approximately 4% of the Company’s consolidated revenue in the thirteen-week period ended April 1, 2023.

On May 6, 2020, the Company formed a new subsidiary that was subsequently renamed Landstar Blue, LLC (“Landstar Blue”).

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The results of operations from Landstar Blue are presented as part of the Company’s transportation logistics segment.

Revenue from Landstar Blue represented less than 1% of the Company’s transportation logistics segment revenue in the thirty-nine-week period ended September 24, 2022.

Revenue from Landstar Blue represented approximately 1% of the Company’s transportation logistics segment revenue in the thirteen-week period ended April 1, 2023.

The insurance segment is comprised of Signature Insurance Company (“Signature”), a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc.

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Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk is ultimately borne by Signature.

Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for the thirty-nine-week period ended September 24, 2022.

Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for the thirteen-week period ended April 1, 2023.

Changes in Financial Condition and Results of Operations

Management believes the Company’s success principally depends on its ability to generate freight revenue through its network of independent commission sales agents and to deliver freight safely and efficiently utilizing third party capacity providers.

Management believes the most significant factors to the Company’s success include increasing revenue, sourcing capacity, empowering its network through technology-based tools and controlling costs.

Management believes the most significant factors to the Company’s success include increasing revenue, sourcing capacity, empowering its network through technology-based tools and controlling costs, including insurance and claims.

While customer demand, which is subject to overall economic conditions, ultimately drives increases or decreases in revenue, the Company primarily relies on its independent commission sales agents to establish customer relationships and generate revenue opportunities.

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The following table summarizes this information by trailer type for truck transportation and by mode for all others:

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 24,

September 25,

September 24,

September 25,

Revenue generated through (in thousands):

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The following table summarizes the number of available truck capacity providers on the dates indicated:

September 24,

September 25,

April 1, 2023

March 26, 2022

BCO Independent Contractors

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With respect to insurance and claims cost, potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable.

For periods prior to May 1, 2019, Landstar retains liability for commercial trucking claims up to $5 million per occurrence and maintains various third party insurance arrangements for liabilities in excess of its $5 million self-insured retention.

Effective May 1, 2019, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “Initial Excess Policy”) with a third party insurance company.

Landstar retains liability through a self-insured retention for commercial trucking claims up to $5 million per occurrence.

Effective May 1, 2019, the Company entered into a three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “2019 Initial Excess Policy”) with a third party insurance company.

The Company subsequently extended the 2019 Initial Excess Policy for one additional policy year, from May 1, 2022 through April 30, 2023.

For commercial trucking claims incurred on or after May 1, 2022 through April 30, 2023, the extended Initial Excess Policy provides for a limit for a single loss of $5 million, with a remaining aggregate limit of $10 million for the policy period ending April 30, 2023, and an option to increase such aggregate limit for a pre-established amount of additional premium.

If aggregate losses under the Initial Excess Policy exceed the aggregate limit for the period ending April 30, 2023, and the Company did not elect to increase such aggregate limit for a pre-established amount of additional premium, the Company would retain liability of up to $10 million per occurrence, inclusive of its $5 million self-insured retention for commercial trucking claims during the remainder of the policy period ending April 30, 2023.

For commercial trucking claims incurred on or after May 1, 2022 through April 30, 2023, the extended 2019 Initial Excess Policy provides for a limit for a single loss of $5 million, with an aggregate limit of $10 million for the policy period ended April 30, 2023.

Effective May 1, 2023, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “2023 Initial Excess Policy”) with a third party insurance company.

For commercial trucking claims incurred on or after May 1, 2023 through April 30, 2026, the 2023 Initial Excess Policy provides for an aggregate deductible of $18 million over the thirty-six month term ending April 30, 2026.

After payment of the deductible, the 2023 Initial Excess Policy provides for a limit for a single loss of $5 million, with an aggregate limit of $15 million for the thirty-six month term ending April 30, 2026.

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10 million.

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Due to the increasing cost of commercial auto liability claims, the availability of excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased.

With respect to the annual policy year ended April 30, 2021, as compared to the annual policy year ended April 30, 2020, the Company experienced an increase of approximately $14 million, or over 170%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million.

Effective May 1, 2021, with respect to the annual policy year ending April 30, 2022, as compared to the annual policy year ended April 30, 2021, the Company experienced an increase of approximately $3 million, or 19%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million.

Effective May 1, 2022, with respect to the annual policy year ending April 30, 2023, as compared to the annual policy year ended April 30, 2022, the Company experienced an increase of approximately $2.3 million, or 10%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million.

Since the annual policy year ended April 30, 2020, as compared to the annual policy year ending April 30, 2024, the Company experienced an increase of approximately $21 million, or over 380%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million.

Moreover, in recent years the Company has increased the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage.

For example, with respect to a hypothetical claim in the amount of $35 million incurred during the annual policy year ending April 30, 2023, the Company would have an aggregate financial exposure of approximately $10 million.

For example, with respect to a single hypothetical claim in the amount of $60 million incurred during the annual policy year ending April 30, 2024, the Company would have an aggregate financial exposure of approximately $25 million.

Furthermore, the Company’s third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure.

