Landstar System Inc.’s earnings and revenue fell for the second straight year in 2024, as weak demand for freight services continues to affect the Jacksonville-based trucking company.
Landstar reported revenue of $4.8 billion in 2024, down from $5.3 billion in 2023 and $7.4 billion in 2022.
Earnings fell from $11.76 a share in 2022 to $7.36 in 2023 and $5.51 last year.
Fourth-quarter 2024 revenue was basically flat at $1.2 billion but earnings fell 31 cents a share from the fourth quarter of 2023 to $1.31.
“The freight environment in the 2024 fourth quarter continued to be characterized by relatively soft demand and readily available truck capacity,” Landstar CEO Frank Lonegro said in the company’s Jan. 29 conference call with analysts.
“The impact of accumulated inflation on goods continues to impact the amount of truckload freight generated in relation to consumer spending,” he said.
“Truck capacity continues to be readily available with small pockets of supply-demand equilibrium and market conditions continuing to favor the shipper amidst choppy conditions in the industrial economy.”
Lonegro said truck volumes in January were trending slightly ahead of normal until the end of the month.
“We attribute the softness experienced during the last week of the month to the severe winter weather that recently crossed the entire country and the Southern California fires,” he said.
Landstar does not employ drivers but contracts with truckers who own their own vehicles called business capacity owners, or BCOs.
With freight traffic down, Landstar’s BCO count has dropped from 9,024 at the end of 2023 to 8,082 at the end of last year.
Analysts said the drop in drivers under contract is a concern.
“The falling BCO count (now down -27% from the 1Q22 peak) continues to remain a focal point as it implies there is a risk that Landstar will not see the BCO growth accelerate enough to generate operating leverage in a ‘normal’ upcycle,” J.P. Morgan analyst Brian Ossenbeck said in a research note.
“Given management’s (and our own) expectations of a slow price recovery (driven by supply exits), we see late 2025 as the likely starting point of net BCO returns to the Landstar platform and subsequently when the company will break out of trough earnings (solidly behind transport peers),” Raymond James analyst David Hicks said in his research note.
“It is typical to incur turnover in BCO truck count in a low rate per load environment. BCO turnover also continues to be influenced by the significant increase in the cost to maintain and operate a truck today compared to before the pandemic,” Lonegro said in the conference call.
“We would expect BCO count to continue to decline in the first quarter given the challenging operating environment faced by many truck owner-operators and the typical seasonality in truck count experienced from the fourth quarter to the first quarter,” he said.
Landstar is projecting first-quarter earnings of $1.05 to $1.25 a share, which would be lower than last year’s first-quarter earnings of $1.32.
Landstar’s report came before President Donald Trump announced tariffs on products imported from Canada, Mexico and China, and Lonegro acknowledged new policies could impact the company’s outlook.
“With the change in the administration we, like many, are looking for visibility into policy shifts that may have an impact on North American freight transportation. To be clear, our first-quarter guidance does not anticipate any potential negative impacts from tariffs,” he said.
Landstar’s stock fell as much as $10.34 to a 52-week low of $162.58 in the two days after the earnings report.
“The stock will likely underperform on the operating miss and weaker than-expected 1Q25 outlook which is only modestly above our Street-low estimate, but Landstar had already traded down into the print (earnings report) for a second consecutive quarter, which should mitigate the pressure on the stock,” said Ossenbeck, who maintained a “neutral” rating on the stock.
“We are maintaining our Market Perform rating on shares of Landstar as cost dynamics likely hamper the return of all-important BCOs to the Landstar platform and valuation appears rather in line given where we are in the cycle,” said Hicks.
Loop Capital analyst Rick Paterson downgraded his ratings on five railroads, including Jacksonville-based CSX Corp., plus FedEx Corp. and GXO Logistics Inc. because of the tariff announcement.
“The transportation sector has already been in a freight recession for the last two years—this will extend it,” Paterson said in a Feb. 3 research note.
“We’ve eliminated all positive ratings in the transportation sector and recommend our clients don’t add to positions until the dust settles,” he said.
Paterson downgraded CSX and Norfolk Southern Corp., the other major eastern U.S. railroad company, from “buy” to “hold.”
