LANDSTAR SYSTEM INC

Previous wording

Item 2. Management’s Discussion and Analysis of Financial Condition and Re

Current wording

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Previous wording

The following discussion should be read in conjunction with the interim consolidated financial statements and notes thereto included herein, and with the Company’s audited financial statements and notes thereto for the fiscal year ended December 30, 2023 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2023 Annual Report on Form

Current wording

The following discussion should be read in conjunction with the interim consolidated financial statements and notes thereto included herein, and with the Company’s audited financial statements and notes thereto for the fiscal year ended December 30, 2023 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2023 Annual Report on Form 10-K.

Previous wording

Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc. (collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), is a technology-enabled, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. 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 79,000 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.

Current wording

Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc. (collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), is a technology-enabled, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. 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 nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.

Previous wording

The transportation logistics segment provides a wide range of integrated transportation management solutions. Transportation services are provided by Landstar’s “Operating Subsidiaries”: Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I. 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. In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less- than-truckload service providers. The independent commission sales agents market services provided by the transportation logistics segment. 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 thetwenty-six weeks ended June 29, 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 5% of the Company’s consolidated revenue in thetwenty-six-week period ended June 29, 2024.

Current wording

The transportation logistics segment provides a wide range of integrated transportation management solutions. Transportation services are provided by Landstar’s “Operating Subsidiaries”: Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I. 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. In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers. The independent commission sales agents market services provided by the transportation logistics segment. 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.

Previous wording

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. 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 thetwenty-six-week period ended June 29, 2024.

Current wording

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. 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.

Previous wording

During thetwenty-six-week period ended June 29, 2024, employee compensation and benefits accounted for approximately 64% 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.

Current wording

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. 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.

Previous wording

In general, variable contribution margin on revenue generated by BCO Independent Contractors represents a fixed percentage due to the nature of the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. 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 thetwenty-six-week period ended June 29, 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.

Current wording

In general, variable contribution margin on revenue generated by BCO Independent Contractors represents a fixed percentage due to the nature of the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. 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.

Previous wording

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

Current wording

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.

Previous wording

The decrease in operating income as a percentage of variable contribution from the 2023 twenty-six-week period to the 2024 twenty-six-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, and the impact of increased other operating costs.

Current wording

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.

Previous wording

Revenue for the 2024 twenty-six-week period was $2,396,048,000, a decrease of $413,484,000, or 15%, compared to the 2023 twenty-six-week period. Transportation revenue decreased $408,832,000, or 15%. The decrease in transportation revenue was attributable to a decreased number of loads hauled of approximately 11% and decreased revenue per load of approximately 5% compared to the 2023 twenty-six-week period. Reinsurance premiums were $32,441,000 and $37,093,000 for the 2024 and 2023 twenty-six-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 twenty-six-week period compared to the 2023 twenty-six-week period.

Current wording

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.

Previous wording

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the 2024 twenty-six-week period was $2,174,621,000, representing 91% of total revenue, a decrease of $396,032,000, or 15%, compared to the 2023 twenty-six-week period. The number of loads hauled by third party truck capacity providers decreased approximately 11% compared to the 2023 twenty-six-week period, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 5% in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period.

Current wording

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.

Previous wording

The decrease in the number of loads hauled via truck compared to the 2023 twenty-six-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 35%, 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 twenty-six-week period.

Current wording

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.

Previous wording

The decrease in revenue per load on loads hauled via truck was primarily due to a softer freight demand environment experienced throughout the 2024 thirteen-week period. Revenue per load on loads hauled via other truck transportation services decreased 9%, on loads hauled via van equipment decreased 5% and on less-than-truckload loadings decreased 1%, while revenue per load on loads hauled via unsided/platform equipment increased 3% as compared to the 2023 thirteen-week period. The increase in revenue per load on loads hauled via unsided/platform equipment of 3% was favorably impacted by an increase in the percentage of revenue contributed by heavy/specialized equipment, which typically has a higher revenue per load.

Current wording

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.

Previous wording

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 $60,302,000 and $79,295,000 in the 2024 and 2023 twenty-six-week periods, respectively. It should be noted that billings to many customers of the Company’s truck brokerage services include a singleall-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.

Current wording

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 singleall-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.

Previous wording

Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for the 2024 twenty-six-week period was $170,382,000, or 7% of total revenue, a decrease of $17,041,000, or 9%, compared to the 2023 twenty-six-week period. Revenue per load on revenue generated by multimode capacity providers decreased approximately 8% in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period, and the number of loads hauled by multimode capacity providers decreased approximately 2% over the same period. Revenue per load on loads hauled via air and rail intermodal decreased 61% and 5% respectively, while revenue per load on loads hauled via ocean increased 2%, during the 2024 twenty-six-week period as compared to the 2023 twenty-six-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 twenty-six-week period. 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. The decrease in the number of loads hauled by multimode capacity providers was due to a 7% decrease in rail loadings and a 4% decrease in air loadings, partially offset by a 6% increase in ocean loadings. The 7% decrease in rail loadings was primarily attributable to decreased loadings at two specific agencies. The 4% decrease in air loadings was primarily attributable to decreased loadings at two specific customers. The 6% increase in ocean loadings was broad-based with increases at several customers.

