What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-31 compared with 2024-05-03 · 104 added, 55 removed, 288 unchanged (36% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Re s

ults of Oper ati

The following discussion should be read in conjunction with the interim consolidated financial statements and notes thereto included herein, and with the Company’s audited financial statements and notes thereto for the fiscal year ended December 30, 2023 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2023 Annual Report on Form 10-K.

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Landstar’s independent commission sales agents enter into contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers.

The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the

“BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under non-exclusive contractual arrangements (the “Truck Brokerage Carriers”), air cargo carriers, ocean cargo carriers and railroads.

The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the “BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under non-exclusive contractual arrangements (the “Truck Brokerage Carriers”), air cargo carriers, ocean cargo carriers and railroads.

Through this network of agents and capacity providers linked together by Landstar’s ecosystem of digital technologies, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $5.3 billion during the most recently completed fiscal year.

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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.

In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers.

In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-

than-truckload service providers.

The independent commission sales agents market services provided by the transportation logistics segment.

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 thirteen weeks ended March 30, 2024, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 39%, 53% and 2%, respectively, of the Company’s consolidated revenue.

Collectively, revenue generated by air and ocean cargo carriers represented approximately 5% of the Company’s consolidated revenue in the thirteen-week period ended March 30, 2024.

During the twenty-six weeks ended June 29, 2024, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 38%, 52% and 2%, respectively, of the Company’s consolidated revenue.

Collectively, revenue generated by air and ocean cargo carriers represented approximately 5% of the Company’s consolidated revenue in the twenty-six-week period ended June 29, 2024.

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 thirteen-week period ended March 30, 2024.

Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for the twenty-six-week period ended June 29, 2024.

Changes in Financial Condition and Results of Operations

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

Twenty-Six Weeks Ended

Thirteen Weeks Ended

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

March 30, 2024

April 1, 2023

June 29, 2024

BCO Independent Contractors

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Selling, general and administrative

During the thirteen-week period ended March 30, 2024, employee compensation and benefits accounted for approximately 68% of the Company’s selling, general and administrative costs.

During the twenty-six-week period ended June 29, 2024, employee compensation and benefits accounted for approximately 64% 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.

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

Twenty-Six Weeks Ended

Thirteen Weeks Ended

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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 44% of the Company’s consolidated revenue in the thirteen-week period ended March 30, 2024 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 56% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.

Approximately 43% of the Company’s consolidated revenue in the twenty-six-week period ended June 29, 2024 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 57% 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.

Twenty-Six Weeks Ended

Thirteen Weeks Ended

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Operating income as % of variable contribution

The decrease in operating income as a percentage of gross profit from the 2023 thirteen-week period to the 2024 thirteen-week period resulted from the decrease of operating income at a more rapid percentage rate than the decrease in gross profit, primarily due to the impact of the Company’s fixed cost infrastructure, principally certain components of selling, general and administrative costs, in comparison to a smaller gross profit base.

The decrease in operating income as a percentage of variable contribution from the 2023 thirteen-week period to the 2024 thirteen-week period resulted from the decrease of operating income at a more rapid percentage rate than the decrease in variable contribution, primarily due to the impact of the Company’s fixed cost infrastructure, principally certain components of selling, general and administrative costs, in comparison to a smaller variable contribution base, and the impact of increased other operating costs during the 2024 thirteen-week period.

The decrease in operating income as a percentage of gross profit from the 2023 twenty-six-week period to the 2024 twenty-six-week period and from the 2023 thirteen-week period to the 2024 thirteen-week period resulted from the decrease of operating income at a more rapid percentage rate than the decrease in gross profit, primarily due to the impact of the Company’s fixed cost infrastructure, principally certain components of selling, general and administrative costs, in comparison to a smaller gross profit base.

The decrease in operating income as a percentage of variable contribution from the 2023 twenty-six-week period to the 2024 twenty-six-week period and from the 2023 thirteen-week period to the 2024 thirteen-week period resulted from the decrease of operating income at a more rapid percentage rate than the decrease in variable contribution, primarily due to the impact of the Company’s fixed cost infrastructure, principally certain components of selling, general and administrative costs, in comparison to a smaller variable contribution base, and the impact of increased other operating costs.

