What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-10-30 · 88 added, 138 removed, 262 unchanged (46% of the section changed)

6 unchanged sentences

Such statements are by nature subject to uncertainties and risks, including but not limited to:

trade relationships;

an increase in the frequency or severity of accidents or other claims;

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decreased demand for transportation services;

trade relationships;

substantial industry competition;

2 unchanged sentences

dependence on key vendors;

adoption of artificial intelligence;

potential changes in taxes;

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Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world.

The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of approximately 1,100 independent commission sales agents and over 78,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company.

The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of over 1,000 independent commission sales agents and over 88,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company.

The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.

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de C.V., and Landstar Blue, LLC.

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.

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.

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, cold chain/temperature-controlled, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada,

project cargo and customs brokerage.

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

1 unchanged sentence

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 weeks ended September 28, 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 6% of the Company’s consolidated revenue in the thirty-nine-week period ended September 28, 2024.

During the thirteen weeks ended March 29, 2025, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 37%, 54% and 2%, respectively, of the Company’s consolidated revenue.

Collectively, revenue generated by air and ocean cargo carriers represented approximately 6% of the Company’s consolidated revenue in the thirteen-week period ended March 29, 2025.

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

The insurance segment provides risk and claims management services to certain of Landstar’s operating subsidiaries.

In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s operating subsidiaries.

In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance and reinsurance to certain of Landstar’s operating subsidiaries.

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 28, 2024.

Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for the thirteen-week period ended March 29, 2025.

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:

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 28,

September 30,

September 28,

September 30,

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 28,

September 30,

March 29, 2025

March 30, 2024

BCO Independent Contractors

26 unchanged sentences

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

The Company also maintains third party insurance arrangements providing coverage for commercial trucking liabilities in excess of $5 million.

Historically, these third party insurance arrangements were based on policy year periods beginning on May 1 and ending on a subsequent April 30.

Beginning with the policy year period commencing May 1, 2025, the Company and its third party insurance providers adjusted the applicable policy year period, beginning in 2026, to commence on June 1 and end on a subsequent May 31.

All applicable third party insurance arrangements with a policy period ending April 30, 2026, have been amended to provide for a policy period ending May 31, 2026, as reflected below.

Effective May 1, 2023, the Company entered into a 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.

For commercial trucking claims incurred on or after May 1, 2023 through May 31, 2026, the 2023 Initial Excess Policy provides for an aggregate deductible of $18 million over the thirty-seven month term ending May 31, 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-seven month term ending May 31, 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.

Since the annual policy year ended April 30, 2020, as compared to the annual policy year ending April 30, 2025, the Company experienced an increase of approximately $22 million, or over 400%, 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, the Company from year to year manages 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 single hypothetical claim in the amount of $65 million incurred during the annual policy year ending April 30, 2025, the Company would have an aggregate financial exposure of approximately $30 million.

Since the annual policy year ended April 30, 2020, as compared to the annual policy year ending May 31, 2026, the Company experienced an increase of approximately $22 million, or approximately 400%, 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, the Company from year to year manages 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 structured 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 single hypothetical claim in the amount of $65 million incurred during the annual policy year ending May 31, 2026, the Company would have an aggregate financial exposure of approximately $36 million.

Within the Company’s third party insurance arrangements providing excess coverage for commercial trucking liabilities, structured arrangements with third party reinsurers within a specific loss layer may include provisions that require additional payments of premium in the event of unfavorable loss experience or a refund of premium in the event of favorable loss experience.

With respect to one such three year commercial auto liability reinsurance arrangement relating to certain excess claims incurred between May 1, 2020 through April 30, 2023, it is anticipated that during the 2025 second fiscal quarter, the Company will receive a $12,000,000 cash payment from a third party reinsurance provider in the form of a “no claims bonus” due to favorable loss experience with respect to claims incurred during the policy period.

The Company intends to record the receipt of this payment as a deferred gain on the balance sheet until such time as all underlying claims with exposure under the applicable excess layer insurance arrangement are resolved.

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.

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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 $2,000,000 for each general liability claim, $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 $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.