Current wording

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.

Previous wording

Purchased transportation was 77.4% and 76.7% of revenue in the 2024 and 2023 twenty-six-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 8.8% of revenue in the 2024 and 2023 twenty-six-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.

Current wording

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.

Previous wording

Investment income was $7,066,000 and $3,852,000 in the 2024 and 2023 twenty-six-week periods, respectively. The increase in investment income was attributable to higher average rates of return on investments in the 2024 twenty-six-week period and a higher average investment balance held by the insurance segment during the 2024 twenty-six-week period.

Current wording

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.

Previous wording

Other operating costs increased $3,154,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-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.

Current wording

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.

Previous wording

Insurance and claims decreased $3,999,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-week period. The decrease in insurance and claims expense compared to the prior year was primarily due to decreased net unfavorable development of prior years’ claims in the 2024 twenty-six-week period, decreased BCO miles traveled and decreased severity of trucking accidents during the 2024 twenty-six-week period. During the 2024 and 2023 twenty-six-week periods, insurance and claims costs included $2,116,000 and $2,831,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Current wording

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.

Previous wording

Selling, general and administrative costs increased $3,265,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-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 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 $1,455,000 and $323,000 for the 2024 and 2023 twenty-six-week periods, respectively.

Current wording

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.

Previous wording

Depreciation and amortization decreased $1,509,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-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.

Current wording

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.

Previous wording

Net interest and debt income increased $1,368,000 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 and decreased interest expense related to finance lease obligations.

Current wording

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.

Previous wording

The provisions for income taxes for the 2024 and 2023 twenty-six-week periods were based on estimated annual effective income tax rates of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The effective income tax rate for the 2024 twenty-six-week period was 24.1%. 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. The effective income tax rate for the 2023 twenty-six-week period was 23.9%. 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.

Current wording

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.

Previous wording

Net income was $99,720,000, or $2.79 per basic and diluted share, in the 2024 twenty-six-week period. Net income was $144,754,000, or $4.03 per basic and diluted share, in the 2023 twenty-six-week period.

Current wording

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.

Previous wording

Revenue for the 2024 thirteen-week period was $1,225,005,000, a decrease of $148,852,000, or 11%, compared to the 2023 thirteen-week period. Transportation revenue decreased $146,518,000, or 11%. The decrease in transportation revenue was attributable to a decreased number of loads hauled of approximately 9% and decreased revenue per load of approximately 2% compared to the 2023 thirteen-week period. Reinsurance premiums were $15,930,000 and $18,264,000 for the 2024 and 2023 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 2024 thirteen-week period compared to the 2023 thirteen-week period.

Current wording

Revenue for the 2024 thirteen-week period was $1,213,867,000, a decrease of $75,478,000, or 6%, compared to the 2023 thirteen-week period. Transportation revenue decreased $73,051,000, or 6%. 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. Reinsurance premiums were $15,533,000 and $17,960,000 for the 2024 and 2023 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 2024 thirteen-week period compared to the 2023 thirteen-week period.

Previous wording

Truck transportation revenue generated by third party truck capacity providers for the 2024 thirteen-week period was $1,105,689,000, representing 90% of total revenue, a decrease of $141,256,000, or 11%, compared to the 2023 thirteen-week period. The number of loads hauled by third party truck capacity providers decreased approximately 9% compared to the 2023 thirteen-week period, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 3% in the 2024 thirteen-week period compared to the 2023 thirteen-week period.

Current wording

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.

Previous wording

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. Loads hauled via other truck transportation services decreased 28%, less-than-truckload loadings decreased 9%, loads hauled via van equipment decreased 7% and loads hauled via unsided/platform equipment decreased 7% as compared to the 2023 thirteen-week period.

Current wording

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.

Previous wording

The decrease in revenue per load on loads hauled via truck was primarily due to a softer freight demand environment experienced throughout the 2024 twenty-six-week period. Revenue per load on loads hauled via other truck transportation services decreased 17%, on loads hauled via van equipment decreased 7% and on less-than-truckload loadings decreased 4%, while revenue per load on loads hauled via unsided/platform equipment increased 1% as compared to the 2023 twenty-six-week period. The increase in revenue per load on loads hauled via unsided/platform equipment of 1% was favorably impacted by an increase in the percentage of revenue contributed by heavy/specialized equipment, which typically has a higher revenue per load.

Current wording

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.

Previous wording

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 $30,269,000 and $36,360,000 in the 2024 and 2023 thirteen-week periods, respectively.