1 unchanged sentence

Moreover, the occurrence of a Nuclear Verdict, or the settlement of a catastrophic injury and/or fatality claim that could have otherwise resulted in a Nuclear Verdict, could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim.

Further, the Company retains liability of up to $2,000,000 for each general liability claim, $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim.

In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims.

2 unchanged sentences

Selling, general and administrative

During the thirty-nine-week period ended September 24, 2022, employee compensation and benefits accounted for approximately 68% of the Company’s selling, general and administrative costs.

During the thirteen-week period ended April 1, 2023, employee compensation and benefits accounted for approximately 62% of the Company’s selling, general and administrative costs.

Employee compensation and benefits include wages and employee benefit costs as well as incentive compensation and stock-based compensation expense.

3 unchanged sentences

Costs of revenue

The Company incurs costs of revenue related to the transportation of freight and, to a much lesser extent, reinsurance premiums received by Signature.

The Company incurs costs of revenue related to the transportation of freight and, to a much lesser extent, to reinsurance premiums received by Signature.

Costs of revenue include variable costs of revenue and other costs of revenue.

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Other costs of revenue associated with the transportation of freight include:

(i) other operating costs, primarily consisting of trailer maintenance and BCO Independent Contractor recruiting and qualification costs, as reported in the Company’s Consolidated Statements of Income, (ii) transportation-related insurance premiums paid and claim costs incurred, included as a portion of insurance and claims in the Company’s Consolidated Statements of Income, (iii) costs incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support our independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income;

(i) other operating costs, primarily consisting of trailer maintenance and BCO Independent Contractor recruiting and qualification costs, as reported in the Company’s Consolidated Statements of Income, (ii) transportation-related insurance premiums paid and claim costs incurred, included as a portion of insurance and claims in the Company’s Consolidated Statements of Income, (iii) costs incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support the Company’s independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income;

and (iv) depreciation on Company-owned trailing equipment, included as a portion of depreciation and amortization in the Company’s Consolidated Statements of Income.

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The reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin are each presented below:

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 24,

September 25,

September 24,

September 25,

Costs of revenue:

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Variable contribution margin on revenue generated from shipments hauled by railroads, air cargo carriers, ocean cargo carriers and Truck Brokerage Carriers, other than those under retention contracts, is variable in nature, as the Company’s contracts with independent commission sales agents provide commissions to agents at a contractually agreed upon percentage of the amount represented by revenue less purchased transportation for these types of shipments.

Approximately 40% of the Company’s consolidated revenue in the thirty-nine-week period ended September 24, 2022 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 60% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.

Approximately 41% of the Company’s consolidated revenue in the thirteen-week period ended April 1, 2023 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 59% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.

Operating income as a percentage of gross profit and operating income as a percentage of variable contribution

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and (iv) management considers this financial information in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs.

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 24,

September 25,

September 24,

September 25,

Operating income

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Operating income as % of variable contribution

The increase in operating income as a percentage of gross profit from the 2021 thirty-nine-week period to the 2022 thirty-nine-week period resulted from operating income increasing at a more rapid percentage rate than the increase in gross profit, as the Company was able to scale our fixed cost infrastructure, primarily certain components of selling, general and administrative costs, across a larger gross profit base.

The increase in operating income as a percentage of gross profit from the 2021 thirteen-week period to the 2022 thirteen-week period resulted from operating income increasing notwithstanding a modest decrease in gross profit, as certain components of selling, general and administrative costs, namely incentive and equity compensation under the Company’s variable compensation programs, decreased approximately $8,500,000 from the 2021 thirteen-week period to the 2022 thirteen-week period.

The increase in operating income as a percentage of variable contribution from the 2021 thirty-nine-week period to the 2022 thirty-nine-week period resulted from operating income increasing at a more rapid percentage rate than the increase in variable contribution, as the Company was able to scale our fixed cost infrastructure, primarily certain components of selling, general and administrative costs, as well as certain components of our other costs of revenue, across a larger variable contribution base.

The ten basis point increase in operating income as a percentage of variable contribution from the 2021 thirteen-week period to the 2022 thirteen-week period resulted from operating income increasing at a modestly higher percentage rate than the increase in variable contribution, as the Company was able to scale our fixed cost infrastructure, primarily certain components of selling, general and administrative costs across a larger variable contribution base.

The decrease in operating income as a percentage of gross profit from the 2022 thirteen-week period to the 2023 thirteen-week period primarily resulted from the effect of decreased gross profit on the Company’s fixed cost infrastructure, primarily certain components of selling, general and administrative costs.

The decrease in operating income as a percentage of variable contribution from the 2022 thirteen-week period to the 2023 thirteen-week period primarily resulted from (1) the effect of decreased variable contribution on the Company’s fixed cost infrastructure, primarily certain components of selling, general and administrative costs and (2) the impact of increased other operating costs and depreciation and amortization during the 2023 thirteen-week period.

Also, as previously mentioned, the Company reports two operating segments:

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and (4) the insurance segment has no depreciation and amortization.

THIRTY NINE WEEKS ENDED SEPTEMBER 24, 2022 COMPARED TO THIRTY NINE WEEKS ENDED SEPTEMBER 25, 2021

Revenue for the 2022 thirty-nine-week period was $5,761,795,000, an increase of $1,169,244,000, or 25%, compared to the 2021 thirty-nine-week period.

