Landstar Probes $15M Fraud, Delays Q1 Earnings Results

Landstar System has delayed the release of its first-quarter earnings after uncovering a suspected supply chain fraud tied to its freight forwarding unit. The Jacksonville-based freight brokerage estimates the issue will impact net income by up to $15 million, before considering any insurance recovery or related professional fees.

The incident, discovered in late March, involves a single independent commission sales agency operating within Landstar’s international freight forwarding segment.

“The Company believes that this matter is limited to the operations of one specific independent commission sales agency,” Landstar said in a press release.

Financial Impact and Revised Guidance

Landstar cut its Q1 earnings-per-share guidance from $1.05–$1.25 to $0.90–$0.95, citing both the fraud event and elevated claims costs.
Key metrics from the company’s April update include:

• Estimated EPS impact from fraud: 35 to 50 cents, or $15 million after tax
• Cargo theft and truck accident claims contributed to higher insurance costs
• Final reported EPS: $0.95, one cent below the consensus estimate (excluding fraud-related charges)

Landstar has postponed its Q1 earnings release to May 13 and filed for a five-day extension with the Securities and Exchange Commission as it continues its internal review.

Operational Metrics Remain Within Forecast

Despite the disruption, Q1 revenue totaled $1.153 billion, near the upper end of the company’s January forecast of $1.075 to $1.175 billion.

Operational performance through the first eight weeks of the quarter included:

• Total truckloads down 4% year-over-year
  • Dry van: -6%
  • Flatbed: -5%
  • Power-only: +26%
• Revenue per load: flat year-over-year
  • Dry van: -2%
  • Flatbed: +4%

Landstar reported $473 million in cash and short-term investments at quarter-end.

Source: FreightWaves