The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage.

The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various legal defenses and other factors including the extent to which such carriers maintain their own insurance coverage.

A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

Selling, general and administrative

During the thirty-nine-week period ended September 28, 2024, employee compensation and benefits accounted for approximately 64% of the Company’s selling, general and administrative costs.

During the thirteen-week period ended March 29, 2025, employee compensation and benefits accounted for approximately 58% 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.

Incentive compensation and stock-based compensation expense is highly variable in nature in comparison to wages and employee benefit costs.

As further described in Note 14 in the “Notes to Consolidated Financial Statements” in this Quarterly Report on Form 10-Q, during the last week of the Company’s 2025 first quarter, the Company identified a supply chain fraud relating to the Company’s international freight forwarding operations.

While remediation and collection efforts continue, selling, general and administrative costs during the thirteen-week period ended March 29, 2025 included a $4.8 million expense relating to this matter.

In addition, it is anticipated that legal and other professional fees may be slightly elevated during the remainder of the Company’s 2025 fiscal year as a result of this matter.

Depreciation and amortization

18 unchanged sentences

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 28,

September 30,

September 28,

September 30,

Costs of revenue:

17 unchanged sentences

For revenue generated by Truck Brokerage Carriers, variable contribution margin may be either a fixed or variable percentage, depending on the contract with each individual independent commission sales agent.

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 43% of the Company’s consolidated revenue in the thirty-nine-week period ended September 28, 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.

agents at a contractually agreed upon percentage of the amount represented by revenue less purchased transportation for these types of shipments.

Approximately 42% of the Company’s consolidated revenue in the thirteen-week period ended March 29, 2025 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 58% 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

6 unchanged sentences

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 28,

September 30,

September 28,

September 30,

Operating income

3 unchanged sentences

Operating income as % of variable contribution

The decrease in operating income as a percentage of gross profit from the 2023 thirty-nine-week period to the 2024 thirty-nine-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 thirty-nine-week period to the 2024 thirty-nine-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.

The decrease in operating income as a percentage of gross profit from the 2024 thirteen-week period to the 2025 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 2024 thirteen-week period to the 2025 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 insurance and claims costs during the 2025 thirteen-week period.

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

7 unchanged sentences

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

THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 2024 COMPARED TO THIRTY-NINE WEEKS ENDED SEPTEMBER 30, 2023

Revenue for the 2024 thirty-nine-week period was $3,609,915,000, a decrease of $488,962,000, or 12%, compared to the 2023 thirty-nine-week period.

Transportation revenue decreased $481,883,000, or 12%.

The decrease in transportation revenue was attributable to a decreased number of loads hauled of approximately 10% and decreased revenue per load of approximately 3% compared to the 2023 thirty-nine-week period.

Reinsurance premiums were $47,974,000 and $55,053,000 for the 2024 and 2023 thirty-nine-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 thirty-nine-week period compared to the 2023 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 2024 thirty-nine-week period was $3,265,745,000, representing 90% of total revenue, a decrease of $478,672,000, or 13%, compared to the 2023 thirty-nine-week period.

The number of loads hauled by third party truck capacity providers decreased approximately 10% compared to the 2023 thirty-nine-week period, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 3% in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-week period.

The decrease in the number of loads hauled via truck compared to the 2023 thirty-nine-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 27%, 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 thirty-nine-week period.

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

Revenue per load on loads hauled via other truck transportation services decreased 12%, on loads hauled via van equipment decreased 5% and on less-than-truckload loadings decreased 3%, while revenue per load on loads hauled via unsided/platform equipment increased 2% as compared to the 2023 thirty-nine-week period.

The increase 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.

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 $89,862,000 and $112,879,000 in the 2024 and 2023 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 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 thirty-nine-week period was $267,710,000, or 7% of total revenue, a decrease of $8,601,000, or 3%, compared to the 2023 thirty-nine-week period.

Revenue per load on revenue generated by multimode capacity providers decreased approximately 3% in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-week period, while the number of loads hauled by multimode capacity providers was approximately equal to the 2023 thirty-nine-week period.