Transportation revenue increased $1,163,398,000, or 26%.

The increase in transportation revenue was attributable

to increased revenue per load of approximately 15% and an increased number of loads hauled of approximately 9% compared to the 2021 thirty-nine-week period.

Reinsurance premiums were $58,836,000 and $52,990,000 for the 2022 and 2021 thirty-nine-week periods, respectively.

The increase in revenue from reinsurance premiums was primarily attributable to (i) an increase in the aggregate value of equipment insured by BCO Independent Contractors under a physical damage program reinsured by Signature;

(ii) an increase in the average number of trucks provided by BCO Independent Contractors and (iii) participation levels among BCO Independent Contractors in certain occupational accident programs and workers’ compensation programs in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the 2022 thirty-nine-week period was $5,097,248,000, representing 88% of total revenue, an increase of $878,842,000, or 21%, compared to the 2021 thirty-nine-week period.

Revenue per load on loads hauled by third party truck capacity providers increased approximately 10% compared to the 2021 thirty-nine-week period, and the number of loads hauled by third party truck capacity providers increased approximately 10% in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period.

The increase in revenue per load on loads hauled via truck was due to a tight truck capacity environment experienced during the 2022 thirty-nine-week period, in particular during the first fiscal quarter of 2022, and the impact of higher diesel fuel costs on loads hauled via Truck Brokerage Carriers, partially offset by (i) a decrease in the number of loads hauled via heavy specialized equipment, which typically have a higher revenue per load, as a percentage of total truck loads and (ii) a decreased average length of haul during the 2022 thirty-nine-week period.

Revenue per load on loads hauled via van equipment increased 11%, revenue per load on loads hauled via unsided/platform equipment increased 9%, revenue per load on less-than-truckload loadings increased 17% and other truck transportation services revenue per load increased 4% as compared to the 2021 thirty-nine-week period.

The increase in the number of loads hauled via truck compared to the 2021 thirty-nine-week period was due to a broad-based increase in demand for the Company’s truck transportation services.

Loads hauled via van equipment increased 9%, loads hauled via unsided/platform equipment increased 10%, less-than-truckload loadings increased 6% and loads hauled via other truck transportation services increased 17% as compared to the 2021 thirty-nine-week period.

Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue.

Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $153,195,000 and $74,195,000 in the 2022 and 2021 thirty-nine-week periods, respectively.

It should be noted that billings to many customers of the Company’s truck brokerage services include a single all-in rate that does not separately identify fuel surcharges on loads hauled via Truck Brokerage Carriers.

Accordingly, the overall impact of changes in fuel prices on revenue and revenue per load on loads hauled via truck is likely to be greater than that indicated.

Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for the 2022 thirty-nine-week period was $588,918,000, or 10% of total revenue, an increase of $276,427,000, or 88%, compared to the 2021 thirty-nine-week period.

Revenue per load on revenue generated by multimode capacity providers increased approximately 99% in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period, while the number of loads hauled by multimode capacity providers decreased approximately 5% over the same period.

Revenue per load on loads hauled by multimode capacity providers increased for all modes, primarily due to continuing U.S.

and global economic recoveries coupled with the impact of global supply chain disruptions which were particularly acute with respect to international ocean and air freight.

Revenue per load on loads hauled via air, ocean and rail intermodal increased 139%, 93% and 19%, respectively, during the 2022 thirty-nine-week period as compared to the 2021 thirty-nine-week period.

Revenue per load on revenue generated by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity.

The decrease in the number of loads hauled by multimode capacity providers was due to a 21% decrease in rail loadings and a 19% decrease in air loadings, partially offset by a 34% increase in ocean loadings.

The 21% decrease in rail loadings was broad-based across several agencies and customers, and the 19% decrease in air loadings was entirely attributable to decreased loadings at one specific customer.

The 34% increase in ocean loadings was due to a broad-based increase in demand across many customers for the Company’s ocean services.

Purchased transportation was 78.3% and 78.0% of revenue in the 2022 and 2021 thirty-nine-week periods, respectively.

The increase in purchased transportation as a percentage of revenue was primarily due to (i) an increased percentage of revenue generated by Truck Brokerage Carriers, which typically has a higher rate of purchased transportation than revenue generated by BCO Independent Contractors and (ii) an increased percentage of revenue generated by multimode capacity providers, which typically has a higher rate of purchased transportation than third party truck capacity providers, partially offset by a lower rate of purchased transportation on revenue generated by Truck Brokerage Carriers.

Commissions to agents were 8.1% and 7.8% of revenue in the 2022 and 2021 thirty-nine-week periods, respectively.

The increase in commissions to agents as a percentage of revenue was primarily attributable to a decreased cost of purchased transportation as a percentage of revenue on revenue generated by Truck Brokerage Carriers.

Investment income was $2,023,000 and $2,138,000 in the 2022 and 2021 thirty-nine-week periods, respectively.

The decrease in investment income was primarily attributable to a lower average investment balance held by the insurance segment in the 2022 thirty-nine-week period, partially offset by higher average rates of return on investments in the 2022 thirty-nine-week period.

Other operating costs increased $7,761,000 in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period.