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

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

THIRTEEN WEEKS ENDED MARCH 30, 2024 COMPARED TO THIRTEEN WEEKS ENDED APRIL 1, 2023

TWENTY-SIX WEEKS ENDED JUNE 29, 2024 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 1, 2023

Revenue for the 2024 twenty-six-week period was $2,396,048,000, a decrease of $413,484,000, or 15%, compared to the 2023 twenty-six-week period.

Transportation revenue decreased $408,832,000, or 15%.

The decrease in transportation revenue was attributable to a decreased number of loads hauled of approximately 11% and decreased revenue per load of approximately 5% compared to the 2023 twenty-six-week period.

Reinsurance premiums were $32,441,000 and $37,093,000 for the 2024 and 2023 twenty-six-week periods, respectively.

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 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the 2024 twenty-six-week period was $2,174,621,000, representing 91% of total revenue, a decrease of $396,032,000, or 15%, compared to the 2023 twenty-six-week period.

The number of loads hauled by third party truck capacity providers decreased approximately 11% compared to the 2023 twenty-six-week period, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 5% in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

The decrease in the number of loads hauled via truck compared to the 2023 twenty-six-week period was primarily due to a broad-based decrease in demand for the Company’s truck transportation services.

Loads hauled via other truck transportation services decreased 35%, less-than-truckload loadings decreased 11%, loads hauled via van equipment decreased 8% and loads hauled via unsided/platform equipment decreased 7% as compared to the 2023 twenty-six-week period.

The decrease in revenue per load on loads hauled via truck was primarily due to a softer freight demand environment experienced throughout the 2024 twenty-six-week period.

Revenue per load on loads hauled via other truck transportation services decreased 17%, on loads hauled via van equipment decreased 7% and on less-than-truckload loadings decreased 4%, while revenue per load on loads hauled via unsided/platform equipment increased 1% as compared to the 2023 twenty-six-week period.

The increase in revenue per load on loads hauled via unsided/platform equipment of 1% was favorably impacted by an increase in the percentage of revenue contributed by heavy/specialized equipment, which typically has a higher revenue per load.

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 $60,302,000 and $79,295,000 in the 2024 and 2023 twenty-six-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 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 2024 twenty-six-week period was $170,382,000, or 7% of total revenue, a decrease of $17,041,000, or 9%, compared to the 2023 twenty-six-week period.

Revenue per load on revenue generated by multimode capacity providers decreased approximately 8% in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period, and the number of loads hauled by multimode capacity providers decreased approximately 2% over the same period.

Revenue per load on loads hauled via air and rail intermodal decreased 61% and 5% respectively, while revenue per load on loads hauled via ocean increased 2%, during the 2024 twenty-six-week period as compared to the 2023 twenty-six-week period.

The decrease in revenue per load on loads hauled by air cargo carriers was primarily attributable to the impact of high value air loadings at one specific customer during the 2023 twenty-six-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 7% decrease in rail loadings and a 4% decrease in air loadings, partially offset by a 6% increase in ocean loadings.

The 7% decrease in rail loadings was primarily attributable to decreased loadings at two specific agencies.

The 4% decrease in air loadings was primarily attributable to decreased loadings at two specific customers.

The 6% increase in ocean loadings was broad-based with increases at several customers.

Purchased transportation was 77.4% and 76.7% of revenue in the 2024 and 2023 twenty-six-week periods, respectively.

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

Commissions to agents were 8.2% and 8.8% of revenue in the 2024 and 2023 twenty-six-week periods, respectively.

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

Investment income was $7,066,000 and $3,852,000 in the 2024 and 2023 twenty-six-week periods, respectively.

The increase in investment income was attributable to higher average rates of return on investments in the 2024 twenty-six-week period and a higher average investment balance held by the insurance segment during the 2024 twenty-six-week period.

Other operating costs increased $3,154,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

The increase in other operating costs compared to the prior year was primarily due to decreased gains on sales of operating property and an increased provision for contractor bad debt.

Insurance and claims decreased $3,999,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-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 2024 twenty-six-week period, decreased BCO miles traveled and decreased severity of trucking accidents during the 2024 twenty-six-week period.

During the 2024 and 2023 twenty-six-week periods, insurance and claims costs included $2,116,000 and $2,831,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs increased $3,265,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

The increase in selling, general and administrative costs compared to prior year was primarily attributable to increased employee benefit costs, primarily attributable to increased medical and pharmacy costs under the self-insured portion of the Company’s medical plan, the impact of CEO transition costs and an increased provision for incentive compensation, partially offset by decreased project consulting fees.