Revenue per load on loads hauled via air and rail intermodal decreased 58% and 8% respectively, while revenue per load on loads hauled via ocean increased 11%, during the 2024 thirty-nine-week period as compared to the 2023 thirty-nine-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 thirty-nine-week period.

The decrease in revenue per load on loads hauled by rail intermodal and the increase in revenue per load on loads hauled via ocean were both broad-based across many customers.

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.

Purchased transportation was 77.5% and 76.6% of revenue in the 2024 and 2023 thirty-nine-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 8.9% of revenue in the 2024 and 2023 thirty-nine-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 $10,988,000 and $6,874,000 in the 2024 and 2023 thirty-nine-week periods, respectively.

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

Other operating costs increased $3,140,000 in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-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 costs decreased $3,141,000 in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-week period.

The decrease in insurance and claims expense compared to the prior year was primarily due to decreased BCO miles traveled and decreased frequency of trucking accidents during the 2024 thirty-nine-week period, partially offset by increased net unfavorable development of prior years’ claims in the 2024 thirty-nine-week period.

During the 2024 and 2023 thirty-nine-week periods, insurance and claims costs included $6,666,000 and $5,154,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs increased $3,542,000 in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-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 Chief Executive Officer (“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 $2,184,000 and $483,000 for the 2024 and 2023 thirty-nine-week periods, respectively.

Depreciation and amortization decreased $497,000 in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-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 $2,376,000 in the 2024 thirty-nine-week period compared to the 2023 thirty-nine-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 thirty-nine-week periods were based on estimated annual effective income tax rates of 24.3% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2024 thirty-nine-week period was 23.4%.

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, partially offset by federal tax credits.

The effective income tax rate for the 2023 thirty-nine-week period was 24.0%.

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 $149,753,000, or $4.21 per basic and diluted share, in the 2024 thirty-nine-week period.

Net income was $206,407,000, or $5.74 per basic and diluted share, in the 2023 thirty-nine-week period.

THIRTEEN WEEKS ENDED SEPTEMBER 28, 2024 COMPARED TO THIRTEEN WEEKS ENDED SEPTEMBER 30, 2023

THIRTEEN WEEKS ENDED MARCH 29, 2025 COMPARED TO THIRTEEN WEEKS ENDED MARCH 30, 2024

Revenue for the 2025 thirteen-week period was $1,152,502,000, a decrease of $18,541,000, or 2%, compared to the 2024 thirteen-week period.

Transportation revenue decreased $16,787,000, or 1%.

The decrease in transportation revenue was attributable to a decreased number of loads hauled of approximately 7%, partially offset by an increased revenue per load of approximately 2% compared to the 2023 thirteen-week period.

The decrease in transportation revenue was attributable to a decreased number of loads hauled of approximately 1% while revenue per load was approximately the same as compared to the 2024 thirteen-week period.

Reinsurance premiums were $14,757,000 and $16,511,000 for the 2025 and 2024 thirteen-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 2025 thirteen-week period compared to the 2024 thirteen-week period.

Truck transportation revenue generated by third party truck capacity providers for the 2024 thirteen-week period was $1,091,124,000, representing 90% of total revenue, a decrease of $82,640,000, or 7%, compared to the 2023 thirteen-week period.

The number of loads hauled by third party truck capacity providers decreased approximately 8% compared to the 2023 thirteen-week period, while revenue per load on loads hauled by third party truck capacity providers increased approximately 1% 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 broad-based decrease in demand for the Company’s truck transportation services.

Less-than-truckload loadings decreased 12%, loads hauled via other truck transportation services decreased 8%, loads hauled via van equipment decreased 8% and loads hauled via unsided/platform equipment decreased 6% as compared to the 2023 thirteen-week period.

The increase in revenue per load on loads hauled via truck was primarily due to an increased average length of haul on truckload shipments during the 2024 thirteen-week period.