The increase in other operating costs compared to the prior year was primarily due to (i) increased trailing equipment maintenance costs as a result of (x) increased labor and parts costs charged by the Company’s network of third party trailer maintenance facilities as the Company retained older trailing equipment to support current business levels;

and (y) an increased average trailer fleet size during the 2022 thirty-nine-week period and (ii) the impact of the resumption of a large in-person event for the Company’s BCO Independent Contractors.

Insurance and claims increased $21,067,000 in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period.

The increase in insurance and claims expense compared to the prior year was primarily due to increased severity of current year trucking claims during the 2022 thirty-nine-week period, the impact of net unfavorable development of prior years’ claims in the 2022 thirty-nine-week period and increased insurance premiums, primarily for commercial auto and excess liability coverage.

During the 2022 and 2021 thirty-nine-week periods, insurance and claims costs included $7,505,000 and $4,522,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs increased $6,479,000 in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period.

The increase in selling, general and administrative costs compared to the prior year was attributable to increased wages, an increased provision for customer bad debt and the return of the Company’s annual agent convention held in April 2022, partially offset by decreased stock-based compensation expense and a decreased provision for incentive compensation.

Included in selling, general and administrative costs was stock-based compensation expense of $9,409,000 and $18,717,000 for the 2022 and 2021 thirty-nine-week periods, respectively, and incentive compensation expense of $14,185,000 and $21,370,000 for the 2022 and 2021 thirty-nine-week periods, respectively.

Depreciation and amortization expense increased $6,095,000 in the 2022 thirty-nine-week period compared to the 2021 thirty-nine-week period.

The increase in depreciation and amortization expense was primarily due to increased depreciation on digital technology tools in connection with the deployment of new and upgraded applications for use by the Company’s network of agents, capacity providers and employees, and to a lesser extent, in connection with increased trailing equipment depreciation.

Interest and debt expense in the 2022 thirty-nine-week period increased $301,000 compared to the 2021 thirty-nine-week period.

The increase in interest and debt expense was primarily attributable to increased average borrowings on the Company’s revolving credit facility during the 2022 thirty-nine-week period, as the Company had no borrowings under its revolving credit facility during the 2021 period.

The Company had no borrowings under its revolving credit facility as of the end of the 2022 thirty-nine-week period.

The provisions for income taxes for the 2022 and 2021 thirty-nine-week periods were based on estimated annual effective income tax rates of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21% in both periods primarily attributable to state taxes and nondeductible executive compensation.

The effective income tax rate for the 2022 thirty-nine-week period was 23.9%, which was lower than the estimated annual effective income tax rate of 24.5%, primarily attributable to excess tax benefits realized on stock-based awards.

The effective income tax rate in the 2021 thirty-nine-week period of 24.2% was lower than the 24.4% estimated annual effective income tax rate, primarily due to excess tax benefits realized on stock-based awards in the 2021 thirty-nine-week period.

Net income was $337,612,000, or $9.15 per diluted share, in the 2022 thirty-nine-week period.

Net income was $268,209,000, or $7.00 per diluted share, in the 2021 thirty-nine-week period.

THIRTEEN WEEKS ENDED SEPTEMBER 24, 2022 COMPARED TO THIRTEEN WEEKS ENDED SEPTEMBER 25, 2021

Revenue for the 2022 thirteen-week period was $1,816,132,000, an increase of $81,833,000, or 5%, compared to the 2021 thirteen-week period.

Transportation revenue increased $80,397,000, or 5%.

The increase in transportation revenue was attributable to increased revenue per load of approximately 4%, while the number of loads hauled was approximately equal to the 2021 thirteen-week period.

THIRTEEN WEEKS ENDED APRIL 1, 2023 COMPARED TO THIRTEEN WEEKS ENDED MARCH 26, 2022

Revenue for the 2023 thirteen-week period was $1,435,675,000, a decrease of $534,924,000, or 27%, compared to the 2022 thirteen-week period.

Transportation revenue decreased $534,493,000, or 27%.

The decrease in transportation revenue was attributable to decreased revenue per load of approximately 17% and a decreased number of loads hauled of approximately 13% compared to the 2022 thirteen-week period.

Reinsurance premiums were $18,829,000 and $19,260,000 for the 2023 and 2022 thirteen-week periods, respectively.

The increase in revenue from reinsurance premiums was primarily attributable to (i) an increase in the aggregate value of equipment insured by BCO

Independent Contractors under a physical damage program reinsured by Signature;

(ii) an increase in the average number of trucks provided by BCO Independent Contractors and (iii) participation levels among BCO Independent Contractors in certain occupational accident programs and workers’ compensation programs in the 2022 thirteen-week period compared to the 2021 thirteen-week period.

Truck transportation revenue generated by third party truck capacity providers for the 2022 thirteen-week period was $1,598,766,000, representing 88% of total revenue, an increase of $18,036,000, or 1%, compared to the 2021 thirteen-week period.

The number of loads hauled by third party truck capacity providers increased approximately 1% in the 2022 thirteen-week period compared to the 2021 thirteen-week period, while revenue per load on loads hauled by third party truck capacity providers was approximately equal to the 2021 thirteen-week period.

