QUOTE AND NEWS
Benzinga  Aug 8  Comment 
Below are the top mid-cap trucking stocks on the NYSE and the NASDAQ in terms of return on investment. The trailing-twelve-month return on investment at JB Hunt Transport Services (NASDAQ: JBHT) is 21.20%. JB Hunt's revenue for the same period...
Benzinga  Jul 29  Comment 
Analysts at BB&T Capital upgraded Landstar System (NASDAQ: LSTR) from Hold to Buy. The target price for Landstar System is set to $85. Landstar System shares have surged 24.54% over the past 52 weeks, while the S&P 500 index has gained 17.38%...
Benzinga  Jul 29  Comment 
SeekingAlpha  Jul 24  Comment 
Landstar System, Inc. (NASDAQ:LSTR) Q2 2014 Earnings Conference Call July 23, 2014 2:00 PM ET Executives Henry Gerkens – Chairman and CEO Patrick O’Malley – VP and Chief Commercial & Marketing Officer Joseph Beacom – VP...
Motley Fool  Jul 23  Comment 
Is this meaningful or just another movement?
SeekingAlpha  Jul 23  Comment 
The following audio is from a conference call that will begin on July 23, 2014 at 14:00 PM ET. The audio will stream live while the call is active, and can be replayed upon its completion. Listen now Complete Story »
Benzinga  Jul 23  Comment 
Landstar System (NASDAQ: LSTR) shares reached a new 52-week high of $68.65 after the company reported upbeat Q2 results. Northrop Grumman (NYSE: NOC) shares gained 0.16% to touch a new 52-week high of $126.73 after the company reported a 4.7%...
Benzinga  Jun 4  Comment 
In a report published Wednesday, Credit Suisse analyst Allison M. Landry reiterated a Neutral rating on Landstar System (NASDAQ: LSTR), and raised the price target from $60.00 to $63.00. In the report, Credit Suisse noted, “We slightly...
Market Intelligence Center  Apr 29  Comment 
MarketIntelligenceCenter.com's patented trade-picking algorithms have identified an attractive covered-call trade on Landstar System Inc (LSTR). Look at the Jul. '14 $64.65 covered call for a net debit in the $61.89 area. This trade has a...
TheStreet.com  Apr 25  Comment 
NEW YORK (TheStreet) -- Shares of Landstar System Inc. are up 1.13% to $63.14 on Friday after the company was upgraded to "buy" from "hold" at Deutsche Bank . The company is a provider of freight transportation services and supply chain...
Benzinga  Apr 25  Comment 
In a report published Friday, Credit Suisse analyst Allison M. Landry reiterated a Neutral rating on Landstar System (NASDAQ: LSTR), and raised the price target from $55.00 to $60.00. In the report, Credit Suisse noted, “We have raised our...




 

Landstar (LSTR) is a non-asset based trucking company - a trucking company that doesn't own its own trucks; it earns commissions by connecting self-employed truckers who own trucks with shipping customers.

Landstar's carrier segment, which coordinates full truckload transportation, accounted for 73% of revenue in 2007 and shipped over 1 million loads that year. The majority of the remaining revenue (26%) is earned by the global logistics segment.[1]

Landstar competes with other full truckload and less-than-truckload carriers, and in 2007, Landstar was the seventh largest less-than-truckload shipping carrier.[2][1] As the economy slows and the demand for freight transportation decreases, Landstar will be able to largely maintain its profit margin because the majority of its costs are variable costs associated with connecting its independent contractors to its shipping customers.[3]

Company Overview

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Landstar Revenue & Net Income 2007, 2006, 2005[1]

Landstar System, Inc. is a transportation and logistics agent that earns commission-based revenue by connecting self employed truckers with shipping customers. Landstar System's independent sales agents coordinate the shipment of freight between customers in the United States, Canada and Mexico using their network of independent truck operators. Landstar System's operations can be divided in to three business segments: the carrier segment, the global logistics segment and the insurance segment.[1] The company ships forest products, paper & paper products, building materials, general merchandise, food & beverage, chemicals, and automotive parts.