Current wording

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 $29,560,000 and $33,584,000 in the 2024 and 2023 thirteen-week periods, respectively.

Previous wording

Transportation revenue generated by multimode capacity providers for the 2024 thirteen-week period was $93,613,000, or 8% of total revenue, a decrease of $7,060,000, or 7%, compared to the 2023 thirteen-week period. Revenue per load on revenue generated by multimode capacity providers decreased 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 decreased approximately 1% over the same period. Revenue per load on loads hauled via air and rail intermodal decreased 62% and 7%, respectively, while revenue per load on loads hauled via ocean increased 6%, during the 2024 thirteen-week period as compared to the 2023 thirteen-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 thirteen-week period. 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. The decrease in the number of loads hauled by multimode capacity providers was due to a 5% decrease in rail loadings and a 5% decrease in air loadings, partially offset by a 6% increase in ocean loadings. The 5% decrease in rail loadings was primarily attributable to decreased loadings at two specific agencies. The 5% decrease in air loadings was primarily attributable to decreased loadings at one specific customer. The 6% increase in ocean loadings was primarily attributable to increased loadings at one specific customer.

Current wording

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 air cargo carriers was primarily attributable to the impact of high value air loadings at one specific customer during the 2023 thirteen-week period. The decrease in revenue per load on loads hauled by rail intermodal was broad-based. 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. 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.

Previous wording

Purchased transportation was 77.6% and 76.7% of revenue in the 2024 and 2023 thirteen-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. Commissions to agents were 8.1% and 8.9% of revenue in the 2024 and 2023 thirteen-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.

Current wording

Purchased transportation was 77.8% and 76.5% of revenue in the 2024 and 2023 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. Commissions to agents were 8.1% and 8.9% of revenue in the 2024 and 2023 thirteen-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.

Previous wording

Investment income was $3,654,000 and $2,484,000 in the 2024 and 2023 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.

Current wording

Investment income was $3,922,000 and $3,022,000 in the 2024 and 2023 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.

Previous wording

Other operating costs increased $673,000 in the 2024 thirteen-week period compared to the 2023 thirteen-week period. The increase in other operating costs compared to the prior year was primarily due to decreased gains on sales of operating property.

Current wording

Other operating costs decreased $14,000 in the 2024 thirteen-week period compared to the 2023 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.

Previous wording

Insurance and claims decreased $2,620,000 in the 2024 thirteen-week period compared to the 2023 thirteen-week period. The decrease in insurance and claims expense compared to the prior year was primarily due to decreased severity of current year trucking claims and decreased BCO miles traveled during the 2024 thirteen-week period.

Current wording

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. During the 2024 and 2023 thirteen-week periods, insurance and claims costs included $4,550,000 and $2,323,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Previous wording

Selling, general and administrative costs increased $410,000 in the 2024 thirteen-week period compared to the 2023 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, an increased provision for customer bad debt and increased stock-based compensation expense, partially offset by decreased project consulting fees and decreased event-related expenses. Included in selling, general and administrative costs was stock-based compensation expense of $1,892,000 and $1,274,000 for the 2024 and 2023 thirteen-week periods, respectively.

Current wording

Selling, general and administrative costs increased $277,000 in the 2024 thirteen-week period compared to the 2023 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.

Previous wording

Depreciation and amortization decreased $453,000 in the 2024 thirteen-week period compared to the 2023 thirteen-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.

Current wording

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.

Previous wording

Net interest and debt income increased $2,253,000 in the 2024 twenty-six-week period compared to the 2023 twenty-six-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.

Current wording

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.

Previous wording

The provisions for income taxes for the 2024 and 2023 thirteen-week periods were based on estimated annual effective income tax rates of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The effective income tax rate for the 2024 thirteen-week period was 24.5%. 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. The effective income tax rate for the 2023 thirteen-week period was 24.6%. 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.

Current wording

The provisions for income taxes for the 2024 and 2023 thirteen-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 thirteen-week period was 22.2%. 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 thirteen-week period was 24.3%. 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.

Previous wording

Net income was $52,624,000, or $1.48 per basic and diluted share, in the 2024 thirteen-week period. Net income was $66,559,000, or $1.85 per basic and diluted share, in the 2023 thirteen-week period.

Current wording

Net income was $50,033,000, or $1.41 per basic and diluted share, in the 2024 thirteen-week period. Net income was $61,653,000, or $1.71 per basic and diluted share, in the 2023 thirteen-week period.

Previous wording

Working capital and the ratio of current assets to current liabilities were $709,467,000 and 2.2 to 1, respectively, at June 29, 2024, compared with $677,517,000 and 2.0 to 1, respectively, at December 30, 2023. 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 $142,343,000 in the 2024 twenty-six-week period compared with $191,733,000 in the 2023 twenty-six-week period. The decrease in cash flow provided by operating activities was primarily attributable to decreased net income.

Current wording

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. 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. 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.