Analyst Note| Matthew Young, CFA |
The operating backdrop for wide-moat truck broker Landstar System continued to surge in the third quarter. Total gross revenue grew 60%, despite tougher comparisons, and was once again ahead of our expectations. Underlying dry van and flatbed demand is benefiting from robust consumer goods spending and related retailer restocking, along with industrial sector growth. Additionally, truckload market capacity remains immensely constrained with scant signs of easing, awarding truck brokers with solid pricing power, and Landstar’s sell rates have surged to historic highs. Total truckload volume soared 22%, while revenue per load surged 29%. Volume rose 3.5% sequentially versus the usual seasonal decline. Although we expect conditions to normalize within the next 15 months, demand and pricing are holding at historically high levels into the fourth quarter, and management expects load volume to still be up 13%-16% year over year, revenue per load to rise 15%-18%, and EPS of $2.55-$2.65 (ahead of FactSet consensus).