Revenue per load on loads hauled via unsided/platform equipment increased 4%, while revenue per load on less-than-truckload loadings decreased 2%, on loads hauled via van equipment decreased 2% and on loads hauled via other truck transportation services decreased 1% as 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 2025 thirteen-week period was $1,049,718,000, representing 91% of total revenue, a decrease of $19,214,000, or 2%, compared to the 2024 thirteen-week period.

The number of loads hauled by third party truck capacity providers decreased approximately 1% compared to the 2024 thirteen-week period, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 1% in the 2025 thirteen-week period compared to the 2024 thirteen-week period.

The decrease in the number of loads hauled via truck compared to the 2024 thirteen-week period was primarily due to decreased demand from the 2024 thirteen-week period for the Company’s less-than-truckload, van and unsided/platform transportation services.

Loads hauled via less-than-truckload loadings decreased 12%, loads hauled via van equipment decreased 4% and loads hauled via unsided/platform equipment decreased 1%, while loads hauled via other truck transportation services increased 31% as compared to the 2024 thirteen-week period.

The decrease in revenue per load on loads hauled via truck was primarily due to a shorter average length of haul and the impact of lower diesel fuel costs on loads hauled via Truck Brokerage Carriers.

Revenue per load on loads hauled via other truck transportation services decreased 3%, on loads hauled via van equipment decreased 2% and on less-than-truckload loadings decreased 1%.

Revenue per load on loads hauled via unsided/platform equipment was approximately the same as compared to the 2024 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 $26,925,000 and $30,033,000 in the 2025 and 2024 thirteen-week periods, respectively.

Transportation revenue generated by multimode capacity providers for the 2024 thirteen-week period was $97,328,000, or 8% of total revenue, an increase of $8,440,000, or 9%, compared to the 2023 thirteen-week period.

Revenue per load on revenue generated by multimode capacity providers increased 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 increased approximately 3% over the same period.

Revenue per load on loads hauled via ocean increased 28%, while revenue per load on loads hauled via air and rail intermodal decreased 52% and 13%, respectively, during the 2024 thirteen-week period as compared to the 2023 thirteen-week period.

The increase in revenue per load on loads hauled via ocean was broad-based across many customers and reflected the impact of various geopolitical events on ocean shipping rates, generally.

The decrease in revenue per load on loads hauled by rail intermodal was broad-based.

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 2025 thirteen-week period was $83,124,000, or 7% of total revenue, an increase of $6,355,000, or 8%, compared to the 2024 thirteen-week period.

Revenue per load on revenue generated by multimode capacity providers increased approximately 13% in the 2025 thirteen-week period compared to the 2024 thirteen-week period, while the number of loads hauled by multimode capacity providers decreased approximately 4% over the same period.

Revenue per load on loads hauled via air and ocean increased 19% and 14%, respectively, while rail intermodal decreased approximately 10% during the 2025 thirteen-week period as compared to the 2024 thirteen-week period.

The increase 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 2025 thirteen-week period.

The increase in revenue per load on loads hauled by ocean cargo carriers was primarily attributable to one specific customer during the 2025 thirteen-week period.

The decrease in revenue per load on loads hauled by rail intermodal carriers was primarily attributable to one specific agency during the 2025 thirteen-week period.

The increase in the number of loads hauled by multimode capacity providers was due to increases in air, rail intermodal and ocean loadings of 10%, 4% and 1%, respectively.

The 10% increase in air loadings was primarily attributable to increased loadings at one specific agency.

The 4% increase in rail intermodal loadings was primarily attributable to increased loadings at three specific agencies.

The 1% increase in ocean loadings was primarily attributable to increased loadings at one specific customer.

The decrease in the number of loads hauled by multimode capacity providers was due to a 14% decrease in rail loadings and a 1% decrease in air loadings, partially offset by a 7% increase in ocean loadings.

The 14% decrease in rail loadings was primarily attributable to decreased loadings at one specific agency.

The 7% increase in ocean loadings was broad-based with increases at several customers.

Purchased transportation was 77.9% and 77.3% of revenue in the 2025 and 2024 thirteen-week periods, respectively.