The increase in the number of loads hauled via truck compared to the 2021 thirteen-week period was due to (i) a broad-based increase in demand for the Company’s truck transportation services provided via unsided/platform equipment and (ii) a modest increase in demand for the Company’s truck transportation services provided via van equipment, partially offset by reduced demand for substitute line-haul and power-only services from certain parcel and less-than-truckload carriers.

Loads hauled via unsided/platform equipment increased 6% and loads hauled via van equipment increased 2%, while less-than-truckload loadings decreased 8% and other truck transportation services load count decreased 6% as compared to the 2021 thirteen-week period.

The number of loads hauled via truck increased 5% in July, was relatively flat in August and then declined 1% in September, as compared to the corresponding periods in 2021.

The decrease in revenue from reinsurance premiums was primarily attributable to a decrease in the average number of trucks provided by BCO Independent Contractors in the 2023 thirteen-week period compared to the 2022 thirteen-week period, partially offset by an increase in the aggregate value of equipment insured by BCO Independent Contractors under a physical damage program reinsured by Signature in the 2023 thirteen-week period compared to the 2022 thirteen-week period.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the 2023 thirteen-week period was $1,323,708,000, representing 92% of total revenue, a decrease of $427,576,000, or 24%, compared to the 2022 thirteen-week period.

Revenue per load on loads hauled by third party truck capacity providers decreased approximately 14% compared to the 2022 thirteen-week period, and the number of loads hauled by third party truck capacity providers decreased approximately 12% in the 2023 thirteen-week period compared to the 2022 thirteen-week period.

The decrease in revenue per load on loads hauled via truck was primarily due to pricing pressure throughout the 2023 thirteen-week period as industry-wide truck capacity was significantly more readily available as compared to the 2022 thirteen-week period, during which pandemic-related supply chain disruption was at a high point.

Revenue per load on loads hauled via van equipment decreased 21%, on loads hauled via unsided/platform equipment decreased 5% and on less-than-truckload loadings decreased 3%, while revenue per load on loads hauled by other truck transportation services increased 4% as compared to the 2022 thirteen-week period.

The decrease in the number of loads hauled via truck compared to the 2022 thirteen-week period was primarily due to a decrease in demand from the near-record high levels experienced in the 2022 thirteen-week period for the Company’s van services and power-only services included in other truck transportation services, which tend to be more correlated with U.S.

consumer demand.

Loads hauled via other truck transportation services decreased 32%, loads hauled via van equipment decreased 12%, loads hauled via unsided/platform equipment decreased 3% and less-than-truckload loadings decreased 3% as compared to the 2022 thirteen-week period.

Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue.

Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $42,935,000 and $37,485,000 in the 2023 and 2022 thirteen-week periods, respectively.

Transportation revenue generated by multimode capacity providers for the 2022 thirteen-week period was $191,904,000, or 11% of total revenue, an increase of $63,321,000, or 49%, compared to the 2021 thirteen-week period.

Revenue per load on revenue generated by multimode capacity providers increased approximately 85% in the 2022 thirteen-week period compared to the 2021 thirteen-week period, while the number of loads hauled by multimode capacity providers decreased approximately 19% over the same period.

Revenue per load on loads hauled by multimode capacity providers increased for all modes, primarily due to the continuing U.S.

and global economic recoveries coupled with the impact of global supply chain disruptions which were particularly acute with respect to international ocean and air freight.

Revenue per load on loads hauled via air, ocean and rail intermodal increased 127%, 63% and 10%, respectively, during the 2022 thirteen-week period as compared to the 2021 thirteen-week period.

The decrease in the number of loads hauled by multimode capacity providers was due to a 43% decrease in rail loadings, partially offset by an 18% increase in ocean loadings.

Air loadings during the 2022 thirteen-week period were approximately equal to the 2021 thirteen-week period.

The 43% decrease in rail loadings was broad-based across several agencies and customers.

The 18% increase in ocean loadings was due to a broad-based increase in demand across many customers for the Company’s ocean services.

It should be noted that billings to many customers of the Company’s truck brokerage services include a single all-in rate that do not separately identify fuel surcharges on loads hauled via Truck Brokerage Carriers.

Accordingly, the overall impact of changes in fuel prices on revenue and revenue per load on loads hauled via truck is likely to be greater than that indicated.

Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for the 2023 thirteen-week period was $86,750,000, or 6% of total revenue, a decrease of $107,995,000, or 55%, compared to the 2022 thirteen-week period.

Revenue per load on revenue generated by multimode capacity providers decreased approximately 33% in the 2023 thirteen-week period compared to the 2022 thirteen-week period, and the number of loads hauled by multimode capacity providers also decreased approximately 33% over the same period.

Revenue per load on loads hauled via ocean, air and rail intermodal decreased 48%, 13% and 2%, respectively, during the 2023 thirteen-week period as compared to the 2022 thirteen-week period.

The decrease in revenue per load on loads hauled by ocean cargo carriers was primarily related to the impact of global supply chain disruptions during the 2022 thirteen-week period, which were particularly acute with respect to international ocean freight.

The decrease in the number of loads hauled by multimode capacity providers was due to a 39% decrease in rail loadings, a 32% decrease in ocean loadings and a 9% decrease in air loadings.