Included in selling, general and administrative costs was incentive compensation expense of $1,455,000 and $323,000 for the 2024 and 2023 twenty-six-week periods, respectively.

Depreciation and amortization decreased $1,509,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

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

Net interest and debt income increased $2,253,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

The increase in interest and debt income was primarily attributable to increased interest income earned on cash balances held by the transportation logistics segment and decreased interest expense related to finance lease obligations.

The provisions for income taxes for the 2024 and 2023 twenty-six-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 effective income tax rate for the 2024 twenty-six-week period was 24.1%.

The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2024 period primarily attributable to state taxes.

The effective income tax rate for the 2023 twenty-six-week period was 23.9%.

The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2023 period primarily attributable to state taxes.

Net income was $99,720,000, or $2.79 per basic and diluted share, in the 2024 twenty-six-week period.

Net income was $144,754,000, or $4.03 per basic and diluted share, in the 2023 twenty-six-week period.

THIRTEEN WEEKS ENDED JUNE 29, 2024 COMPARED TO THIRTEEN WEEKS ENDED JULY 1, 2023

Revenue for the 2024 thirteen-week period was $1,225,005,000, a decrease of $148,852,000, or 11%, compared to the 2023 thirteen-week period.

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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 2024 thirteen-week period compared to the 2023 thirteen-week period.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the 2024 thirteen-week period was $1,068,932,000, representing 91% of total revenue, a decrease of $254,776,000, or 19%, compared to the 2023 thirteen-week period.

Truck transportation revenue generated by third party truck capacity providers for the 2024 thirteen-week period was $1,105,689,000, representing 90% of total revenue, a decrease of $141,256,000, or 11%, compared to the 2023 thirteen-week period.

The number of loads hauled by third party truck capacity providers decreased approximately 9% compared to the 2023 thirteen-week period, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 3% in the 2024 thirteen-week period compared to the 2023 thirteen-week period.

The decrease in the number of loads hauled via truck compared to the 2023 thirteen-week period was primarily due to a decrease in demand from the 2023 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.

The decrease in the number of loads hauled via truck compared to the 2023 thirteen-week period was primarily due to a broad-based decrease in demand for the Company’s truck transportation services.

Loads hauled via other truck transportation services decreased 28%, less-than-truckload loadings decreased 9%, loads hauled via van equipment decreased 7% and loads hauled via unsided/platform equipment decreased 7% as compared to the 2023 thirteen-week period.

The decrease in revenue per load on loads hauled via truck was primarily due to a loose truck capacity environment experienced throughout the 2024 thirteen-week period.

Revenue per load on loads hauled via other truck transportation services decreased 22%, on loads hauled via van equipment decreased 8%, on less-than-truckload loadings decreased 7% and on loads hauled via unsided/platform equipment decreased 2% as compared to the 2023 thirteen-week period.

The decrease in revenue per load on loads hauled via unsided/platform equipment of 2% was favorably impacted by an increase in the percentage of revenue contributed by heavy/specialized equipment, which typically has a higher revenue per load.

The decrease in revenue per load on loads hauled via truck was primarily due to a softer freight demand environment experienced throughout the 2024 thirteen-week period.

Revenue per load on loads hauled via other truck transportation services decreased 9%, on loads hauled via van equipment decreased 5% and on less-than-truckload loadings decreased 1%, while revenue per load on loads hauled via unsided/platform equipment increased 3% as compared to the 2023 thirteen-week period.

The increase in revenue per load on loads hauled via unsided/platform equipment of 3% was favorably impacted by an increase in the percentage of revenue contributed by heavy/specialized equipment, which typically has a higher revenue per load.

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 $30,269,000 and $36,360,000 in the 2024 and 2023 thirteen-week periods, respectively.

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 2024 thirteen-week period was $76,769,000, or 7% of total revenue, a decrease of $9,981,000, or 12%, compared to the 2023 thirteen-week period.

Transportation revenue generated by multimode capacity providers for the 2024 thirteen-week period was $93,613,000, or 8% of total revenue, a decrease of $7,060,000, or 7%, compared to the 2023 thirteen-week period.