Business and Financial Metrics

Financial Discussion: In 2007, Landstar reported revenues of $2.49 billion, which is down from revenues of $2.51 billion in 2006 and $2.52 billion in 2005; revenue decreased by 1.1% between 2006 and 2007.[1] In 2007, Landstar reported a net income of $110 million, which is down from $113 million in 2006 and $116 million in 2005.[1] The decreases in revenue and net income can be attributed to the global logistics segment, whose decreased revenue resulted from a decrease in revenue associated with that segment's contract to provide disaster relief transportation for the Federal Aviation Authority (FAA).[1]

2008 Q3: Through the third quarter of 2008, Landstar reported revenues of $2.04 billion, which is up from revenues of $1.84 billion for the same period in 2007.[4] Landstar reported a net income of $86.3 million for the first three quarters of 2008, which is up from a net income of $80.6 million for the same period in 2007.[5] The increase is primarily due to an increase in revenue created by intermodal transportation shipping and natural disaster evacuation bus services provided by the global logistics segment.[6]

Business Metrics: Landstar's management uses number of loads (volume), revenue per load, and revenue per mile to keep track of the company's internal operations. Revenue per load and revenue per mile each vary with the type of load that is being hauled and where that load is being hauled. Hauling more expensive cargo will create more revenue then less valuable cargo; furthermore, loads hauled into or out of densely populated areas create less revenue then loads hauled to remote areas.[7]

Metrics Carrier Segment Global Logistics Segment
Years 2005 2006 2007 2005 2006 2007
Number of Loads 1,097,000 1,108,300 1,121,900 334,000 380,700 402,900
Revenue per Load $1,542 $1,621 $1,612 $1,555 $1,528 $1,572
Revenue per Mile $1.92 $2.02 $2.04 - - -

Business Segments

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Landstar Revenue by Segment[1]

Carrier Segment (73% of Revenue)[1]

The carrier segment facilitates the transportation of entire truckloads of cargo between shippers. The carrier segment consists of of 8,603 trucks owned and operated by independent contractors and 14,331 trailers owned by either independent contractors or Landstar System.[1] Revenue from the carrier segment increased by 0.7% from $1.80 billion to $1.81 billion, between 2006 and 2007.[1]

Global Logistics Segment (26% of Revenue)[1]

The global logistics segment arranges intermodal shipping; less-than-truckload shipping (LTL); contract logistics; truck brokerage; emergency and expedited ground, air, and ocean freight; bus brokerage; and warehousing. Excluding transportation associated with the FAA contract, the number of loads and revenue per load delivered by this segment increased by 6% and 3%, respectively, from 2006 to 2007.[1]

Insurance Segment (1% of Revenue)[1]

The insurance segment is made up of Signature Insurance Company, a fully owned subsidiary, and Risk Management Claim Services, Inc. This segment provides property and casualty insurance as well as risk and claims management services to Landstar's operating subsidiaries.[1]

Key Trends and Forces

Landstar can weather downturns more easily than its competitors because of its non-asset based structure

The demand for cargo transportation will decline as the full effects of the global recession negatively impact the manufacturing and retail segments. As the demand for cargo transportation and the capacity needed for cargo transportation decrease, Landstar will be able to maintain its current profit margin because of its non-asset based structure. Landstar's net profit margin in 2007 was 4.4% and payments to independent contractors and sales agents, which are a variable cost, made up 90% of Landstar's 2007 total costs.[1] Landstar's net profit margin through the third quarter of 2008 was 4.2% and payments to independent contractors and sales agents made up 91% of Landstar's total costs during the same period.[8]

Landstar pays its independent contractors a prior-negotiated, contractually agreed-upon rate for picking the cargo up and delivering it to its destination; this rate is usually a percentage of the revenue generated by the shipment. Landstar also pays its sales agents a contractually agreed upon rate that is a percentage of Landstar's total revenue or gross profit.[1] Since Landstar purchases capacity as it is needed, Landstar will never have to increase prices when capacity is scare nor will it have to decrease prices when capacity is abundant.[9]

Landstar is exposed to fluctuations in the price of oil

Landstar purchases its hauling capacity from independent trucking contractors who set prices for use of their capacity. Increases in the price of oil will increase the contractors' variable costs; if the contractors' variable costs increase they will pass this increase on to Landstar by increasing the price that Landstar pays for capacity. If Landstar cannot pass this increase on to its customers, either for competitive or strategic reasons, Landstar's net income will decrease.[1]

For the first three quarters of 2007 the average price of a gallon of diesel fuel was $2.75[10] and Landstar's payments to its independent contractors accounted for 81%[11] of its total costs. For the first three quarters of 2008 the average price of a gallon of diesel fuel was $4.09[12] and Landstar's payments to its independent contractors accounted for 83%[13] of its total costs.