The 39% decrease in rail loadings was broad-based across several agencies and customers, the 32% decrease in ocean loadings was due to a broad-based decrease in demand across many customers for the Company’s ocean services and the 9% decrease in air loadings was entirely attributable to decreased loadings at one specific customer.

Purchased transportation was 76.7% and 78.7% of revenue in the 2023 and 2022 thirteen-week periods, respectively.

The decrease in purchased transportation as a percentage of revenue was primarily due to a lower rate of purchased transportation on revenue generated by Truck Brokerage Carriers, partially offset by (i) an increased percentage of revenue generated by Truck Brokerage Carriers, which typically has a higher rate of purchased transportation than revenue generated by BCO Independent Contractors;

and (ii) an increased percentage of revenue generated by multimode capacity providers, which typically has a higher rate of purchased transportation than third party truck capacity providers.

The decrease in purchased transportation as a percentage of revenue was primarily due to (i) a decreased rate of purchased transportation on revenue generated by Truck Brokerage Carriers and (ii) a decreased percentage of revenue generated by multimode capacity providers, which typically has a higher rate of purchased transportation than third party truck capacity providers, partially offset by an increased percentage of revenue generated by Truck Brokerage Carriers, which typically has a higher rate of purchased transportation than revenue generated by BCO Independent Contractors.

Commissions to agents were 8.8% and 7.6% of revenue in the 2023 and 2022 thirteen-week periods, respectively.

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Investment income was $1,368,000 and $721,000 in the 2023 and 2022 thirteen-week periods, respectively.

The increase in investment income was primarily attributable to higher average rates of return on investments in the 2023 thirteen-week period, partially offset by a lower average investment balance held by the insurance segment during the 2023 thirteen-week period.

Other operating costs increased $1,237,000 in the 2023 thirteen-week period compared to the 2022 thirteen-week period.

The increase in other operating costs compared to the prior year was primarily due to (i) increased trailing equipment maintenance costs as a result of (x) increased labor and parts costs as the Company retained older equipment to support current business levels, and (y) an increased average trailer fleet size during the 2022 thirteen-week period, (ii) the impact of the resumption of a large in-person event for the Company’s BCO Independent Contractors and (iii) decreased gains on the sale of operating property.

Insurance and claims increased $1,876,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period.

The increase in insurance and claims expense compared to the prior year was primarily due to increased severity of current year trucking claims during the 2022 thirteen-week period as well as increased premiums for commercial auto and excess liability coverage, partially offset by decreased net unfavorable development of prior years’ claims during the 2022 thirteen-week period.

and (y) an increased average trailer fleet size during the 2023 thirteen-week period and (ii) an increased provision for contractor bad debt, partially offset by increased gains on sales of operating property.

Insurance and claims decreased $3,121,000 in the 2023 thirteen-week period compared to the 2022 thirteen-week period.

The decrease in insurance and claims expense compared to the prior year was primarily due to decreased net unfavorable development of prior years’ claims in the 2023 thirteen-week period and decreased severity of current year trucking claims during the 2023 thirteen-week period, partially offset by increased insurance premiums, primarily for commercial auto and excess liability coverage.

During the 2023 and 2022 thirteen-week periods, insurance and claims costs included $1,855,000 and $4,273,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs decreased $5,679,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period.

The decrease in selling, general and administrative costs compared to the prior year was attributable to a decreased provision for incentive compensation, decreased stock-based compensation expense and decreased employee benefit costs, partially offset by increased wages.

Included in selling, general and administrative costs was incentive compensation expense of $4,462,000 and $8,755,000 for the 2022 and 2021 thirteen-week periods, respectively, and stock-based compensation expense of $3,599,000 and $7,824,000 for the 2022 and 2021 thirteen-week periods, respectively.

Depreciation and amortization expense increased $2,294,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period.

Interest and debt expense in the 2022 thirteen-week period increased $82,000 compared to the 2021 thirteen-week period.

Selling, general and administrative costs increased $854,000 in the 2023 thirteen-week period compared to the 2022 thirteen-week period.

The increase in selling, general and administrative costs compared to prior year was primarily attributable to increased information technology costs and increased wages, almost entirely offset by a decreased provision for incentive compensation and decreased employee benefit costs, primarily attributable to decreased medical and pharmacy costs under the self-insured portion of the Company’s medical plan.

Included in selling, general and administrative costs was incentive compensation expense of $1,421,000 and $5,199,000 for the 2023 and 2022 thirteen-week periods, respectively.

Depreciation and amortization increased $1,441,000 in the 2023 thirteen-week period compared to the 2022 thirteen-week period.

The increase in depreciation and amortization expense was primarily due to increased depreciation on new and updated digital tools deployed for use by the Company’s network of agents, capacity providers and employees, partially offset by decreased trailing equipment depreciation.

The quarter-over-prior-year-quarter change in interest and debt (income) expense was $1,849,000, with net interest income of $726,000 in the 2023 thirteen-week period compared to net interest and debt expense of $1,123,000 in the 2022 thirteen-week period.

The increase in interest and debt (income) expense was primarily attributable to increased interest income earned on cash balances held by the transportation logistics segment and decreased average borrowings on the Company’s revolving credit facility, as the Company had no borrowings during the 2023 period, partially offset by increased interest expense related to finance lease obligations.

