Landstar System (NASDAQ:LSTR) executives said challenging freight demand and supply chain uncertainty persisted into the company’s fiscal 2025 fourth quarter, but highlighted improving sequential pricing late in the quarter and continued outperformance in the company’s heavy haul business. Management also detailed several discrete insurance and claims items that weighed on quarterly results and provided an update on technology and artificial intelligence initiatives aimed at supporting Landstar’s agent and independent contractor network.
Freight market backdrop and fourth-quarter trends
CEO Frank Lonegro said the “freight recession” continued longer than expected, with volatile federal trade policy and lingering inflation concerns contributing to uncertainty. He noted that the industrial economy remained soft, citing an ISM Index below 50 for the entire fourth quarter.
CFO Jim Todd said total truckloads hauled were down roughly 1% versus the prior-year quarter, but that was almost fully offset by about a 1% increase in truck revenue per load. Todd also pointed to sequential improvement, saying truck revenue per load rose 1.5% from the fiscal third quarter and increased about 6% from fiscal October to fiscal December.
Heavy haul and platform equipment outperformance
Management repeatedly emphasized strength in unsided platform equipment, supported by heavy haul. Lonegro said unsided platform equipment posted an 11% year-over-year revenue increase in the quarter and that heavy haul revenue was approximately $170 million, up 23% from the fiscal 2024 fourth quarter. He attributed the increase to a 16% rise in heavy haul revenue per load and a 7% increase in volume.
Todd added that overall truck revenue per load increased about 1% year over year in the quarter, driven by:
- a 7.5% increase in revenue per load on unsided platform equipment, and
- a 2% increase in revenue per load on less-than-truckload loadings,
partially offset by a 3.4% decline in van revenue per load and a 4.2% decline in revenue per load on other truck transportation loadings.
On market pricing metrics, Todd said revenue per mile on loads hauled by BCO trucks—excluding fuel surcharges passed through to BCOs—was 1% below the prior-year quarter for both unsided platform and van equipment. He described a possible inflection in vans late in the quarter, with revenue per mile on van loads hauled by BCOs up 3% from November to December after sequential declines earlier in the quarter.
Insurance and claims weighed on profitability
Todd said insurance and claim costs rose sharply to $56.1 million in the fiscal 2025 fourth quarter from $30.1 million a year earlier. As a percentage of BCO revenue, those costs were 12.3% versus 6.7% in the prior-year quarter.
He attributed the year-over-year increase largely to several discrete items previously disclosed in an 8-K filed Jan. 21, including:
- $11 million in pre-tax costs related to two separate “tragic vehicular accidents” involving BCOs leased to company subsidiaries during the quarter;
- $5.7 million pre-tax tied to a broker liability judgment entered Jan. 13, 2026, in which a trial court in El Paso, Texas found Landstar Ranger responsible for 100% of $22.8 million in damages awarded (Landstar said it disagrees with the judgment and plans to appeal); and
- $5.3 million pre-tax related to an increase in actuarially determined claim reserves for loss exposure above $1 million per claim.
Todd also noted that insurance and claim costs included net unfavorable development on prior-year claim estimates of $9.2 million in the quarter versus $2.2 million in the prior-year quarter, and said $5.7 million of the $9.2 million was attributable to the El Paso judgment entered in January 2026.
Gross profit declined to $85.6 million from $109.4 million, and gross profit margin fell to 7.3% of revenue from 9.0%. Variable contribution margin was $166 million, essentially flat with the prior-year quarter, and improved slightly as a percentage of revenue to 14.1% from 13.8%.
Network metrics, capital returns, and early 2026 commentary
Lonegro highlighted safety performance, reporting a fiscal 2025 accident frequency rate of 0.59 DOT-reportable accidents per million miles, slightly better than the company’s trailing five-year average of 0.61 and below the last available national average for 2021 cited from the FMCSA.
BCO truck count was down about 4% year over year at quarter-end and down about 1% sequentially, Lonegro said, though he noted turnover improved. Todd said trailing 12-month truck turnover declined to 31.4% at the end of fiscal 2025 from 34.5% at fiscal year-end 2024. During the first four weeks of fiscal 2026, Lonegro said BCO-provided trucks were down fractionally, consistent with typical first-quarter seasonality.
On capital allocation, Lonegro said the company’s priorities were unchanged. Todd said Landstar ended the quarter with $452 million of cash and short-term investments. Management said fiscal 2025 operating cash flow was $225 million, cash capital expenditures were $10 million, dividends paid totaled $125 million, and share repurchases were about $180 million (about 1.3 million shares). The board declared a $0.40 quarterly dividend payable March 11 to shareholders of record as of Feb. 18, the company said.
For the fiscal 2026 first quarter, management said it would provide revenue commentary rather than formal guidance due to a “highly fluid” environment and uncertainty around insurance and claims costs. Todd said January loads were about 1% below January 2025 on a dispatch basis, while revenue per load was about 4% above January 2025 on a process basis. He also estimated winter storms impacted roughly 5,000 to 6,000 dispatched loads across late January and early February, but said Landstar often “gaps back up” when weather clears.
AI strategy focused on enabling agents and the network
Executives devoted a portion of the call to technology and AI initiatives. Lonegro said Landstar is deploying technology, “and specifically AI,” to benefit agents, BCOs, and employees, and added that about 50% of the company’s fiscal 2026 IT capital expenditures budget is dedicated to AI enablement and solutions.
Chief Corporate Sales, Strategy and Specialized Freight Officer Jim Applegate said Landstar’s AI approach is “evolutionary, not experimental,” and is built on prior investments in tools such as pricing, capacity, analytics, and retention. He said AI is embedded within pricing and BCO retention tools, and that the company’s contact center platform uses AI to enhance knowledge bases, analyze sentiment, automate routine tasks, and summarize interactions. Applegate also said Landstar has deployed an AI-powered fraud detection solution that analyzes behavioral patterns and shipment documentation to identify high-risk freight and reduce shipment losses.
Looking ahead, Applegate said that beginning in the first quarter of 2026, an AI task force will work with agentic AI startups and technology partners to accelerate applications across the shipper lifecycle and within agent offices. During the Q&A, management emphasized that unlike larger peers, Landstar expects AI benefits to skew more toward enabling agent productivity and growth than reducing a large employee cost base.
About Landstar System (NASDAQ:LSTR)
Landstar System, Inc provides integrated transportation management solutions through a network of independent agents and third-party capacity providers. The company specializes in truckload brokerage, intermodal, air and ocean freight, expedited and heavy-haul services, along with value-added offerings such as cargo insurance, customs brokerage and supply chain management. Landstar’s proprietary technology platform enables real-time load matching, shipment tracking and data analytics to optimize fleet utilization and improve customer service.
Founded in 1968 and headquartered in Jacksonville, Florida, Landstar pioneered an asset-light brokerage model that has evolved into a global logistics operation.