Revenue per load on revenue generated by multimode capacity providers decreased approximately 6% in the 2024 thirteen-week period compared to the 2023 thirteen-week period, and the number of loads hauled by multimode capacity providers decreased approximately 1% over the same period.

Revenue per load on loads hauled via air, rail intermodal and ocean decreased 58%, 4% and 3%, respectively, during the 2024 thirteen-week period as compared to the 2023 thirteen-week period.

Revenue per load on loads hauled via air and rail intermodal decreased 62% and 7%, respectively, while revenue per load on loads hauled via ocean increased 6%, during the 2024 thirteen-week period as compared to the 2023 thirteen-week period.

The decrease in the number of loads hauled by multimode capacity providers was due to an 8% decrease in rail loadings and a 3% decrease in air loadings, partially offset by a 6% increase in ocean loadings.

The 8% decrease in rail loadings was primarily attributable to decreased loadings at one specific agency.

The decrease in the number of loads hauled by multimode capacity providers was due to a 5% decrease in rail loadings and a 5% decrease in air loadings, partially offset by a 6% increase in ocean loadings.

The 5% decrease in rail loadings was primarily attributable to decreased loadings at two specific agencies.

The 5% decrease in air loadings was primarily attributable to decreased loadings at one specific customer.

The 6% increase in ocean loadings was broad-based with increases at several customers.

The 6% increase in ocean loadings was primarily attributable to increased loadings at one specific customer.

Purchased transportation was 77.6% and 76.7% of revenue in the 2024 and 2023 thirteen-week periods, respectively.

The increase in purchased transportation as a percentage of revenue was primarily due to an increased rate of purchased transportation on revenue generated by Truck Brokerage Carriers.

Commissions to agents were 8.1% and 8.9% of revenue in the 2024 and 2023 thirteen-week periods, respectively.

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Other operating costs increased $673,000 in the 2024 thirteen-week period compared to the 2023 thirteen-week period.

The increase in other operating costs compared to the prior year was primarily due to an increased provision for contractor bad debt and decreased gains on sales of operating property.

The increase in other operating costs compared to the prior year was primarily due to decreased gains on sales of operating property.

Insurance and claims decreased $2,620,000 in the 2024 thirteen-week period compared to the 2023 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 2024 thirteen-week period and decreased frequency of trucking accidents during the 2024 thirteen-week period, partially offset by increased severity of current year trucking claims during the 2024 thirteen-week period.

During the 2024 and 2023 thirteen-week periods, insurance and claims costs included $1,127,000 and $1,855,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

The decrease in insurance and claims expense compared to the prior year was primarily due to decreased severity of current year trucking claims and decreased BCO miles traveled during the 2024 thirteen-week period.

Selling, general and administrative costs increased $410,000 in the 2024 thirteen-week period compared to the 2023 thirteen-week period.

The increase in selling, general and administrative costs compared to prior year was primarily attributable to increased employee benefit costs, primarily attributable to increased medical and pharmacy costs under the self-insured portion of the Company’s medical plan, an increased provision for incentive compensation and the impact of CEO transition costs, partially offset by decreased project consulting fees and a decreased provision for customer bad debt.

Included in selling, general and administrative costs was incentive compensation expense of $2,853,000 and $1,421,000 for the 2024 and 2023 thirteen-week periods, respectively.

The increase in selling, general and administrative costs compared to prior year was primarily attributable to increased employee benefit costs, primarily attributable to increased medical and pharmacy costs under the self-insured portion of the Company’s medical plan, an increased provision for customer bad debt and increased stock-based compensation expense, partially offset by decreased project consulting fees and decreased event-related expenses.

Included in selling, general and administrative costs was stock-based compensation expense of $1,892,000 and $1,274,000 for the 2024 and 2023 thirteen-week periods, respectively.

Depreciation and amortization decreased $453,000 in the 2024 thirteen-week period compared to 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 $720,696,000 and 2.2 to 1, respectively, at March 30, 2024, compared with $677,517,000 and 2.0 to 1, respectively, at December 30, 2023.

Working capital and the ratio of current assets to current liabilities were $709,467,000 and 2.2 to 1, respectively, at June 29, 2024, compared with $677,517,000 and 2.0 to 1, respectively, at December 30, 2023.

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 $94,208,000 in the 2024 thirteen-week period compared with $139,035,000 in the 2023 thirteen-week period.