The provisions for income taxes for the 2023 and 2022 thirteen-week periods were based on estimated annual effective income tax rates of 24.4% and 24.5%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2022 thirteen-week period was 24.3%, which was lower than the estimated annual effective income tax rate of 24.5%, primarily attributable to higher than anticipated state income tax refunds and excess tax benefits realized on stock-based awards.

The effective income tax rate in the 2021 thirteen-week period of 24.4% was consistent with the estimated annual effective income tax rate of 24.4%.

The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2023 period primarily attributable to state taxes and non-deductible meals and entertainment.

The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2022 period primarily attributable to state taxes and non-deductible executive compensation.

The effective income tax rate for the 2023 thirteen-week period was 23.3%, which was lower than the estimated annual effective income tax rate of 24.4%, primarily attributable to excess tax benefits realized on stock-based awards.

The effective income tax rate for the 2022 thirteen-week period was 22.8%, which was lower than the estimated annual effective income tax rate of 24.5%, primarily attributable to excess tax benefits realized on stock-based awards.

Net income was $78,195,000, or $2.17 per diluted share, in the 2023 thirteen-week period.

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CAPITAL RESOURCES AND LIQUIDITY

Working capital and the ratio of current assets to current liabilities were $543,330,000 and 1.6 to 1, respectively, at September 24, 2022, compared with $512,917,000 and 1.5 to 1, respectively, at December 25, 2021.

Working capital and the ratio of current assets to current liabilities were $612,548,000 and 1.8 to 1, respectively, at April 1, 2023, compared with $561,255,000 and 1.6 to 1, respectively, at December 31, 2022.

Landstar has historically operated with current ratios within the range of 1.5 to 1 to 2.0 to 1.

Cash provided by operating activities was $436,381,000 in the 2022 thirty-nine-week period compared with $216,990,000 in the 2021 thirty-nine-week period.

The increase in cash flow provided by operating activities was primarily attributable to favorable working capital impacts in connection with the timing of collections of receivables and payment of certain payables and increased net income.

The Company declared and paid $0.80 per share, or $29,506,000 in the aggregate, in cash dividends during the thirty-nine-week period ended September 24, 2022 and, during such period, also paid $75,387,000 of dividends payable which were declared during fiscal year 2021 and included in current liabilities in the consolidated balance sheet at December 25, 2021.

The Company declared and paid $0.67 per share, or $25,693,000 in the aggregate, in cash dividends during the thirty-nine-week period ended September 25, 2021 and, during such period, also paid $76,770,000 of dividends payable which were declared during fiscal year 2020 and included in current liabilities in the consolidated balance sheet at December 26, 2020.

During the thirty-nine-week period ended September 24, 2022, the Company purchased 1,900,826 shares of its common stock at a total cost of $285,983,000.

During the thirty-nine-week period ended September 25, 2021, the Company purchased 317,046 shares of its common stock at a total cost of $50,230,000.

As of September 24, 2022, the Company may purchase in the aggregate up to 1,099,174 shares of its common stock under its authorized stock purchase program.

Long-term debt, including current maturities, was $109,470,000 at September 24, 2022, $2,334,000 lower than at December 25, 2021.

Shareholders’ equity was $873,173,000, or 89% of total capitalization (defined as long-term debt including current maturities plus equity), at September 24, 2022, compared to $862,010,000, or 89% of total capitalization, at December 25, 2021.

The increase in shareholders’ equity was primarily the result of net income, partially offset by purchases of shares of the Company’s common stock, dividends declared by the Company in the 2022 thirty-nine-week period and taxes paid in lieu of shares issued related to stock-based compensation plans.

On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “First Amended and Restated Credit Agreement”).

As previously disclosed in a Form 8-K filed

with the SEC on July 8, 2022, Landstar entered into a second amended and restated credit agreement, dated July 1, 2022, with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”) that superseded and replaced the First Amended and Restated Credit Agreement.

The Second Amended and Restated Credit Agreement which matures July 1, 2027, provides for borrowing capacity in the form of a revolving credit facility of $300,000,000, $45,000,000 of which may be utilized in the form of letters of credit.

The Second Amended and Restated Credit Agreement also includes an “accordion” feature providing for a possible increase of up to an aggregate amount of borrowing capacity of $600,000,000.

The Second Amended and Restated Credit Agreement, which superseded and replaced the First Amended and Restated Credit Agreement, is referred to herein as the “Credit Agreement.” As of September 24, 2022, there were no borrowings outstanding under the revolving credit facility of the Credit Agreement.

Cash provided by operating activities was $139,035,000 in the 2023 thirteen-week period compared with $94,965,000 in the 2022 thirteen-week period.

The increase in cash flow provided by operating activities was primarily attributable to the timing of collections of trade receivables, partially offset by decreased net income.

The Company declared and paid $0.30 per share, or $10,806,000 in the aggregate, in cash dividends during the thirteen-week period ended April 1, 2023 and, during such period, also paid $71,854,000 of dividends payable which were declared in December 2022 and included in current liabilities in the consolidated balance sheet at December 31, 2022.

The Company declared and paid $0.25 per share, or $9,324,000 in the aggregate, in cash dividends during the thirteen-week period ended March 26, 2022 and, during such period, also paid $75,387,000 of dividends payable which were declared in December 2021 and included in current liabilities in the consolidated balance sheet at December 25, 2021.

