Landstar Profit Up 20 Percent in First Quarter

Landstar System increased revenue 4.4 percent in the first quarter to $572 million, a slower rate of growth than in recent quarters at the truckload carrier group.

The company's net income increased 19.8 percent year-over-year to $20.6 million, however, buoyed by stronger pricing in the first three months of 2011.

Landstar's results show a decline in revenue isn't always a bad thing - especially if it means disposing of less profitable freight for higher margin business.

Independent contractor yield, or revenue per load, increased 10.4 percent.

"Overall truckload capacity was seasonally tighter than a year ago, which led to improved pricing," said Henry Gerkens, chairman, president and CEO.

The carrier group's incremental margin increased 24 percent in the first quarter, following a 21 percent and 6 percent increase in the fourth and third quarters.

Diluted earnings per share increased 26 percent from a year ago, to 43 cents per share. That drove Landstar¹s stock to a 52-week high of $48.26 a share Tuesday.

Landstar attributed its revenue decline to the loss of substitute line-haul service it offers less-than-truckload carriers and "inclement" weather during the quarter.

The company's year-over-year revenue growth slowed for the third straight quarter, dropping from 7.3 percent in the fourth quarter and 24.4 percent in the third.

Landstar System boosted its net income 29.6 percent year-over-year in the fourth quarter to $24.1 million, while its revenue rose 7.3 percent to $587.5 million.

For the full year, the truckload carrier group increased its profit 23.8 percent to $86.6 million, while 2010 revenue jumped 19.5 percent to $2.4 billion.

The company is "cycling through" the loss of one large LTL customer, said analyst Edward M. Wolfe, founder of Wall Street transportation research firm Wolfe Trahan.

The loss of that freight drove down Landstar's owner-operator load volume 2.9 percent in the first quarter, while brokerage load volume declined 9.1 percent.

Landstar's total load volume would have been up about 7 percent excluding the lost LTL freight, Wolfe said. Most of the lost LTL revenue came from brokerage.

--Contact William B. Cassidy at wcassidy@joc.com.