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

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

Commissions to agents were 8.1% and 8.3% of revenue in the 2025 and 2024 thirteen-week periods, respectively.

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Investment income was $3,598,000 and $3,412,000 in the 2025 and 2024 thirteen-week periods, respectively.

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

The increase in investment income was attributable to a higher average investment balance held by the insurance segment during the 2025 thirteen-week period, partially offset by lower average rates of return on investments in the 2025 thirteen-week period.

Other operating costs decreased $3,030,000 in the 2025 thirteen-week period compared to the 2024 thirteen-week period.

The decrease in other operating costs compared to the prior year was primarily due to decreased trailing equipment maintenance costs, almost entirely offset by an increased provision for contractor bad debt and decreased gains on sales of operating property.

Insurance and claims costs increased $858,000 in the 2024 thirteen-week period compared to the 2023 thirteen-week period.

The increase in insurance and claims expense compared to the prior year was primarily due to increased net unfavorable development of prior years’ claims in the 2024 thirteen-week period, partially offset by decreased BCO miles traveled and decreased frequency of current year trucking claims during the 2024 thirteen-week period.

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

Insurance and claims increased $13,584,000 in the 2025 thirteen-week period compared to the 2024 thirteen-week period.

The increase in insurance and claims expense compared to the prior year was primarily due to increased net unfavorable development of prior years’ claims in the 2025 thirteen-week period and increased severity of current year trucking and cargo claims during the 2025 thirteen-week period, partially offset by decreased BCO miles traveled during the 2025 thirteen-week period.

During the 2025 and 2024 thirteen-week periods, insurance and claims costs included $11,352,000 and $1,127,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs increased $5,160,000 in the 2025 thirteen-week period compared to the 2024 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, and an increased provision for incentive compensation, partially offset by decreased stock-based compensation expense and decreased project consulting fees.

Included in selling, general and administrative costs was incentive compensation expense of $729,000 and $160,000 for the 2024 and 2023 thirteen-week periods, respectively, and stock-based compensation (benefit) expense of ($43,000) and $1,144,000 for the 2024 and 2023 thirteen-week periods, respectively.

Depreciation and amortization increased $1,012,000 in the 2024 thirteen-week period compared to the 2023 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.

Net interest and debt income increased $123,000 in the 2024 thirteen-week period compared to the 2023 thirteen-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, partially offset by increased interest expense related to finance lease obligations.

The increase in selling, general and administrative costs compared to prior year was primarily attributable to an approximately $4,800,000 expense relating to the supply chain fraud matter referenced above under “ Expenses—Selling, general and administrative” and increased project consulting fees, partially offset by a decreased provision for incentive compensation and the impact of Chief Executive Officer (“CEO”) transition costs on the 2024 thirteen-week period.

Included in selling, general and administrative costs was incentive compensation expense of $1,000,000 and $2,853,000 for the 2025 and 2024 thirteen-week periods, respectively.

Depreciation and amortization decreased $1,916,000 in the 2025 thirteen-week period compared to the 2024 thirteen-week period.

The decrease in depreciation and amortization expense was primarily due to decreased depreciation on information technology software in the 2025 thirteen-week period.

Net interest and debt income decreased $1,452,000 in the 2025 thirteen-week period compared to the 2024 thirteen-week period.

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

The provisions for income taxes for the 2025 and 2024 thirteen-week periods were based on estimated annual effective income tax rates of 24.3% and 24.5%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2025 thirteen-week period was 24.7%.

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, partially offset by federal tax credits.

The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2025 period primarily attributable to state taxes.

The effective income tax rate for the 2024 thirteen-week period was 23.5%.

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CAPITAL RESOURCES AND LIQUIDITY

Working capital and the ratio of current assets to current liabilities were $718,742,000 and 2.2 to 1, respectively, at September 28, 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 $629,307,000 and 2.0 to 1, respectively, at March 29, 2025, compared with $646,713,000 and 2.0 to 1, respectively, at December 28, 2024.

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 $225,439,000 in the 2024 thirty-nine-week period compared with $303,785,000 in the 2023 thirty-nine-week period.