The decrease in cash flow provided by operating activities was primarily attributable to decreased net income and decreased favorable net working capital impacts in connection with decreased net receivables, defined as accounts receivable less accounts payable.

The Company declared and paid $0.33 per share, or $11,802,000 in the aggregate, in cash dividends during the thirteen-week period ended March 30, 2024 and, during such period, also paid $71,433,000 of dividends payable which were declared in December 2023 and included in current liabilities in the consolidated balance sheet at December 30, 2023.

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.

During the thirteen-week period ended March 30, 2024, the Company did not purchase any shares of its common stock.

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.

As of March 30, 2024, the Company may purchase in the aggregate up to 3,000,000 shares of its common stock under its authorized stock purchase programs.

Long-term debt, including current maturities, was $65,226,000 at March 30, 2024, $5,914,000 lower than at December 30, 2023.

Shareholders’ equity was $1,017,911,000, or 94% of total capitalization (defined as long-term debt including current maturities plus equity), at March 30, 2024, compared to $983,923,000, or 93% of total capitalization, at December 30, 2023.

The increase in shareholders’ equity was primarily the result of net income, partially offset by dividends declared by the Company in the 2024 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”).

Cash provided by operating activities was $142,343,000 in the 2024 twenty-six-week period compared with $191,733,000 in the 2023 twenty-six-week period.

The decrease in cash flow provided by operating activities was primarily attributable to decreased net income.

The Company declared and paid $0.66 per share, or $23,579,000 in the aggregate, in cash dividends during the twenty-six-week period ended June 29, 2024 and, during such period, also paid $71,433,000 of dividends payable which were declared in December 2023 and included in current liabilities in the consolidated balance sheet at December 30, 2023.

The Company declared and paid $0.60 per share, or $21,586,000 in the aggregate, in cash dividends during the twenty-six-week period ended July 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.

During the twenty-six-week period ended June 29, 2024, the Company purchased 315,649 shares of its common stock at a total cost of $56,995,000, including $56,515,000 in cash purchases and accrued excise tax of $480,000, which is included in other current liabilities in the consolidated balance sheet at June 29, 2024.

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

As of June 29, 2024, the Company may purchase in the aggregate up to 2,684,351 shares of its common stock under its authorized stock purchase programs.

Long-term debt, including current maturities, was $73,377,000 at June 29, 2024, $2,237,000 higher than at December 30, 2023.

Shareholders’ equity was $1,000,812,000, or 93% of total capitalization (defined as long-term debt including current maturities plus equity), at June 29, 2024, compared to $983,923,000, or 93% of total capitalization, at December 30, 2023.

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 2024 twenty-six-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 (as further amended as of June 21, 2024, 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.

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

At March 30, 2024, the Company had no borrowings outstanding and $33,492,000 of letters of credit outstanding under the Credit Agreement.

At March 30, 2024, 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 $77,054,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $85,615,000 at March 30, 2024.

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

At June 29, 2024, the Company had no borrowings outstanding and $35,025,000 of letters of credit outstanding under the Credit Agreement.

At June 29, 2024, there was $264,975,000 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 $77,629,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $86,254,000 at June 29, 2024.

Investments, all of which are carried at fair value, include primarily investment-grade bonds, asset-backed securities, commercial paper and U.S.

Treasury obligations having maturities of up to five years.

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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 2024 thirteen-week period, the Company purchased $9,281,000 of operating property and acquired $1,325,000 of trailing equipment by entering into finance leases.

Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2024 approximately $84,000,000 in operating property, consisting primarily of new trailing equipment to replace older trailing equipment and information technology equipment.

During the 2024 twenty-six-week period, the Company purchased $16,778,000 of operating property and acquired $17,144,000 of trailing equipment by entering into finance leases.

Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2024 approximately $60,000,000 in operating property, consisting primarily of new trailing equipment to replace older trailing equipment and information technology hardware and software.

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 programs and meet working capital needs.

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Many of these claims are covered in whole or in part by insurance.

Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable and estimable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

During the 2024 and

2023 thirteen-week periods, insurance and claims costs included $1,127,000 and $1,855,000 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 March 30, 2024, 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.

During the 2024 and 2023 twenty-six-week periods, insurance and claims costs included $2,116,000 and $2,831,000 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 June 29, 2024, 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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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