Landstar System's profitability is not directly related to one customer

Landstar's top 100 customers accounted for about half of Landstar's revenue.[1] In 2007, contracts with the FAA to provide disaster relief services accounted for 17% of revenue; however, that contract expired December 31, 2007.[1] Since no one customer currently accounts for more than 10% of Landstar's revenue, the success of the company does not depend on serving one particular customer. This means that Landstar does not have to change its prices or modify its operations to accommodate one customer's demands the way freight companies that earn the majority of their revenue from one customer have to.

Competition

Landstar System, Inc. primarily provides full-truckload shipping, intermodal shipping, and logistics services; these are trucking companies that represent Landstar's competition because they provide similar services.

  • C.H. Robinson Worldwide (CHRW). is a non-asset based trucking company with operations in United States, Canada, Europe, Mexico, South America and Asia[14] that had revenues of $7.3 billion and net income of $324 million.[15]
  • J.B. Hunt Transport Services (JBHT) uses company owned trucks, independent contractors and third parties to provide intermodal, full-truckload and contracted freight transportation services to its customers. In 2007 J.B. Hunt had revenues of $3.49 billion and a net income of $213 million.[16]
  • Knight Transportation (KNX) operates in two segments: an asset based, full-truckload shipping segment, which produces 60% of the company's revenue, and a non-asset based, truck brokerage segment that produces the remaining 40^% of the company's revenue. In 2007 Knight had $714 million in revenues and $63 million in net income.[17]
  • Conway Inc (CNW) is a trucking company that provides shipping, logistics and supply chain management to its customers. In 2007 Conway had revenues of $4.39 billion and a net income of $146 million.[18]

Market Share

Landstar System competes in the Less-than-Truckload Shipping (LTL) segment of the freight transportation market. The following table shows 20 of the largest companies that compete in the less-than-truckload segment.

Comparing Truckload and Less-than-Truckload Companies[19]

Company Market Share Sales (in $millions) 1-Year Sales Growth Tractors Trailers Terminals
Landstar System1.0%$2,518.0-0.1%8,80013,600N/A
YRC Worldwide3.9%$9,918.713.5%17,50064,200670
Con-Way Inc.1.7%$4,221.51.2%7,80030,500440
Schneider National1.4%$3,700.05.7%14,40048,000N/A
FedEx Freight1.4%$3,645.013.3%14,00045,000470
J.B. Hunt Transport Services (JBHT)1.3%$3,328.06.4%11,100N/AN/A
Swift Transportation1.2%$3,172.8-0.8%18,00050,00030
Werner Enterprises0.8%$2,080.65.5%9,00025,000N/A
Arkansas Best (ABFS)0.7%$1,860.50.0%4,00020,000290
Estes Express Lines0.6%$1,447.2N/A6,50022,800185
Old Dominion Freight Line0.5%$1,279.420.5%4,60017,900180
UPS Ground Freight0.4%$1,014.1N/A6,80022,800210
Averitt Express0.4%$921.3N/A4,00011,25080
Saia (SAIA)0.3%$874.7-20.3%2,9009,000150
Southeastern Freight Lines0.3%$711.09.8%N/AN/AN/A
DATS Trucking0.2%$600.1N/A5001,000N/A
AAA Cooper Transportation0.2%$528.8N/A2,3006,00075
Vitran Corporation0.2%$514.120.1%N/AN/A125
Koch Companies0.1%$200.0N/A6501,820N/A
NFI Industries0.1%$187.2N/A3,0008,00050
Central Freight Lines0.1%$185.9N/A1,9008,50065
A. Duie Pyle Inc.0.03%$77.9N/A5401,45012
TOTAL:$40,251.6125,490377,8202,592




References

  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 LSTR 2007 10K  
  2. Wikinvest - J.B. Hunt Transport Services
  3. Stock Market Beat
  4. LSTR 2008 Q3 10Q
  5. LSTR 2008 Q3 10Q
  6. LSTR 2008 Q3 10Q
  7. Transportation Business Associates
  8. LSTR 2008 Q3 10Q
  9. non-asset based&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a Truckin'
  10. Energy Information Administration
  11. LSTR 2008 Q3 10Q
  12. Energy Information Administration
  13. LSTR 2008 Q3 10Q
  14. C.H. Robinson Worldwide
  15. Google Finance - CHRW
  16. JBHT 2007 10K
  17. KNX 2007 10K
  18. CNW 2007 10K
  19. Wikinvest - J.B. Hunt Transport Services
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