“CSX and Norfolk Southern have less direct exposure to Mexico and Canada, but they’re still part of that supply chain and the tariffs will impact the vast majority of their businesses,” he said.
CSX announced Jan. 27 it added a former top official at the U.S. Surface Transportation Board to its board of directors.
Ann Begeman served on the STB, the main regulatory agency for the railroad industry, from 2011 through 2021 including serving as chairman and acting chairman from 2017 to 2021.
Before joining the STB, Begeman spent nearly two decades in staffing positions within the U.S. Senate and helped develop the legislation that established the Surface Transportation Board in 1996.
“Ann brings a wealth of industry expertise and knowledge to our team where she will play a vital role in our commitment to deliver service excellence and business growth,” CSX Chief Executive Joe Hinrichs said in a news release.
Begeman’s appointment increases the company’s board to 13 directors.
After lowering its quarterly dividend payments in 2024, Fidelity National Information Services Inc., or FIS, announced an increase this year, although it remained below the 2023 level.
The Jacksonville-based financial technology company said Jan. 30 it is raising the quarterly dividend to 40 cents a share, from 36 cents in 2024.
The quarterly dividend was 52 cents in 2023.
FIS says its policy is to target a dividend payout ratio of 35% of adjusted net earnings.
FIS is scheduled to report final 2024 earnings Feb. 11. The company has been projecting adjusted earnings of $5.15 to $5.20 a share, up from $3.37 in 2023.
The company’s adjusted earnings were $3.78 in 2022.
Before the acquisition of its bank subsidiary by Jacksonville-based EverBank, Sterling Bancorp Inc. reported 2024 earnings of $2.1 million, or 4 cents a share, down from $7.4 million, or 15 cents, in 2023.
EverBank agreed in September to buy Southfield, Michigan-based Sterling Bank for $261 million. Holding company Sterling Bancorp will be dissolved after the acquisition and the proceeds from the bank sale will be distributed to shareholders.
Sterling had $2.4 billion in assets and $2.1 billion in deposits at the end of the year.
EverBank will be acquiring 25 California branches in the Los Angeles and San Francisco markets from Sterling and one office in Flushing, New York.
Sterling’s one other branch at its headquarters in Michigan will be closed.
The sale of the bank was approved by Sterling shareholders in December and the deal is awaiting regulatory approval.
Sterling said in its Jan. 30 earnings report it expects the deal to close during the first quarter.
Proficient Auto Logistic Inc.’s stock performed poorly after its May 2024 initial public offering, losing almost half its value by the end of the year.
But Barrington Research analyst Alexander Paris is expecting a rebound for the Jacksonville-based company, which transports automobiles from manufacturer to dealers.
“While Q3/24 results were disappointing, an unfortunate start as a new public company, the miss was due to broad-based reductions in auto shipments as manufacturers seek to address excessive inventory on dealer lots and a significant and related change in the mix of revenue,” Paris said in a Feb. 3 research note ahead of Proficient’s Feb. 11 earnings report.
He sees the stock rising “as automobile sales recover and Proficient executes its growth strategy and its margins expand over time as expected.”
Paris, who has an “outperform” rating on Proficient, set a price target at its IPO level of $15, with the stock trading at $9.84 at the time of his report.
Argosy Healthcare Partners acquired Jacksonville-based Nicklas Medical Staffing, according to a Jan. 31 news release by Nicklas’ advisor SDR Ventures.
Nicklas, founded in 2013 by Deborah Hills, provides staffing services for pathology and histology labs.
Wayne, Pennsylvania-based Argosy is a private equity firm focused on the health care industry.
Terms of the deal were not announced.
Safe & Green Holdings Corp. announced Feb. 3 it signed a definitive agreement to acquire New Asia Holdings Inc., owner of energy company Olenox Corp. and industrial IoT (internet of things) business Machfu.com.
Safe & Green is a modular construction company that moved its headquarters to Miami in 2023 after one year in Jacksonville.
The merger agreement follows the appointment of Olenox founder Michael McLaren as CEO of Safe & Green a month ago.
Safe & Green said it will acquire New Asia Holdings in exchange for shares of convertible preferred stock, but it did not announce the value of the deal.