Landstar Second Quarter Earnings Drop 20%; Marten 2Q Net Rises 2.1%
Landstar System Inc. net income tumbled 20%, hurt by a combination of weaker trucking results and accident costs, while Marten Transport Ltd. earnings rose 2.1%, helped by dedicated and intermodal results as well as gains on equipment sales.
Landstar, based in Jacksonville, Florida, earned $32.3 million, or 76 cents as revenue declined 11% to $775.2 million, compared with $40.5 million, or 92 cents in the year-earlier period. Marten Transport's second-quarter net income inched up to $8.5 million, or 26 cents per share, from $8.4 million, or 25 cents.
Profit before interest and taxes at Landstar, ranked No. 9 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, slipped to $53.1 million from $66 million, linked to the 11% drop in trucking revenue that accounted for 93% of the revenue total. Van freight revenue slipped 8%, while flatbed revenue tumbled 17%.
Landstar’s results lagged the average estimate of 81 cents in a Bloomberg News analyst survey. CEO Jim Gattoni said the results trailed Landstar’s own midquarter forecast due to anticipated costs from a severe accident at the end of the quarter.
“Overall, I believe we executed well considering the sluggish freight environment,” Gattoni said, which was characterized by “significant pricing pressure” due to more plentiful capacity. On average, truck rates slipped 9%, while shipments fell just 2%.
He also noted that July truck rates have improved.
Marten’s revenue growth to $166.1 million from $163.6 million nearly kept pace with earnings improvement. Last year’s second-quarter earnings were $8.4 million, or 25 cents.
Marten reported a $2.7 million gain on equipment sales, more than 45% higher than the prior-year period. Operating income at the company ranked No. 47 on the for-hire TT100, increased $615,000, which was less than the added $916,000 resulting from equipment sales.
Dedicated unit profit before interest and taxes doubled to $5.1 million, and intermodal rose $853,000, or 88%, to $1.82 million. Those gains overcame 29% profit in the truckload business.
CEO Randy Marten noted the revenue and earnings improvement that was achieved “despite pricing pressures and a soft freight market. We successfully grew our average number of truckload and dedicated tractors by 362 tractors, or 15.4%, in the first half of this year over the first half of 2015.”
“Marten was able to showcase the strength of its diversified platform [truck, dedicated, intermodal and brokerage] to drive both top- and bottom-line growth in this choppy freight environment versus the year-ago period, an accomplishment we do not expect any other trucking names on our coverage universe to match,” Brad Delco, an analyst at Stephens Inc., wrote in response to the earnings report.
Marten, based in Mondovi, Wisconsin, topped the average Bloomberg estimate by 1 cent.