Cash provided by operating activities was $55,698,000 in the 2025 thirteen-week period compared with $94,208,000 in the 2024 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 $1.02 per share, or $36,325,000 in the aggregate, in cash dividends during the thirty-nine-week period ended September 28, 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 $0.93 per share, or $33,448,000 in the aggregate, in cash dividends during the thirty-nine-week period ended September 30, 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 thirty-nine-week period ended September 28, 2024, the Company purchased 436,919 shares of its common stock at a total cost of $79,388,000, including $78,697,000 in cash purchases and accrued excise tax of $691,000, which is included in other current liabilities in the consolidated balance sheet at September 28, 2024.

During the thirty-nine-week period ended September 30, 2023, the Company purchased 89,661 shares of its common stock at a total cost of $15,433,000.

As of September 28, 2024, the Company may purchase in the aggregate up to 2,563,081 shares of its common stock under its authorized stock purchase programs.

Long-term debt, including current maturities, was $72,506,000 at September 28, 2024, $1,366,000 higher than at December 30, 2023.

Shareholders’ equity was $1,015,918,000, or 93% of total capitalization (defined as long-term debt including current maturities plus equity), at September 28, 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 thirty-nine-week period.

The Company declared and paid $0.36 per share, or $12,688,000 in the aggregate, in cash dividends during the thirteen-week period ended March 29, 2025 and, during such period, also paid $70,632,000 of dividends payable which were declared in December 2024 and included in current liabilities in the consolidated balance sheet at December 28, 2024.

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.

During the thirteen-week period ended March 29, 2025, the Company purchased 386,318 shares of its

common stock at a total cost of $60,945,000, including $60,361,000 in cash purchases and accrued excise tax of $584,000, which is included in other current liabilities in the consolidated balance sheet at March 29,2025.

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

As of March 29, 2025, the Company may purchase in the aggregate up to 2,161,663 shares of its common stock under its authorized stock purchase programs.

Long-term debt, including current maturities, was $93,968,000 at March 29, 2025, $8,339,000 lower than at December 28, 2024.

Shareholders’ equity was $930,755,000, or 91% of total capitalization (defined as long-term debt including current maturities plus equity), at March 29, 2025, compared to $972,439,000, or 90% of total capitalization, at December 28, 2024.

The decrease in shareholders’ equity was primarily the result of purchases of shares of the Company’s common stock and dividends declared by the Company, partially offset by the result of net income in the 2025 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 (as further amended as of June 21, 2024, the “Credit Agreement”).

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

At September 28, 2024, the Company had no borrowings outstanding and $35,250,000 of letters of credit outstanding under the Credit Agreement.

At September 28, 2024, there was $264,750,000 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 $73,117,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $81,241,000 at September 28, 2024.

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

At March 29, 2025, the Company had no borrowings outstanding and $35,250,000 of letters of credit outstanding under the Credit Agreement.

At March 29, 2025, there was $264,750,000 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 $74,321,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $82,579,000 at March 29, 2025.

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.

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 available to the Company is provided by third party capacity providers, thereby reducing the Company’s capital requirements.

During the 2024 thirty-nine-week period, the Company purchased $24,256,000 of operating property and acquired $24,238,000 of trailing equipment by entering into finance leases.

In addition, during the 2024 thirty-nine-week period, Landstar acquired $6,690,000 of operating property for which the Company accrued a corresponding liability of $1,201,000 in accounts payable and $5,489,000 in other noncurrent liabilities as of September 28, 2024.

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 2025 thirteen-week period, the Company purchased $1,902,000 of operating property.

Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2025 approximately $32,000,000 in operating property consisting primarily of new trailing equipment to replace older trailing equipment and information technology hardware and software.

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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, the Company believes that adequate provisions have been made for probable and reasonably 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.

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.

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 thirty-nine-week periods, insurance and claims costs included $6,666,000 and $5,154,000 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 28, 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 2025 and 2024 thirteen-week periods, insurance and claims costs included $11,352,000 and $1,127,000 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 29, 2025, 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 the Company’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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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 and 2023 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