During the thirteen-week period ended April 1, 2023, the Company purchased 89,661 shares of its common stock at a total cost of $15,433,000.

During the thirteen-week period ended March 26, 2022, the Company purchased 693,550 shares of its common stock at a total cost of $109,332,000.

As of April 1, 2023, the Company may purchase in the aggregate up to 2,910,339 shares of its common stock under its authorized stock purchase programs.

Long-term debt, including current maturities, was $93,992,000 at April 1, 2023, $9,408,000 lower than at December 31, 2022.

Shareholders’ equity was $935,652,000, or 91% of total capitalization (defined as long-term debt including current maturities plus equity), at April 1, 2023, compared to $887,221,000, or 90% of total capitalization, at December 31, 2022.

The increase in shareholders’ equity was primarily the result of net income, partially offset by purchases of shares of the Company’s common stock and dividends declared by the Company in the 2023 thirteen-week period.

On July 1, 2022, Landstar entered into a second amended and restated credit agreement with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”).

The Credit Agreement, which matures July 1, 2027, provides for borrowing capacity in the form of a revolving credit facility of $300,000,000, $45,000,000 of which may be utilized in the form of letters of credit.

The Credit Agreement also includes an “accordion” feature providing for a possible increase of up to an aggregate amount of borrowing capacity of $600,000,000.

The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness.

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The Company is currently in compliance with all of the debt covenants under the Credit Agreement.

At September 24, 2022, the Company had no borrowings outstanding and $33,493,000 of letters of credit outstanding under the Credit Agreement.

At September 24, 2022, there was $266,507,000 available for future borrowings under the Credit Agreement.

In addition, the Company has $76,567,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $85,074,000 at September 24, 2022.

Investments, all of which are carried at fair value, include primarily investment-grade bonds and asset-backed securities having maturities of up to five years.

At April 1, 2023, the Company had no borrowings outstanding and $33,492,000 of letters of credit outstanding under the Credit Agreement.

At April 1, 2023, there was $266,508,000 available for future borrowings under the Credit Agreement and access to an additional $300,000,000 under the Credit Agreement’s “accordion” feature.

In addition, the Company has $76,567,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $85,074,000 at April 1, 2023.

Investments, all of which are carried at fair value, include primarily investment-grade bonds, U.S.

Treasury obligations and asset-backed securities having maturities of up to five years.

Fair value of investments is based primarily on quoted market prices.

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As an asset-light provider of integrated transportation management solutions, the Company’s annual capital requirements for operating property are generally for trailing equipment and information technology hardware and software.

In addition, a significant portion of the trailing equipment used by the Company is provided by third party capacity providers, thereby reducing the Company’s capital requirements.

During the 2022 thirty-nine-week period, the Company purchased $21,096,000 of operating property and acquired $26,741,000 of trailing equipment by entering into finance leases.

In addition, a significant portion of the trailing equipment available to the Company is provided by third party capacity providers, thereby reducing the Company’s capital requirements.

During the 2023 thirteen-week period, the Company purchased $6,233,000 of operating property.

Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2023 approximately $51,000,000 in operating property, consisting primarily of new trailing equipment to replace older trailing equipment and information technology equipment.

On April 1, 2022, Landstar Investment Holdco, LLC, a newly formed Delaware LLC and wholly owned subsidiary of Landstar System Holdings, Inc., purchased Class A units of Cavnue, LLC for approximately $4,999,000 in cash consideration.

Cavnue, LLC is a privately held company focused on combining technology and road infrastructure to unlock the full potential of connected and autonomous vehicles.

Management believes that cash flow from operations combined with the Company’s borrowing capacity under the Credit Agreement will be adequate to meet Landstar’s debt service requirements, fund continued growth, both internal and through acquisitions, pay dividends, complete the authorized share purchase program and meet working capital needs.

LEGAL MATTERS

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The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim.

Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates.

During the 2022 and 2021 thirty-nine-week periods, insurance and claims costs included $7,505,000 and $4,522,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims liability at September 24, 2022.

Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates within its various programs.

During the 2023 and 2022 thirteen-week periods, insurance and claims costs included $1,855,000 and $4,273,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims liability at April 1, 2023, primarily due to the inherent difficulty in estimating the severity of commercial trucking claims and the potential judgment or settlement amount that may be incurred in connection with the resolution of such claims.

Significant variances from management’s estimates for the ultimate resolution of self-insured claims could be expected to positively or negatively affect Landstar’s earnings in a given quarter or year.

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Landstar’s operations are subject to seasonal trends common to the trucking industry.

Truckload shipments for the quarter ending in March are typically lower than for the quarters ending June, September and December.

Historically, truckload shipments for the quarter ending in March are typically lower than for the quarters ending June, September and December.

The COVID-19 global pandemic and related supply chain issues significantly disrupted these typical seasonal patterns.

In particular, the Company’s 2022 fiscal year results did not reflect normal seasonal patterns.

No assurances can be given regarding the extent to which or when trends common to the trucking industry and Landstar’s operations, in particular, will return to more typical, pre-pandemic, seasonal patterns.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis