Landstar System Inc.’s first-quarter revenue met its expectations, but the Jacksonville-based trucking company said two factors may significantly reduce its earnings.
“During the last fiscal week of the Company’s first fiscal quarter of 2025, the Company identified a significant supply chain fraud that remains under investigation and does not involve the Company’s core North American truckload services,” Landstar said in an April 2 Securities and Exchange Commission filing.
“While preliminary in our investigation, the Company believes this fraud may adversely affect Landstar’s 2025 first quarter earnings per share in a range of $0.35 to $0.50 primarily related to an impairment of a trade accounts receivable,” before any potential insurance recoveries, it said.
In January, Landstar projected first-quarter earnings of $1.05 to $1.25 per share, but the SEC filing also said the company experienced elevated insurance and claim costs “primarily due to cargo theft and truck accident claim development.”
Those expenses are expected to lower earnings to between 90 cents and 95 cents, before any costs of the supply chain fraud.
TD Cowen analyst Jason Seidl said in a research note the fraud issue has been impacting the entire industry.
“Fraud and theft has been increasingly prevalent in the freight market, particularly as tech and automation have been playing a growing role in freight bookings that has enabled thieves to take advantage of the system,” he said.
Landstar said its revenue in the first quarter will be within its forecast range of $1.075 billion to $1.175 billion.
“I’m pleased that in a highly fluid freight transportation environment and ever-changing policy backdrop, we expect our revenue for the 2025 first quarter to finish at or near the mid-point of our 2025 First Quarter Prior Guidance,” CEO Frank Lonegro said in a statement in the SEC filing.
He said severe winter weather and the California wildfires reduced loads hauled in January but that was offset by a stronger than usual February.
Landstar’s disclosure came after the market closed April 2, just before the stock market’s overall meltdown began April 3.
Its stock fell as much as $20.59 over three trading days to $131.34 April 7, its lowest level since the end of 2020.
Seidl and Truist Securities analyst Lucas Servera maintained “hold” ratings on the stock after the disclosures, which Landstar presented to analysts at an April 2 meeting.
“While we expect longer-term fundamentals to remain in place, and capital returns via buybacks to continue, we see limited room for margin expansion and note cross-border risks amid tariff uncertainty (cross-border is an area of focus around Landstar’s growth strategy),” Servera said in his note.
Duos Technologies Group Inc. reported slightly lower 2024 revenue but is projecting big gains in 2025 after its expansion into two new businesses last year.
Jacksonville-based Duos’ main business had been railroad safety technology but it launched a subsidiary called Duos Edge AI to provide artificial intelligence data centers in rural markets and another business called Duos Energy Corp. to install power systems.
“We are now diversified into two areas of high growth, Edge Data Centers and Power, which de-risks our sole reliance on the Rail Technology business and will enable meaningful growth and profitability by the end of this year,” CEO Chuck Ferry said in a March 31 conference call, according to a company transcript.
Duos reported 2024 revenue fell 3% to $7.28 million, which it attributed to customer-driven delays in installing its Railcar Inspection Portals.
“We came to the realization that while our technology is the standard for Wayside Detection, as the railroaders describe it, using scanning and advanced AI processing, its adoption by the industry would likely take much longer than desired, causing ongoing losses for our business and continuous requirement for dilutive capitalization,” Chief Financial Officer Adrian Goldfarb said in the conference call.
Despite the slower than expected growth of the railroad technology, Ferry said that business led to the company’s expansion. The AI business “evolved from our edge computing experience used with our railcar inspection technology which requires powerful edge computing to process images and artificial intelligence,” he said.
With the addition of the two new businesses, Duos said it had a backlog of about $50.5 million in contracts at the end of 2024 and is expecting revenue of $28 million to $30 million this year.
Duos had a net loss of $10.8 million, or $1.39 a share, in 2024, but is expecting much better bottom-line results in 2025.
“Our initial expectation is to lose some money in the first half as we transition and build the new businesses but plan to minimize this as much as possible by some expense reductions in our rail business to match the expected business from that segment.” Goldfarb said.
“However, I’m very pleased to report that we expect to break even and then make money in the third and fourth quarters and end the full year with positive adjusted EBITDA,” he said.
Ferry remains optimistic about the railroad technology.
“This technology still has high potential, and while going slow, it is inevitable that it will be adopted broadly in the coming years,” he said.
Proficient Auto Logistics Inc. said April 2 it acquired Brothers Auto Transport LLC, a Pennsylvania-based company that will expand Jacksonville-based Proficient’s operations in northeastern markets.
Proficient, which transports automobiles from manufacturers to dealers, began operations in May 2024 by merging five auto transport businesses after an initial public offering.
The addition of Brothers Auto is the second acquisition since the IPO. Terms of the deal were not announced.
“While this transaction is smaller than prior acquisitions, we expect the business to be accretive immediately, proportional to its size, and positioned to contribute to PAL’s long-term financial and operational objectives,” CEO Richard O’Dell said in a news release.
The company said the addition of Brothers increases its fleet capacity by 13%.
Proficient’s business has been impacted by a weak auto sales environment since its IPO and is facing new challenges after President Donald Trump announced tariffs on imported automobiles and auto parts.
“The current presidential administration has stated its intention to impose new or increased tariffs on imported goods – specifically automobiles – from countries that include Canada, Mexico and the European Union,” Proficient said in its annual report filed March 31 with the SEC.
“Such trade policies and tariff implementations, and any related retaliatory trade policies and tariff implementations by foreign governments may result in decreased shipping volumes and increased product costs, and could have a material adverse effect on our revenues and results of operations,” it said.
Proficient’s stock has been trading below its $15 IPO price since September and in the recent bear market, it fell to a new low of $6.81 April 7.
Treace Medical Concepts Inc. said April 7 that founder and CEO John Treace will take on the additional role of chairman of the board, succeeding his uncle James in that role.
James Treace, 79, has been chairman since the Ponte Vedra-based company was founded in 2014 and will retire after the company’s annual meeting May 20.
“This is the right time to elevate new leadership to our Board,” James Treace said in a news release.
“John founded this Company and has extensive strategic, operational, and executive leadership experience as well as deep knowledge of the market, which will serve the Board, the Company, and our stockholders well,” he said.
Treace Medical makes surgical products to treat bunions and other foot issues. James Treace has experience with several medical products companies, including serving as CEO of Jacksonville-based Xomed Surgical Products Inc. until it was acquired by Medtronic plc in 1999.
Xomed makes surgical products for ear, nose and throat doctors and continues to operate as a Jacksonville-based subsidiary of Medtronic.
Sterling Bancorp Inc. announced April 1 it is winding down operations and paying a liquidation distribution to its shareholders, after selling its Sterling Bank and Trust FSB subsidiary to Jacksonville-based EverBank Financial Corp.
EverBank agreed in September to buy the bank for $261 million to acquire its 25 branches in California, but did not want to buy the troubled holding company for the bank.
Sterling Bancorp began looking for a buyer in December 2022 and as it discussed deals with potential buyers, it agreed in March 2023 to plead guilty to securities fraud related to a mortgage program at the bank.
EverBank also acquired a Sterling branch in Flushing, New York, but not the bank’s one other branch at its headquarters in Southfield, Michigan. The Michigan branch was closed March 31 as the acquisition was completed.
Sterling Bancorp said it is paying shareholders an initial distribution of $4.85 per share, a total of about $252 million. It intends to make a second distribution after incurring some costs to finish winding down operations.
The company’s stock closed at $5.75 on the last trading day before the Sept. 16 announcement of the EverBank deal.
The acquisition gives EverBank 27 branches in California, after it opened offices in the Los Angeles and Sacramento markets in late 2024.
It also had 11 branches in Florida and one each in New York and Missouri before the acquisition.