In an 8-k filing with the Securities and Exchange Commission, Landstar System, Inc. (NASDAQ: LSTR) announced that third quarter 2019 earnings expectations will fall short of its prior guidance due to a "tragic vehicular accident" and weaker than anticipated market conditions.
Landstar stated that a business capacity owner (BCO) independent contractor "with a subsidiary of the company" was involved in the accident during the third quarter. The accident is expected to "adversely impact insurance and claims costs in the 2019 third quarter."
The filing also stated that the company is expected to see revenue for the quarter at the low end of its previously issued guidance range, citing truck revenue per load and the number of loads hauled via truck through the first two months of the third quarter as the reasons.
With the lower revenue expectation and increased insurance and claims costs, the company expects to miss the low end of its prior earnings per share (EPS) range.
In its second quarter 2019 earnings release, LSTR issued third quarter 2019 guidance calling for a low single-digit decline in loads hauled via truck, a low double-digit decline in revenue per truck load, revenue of $1.01 to $1.06 billion and EPS of $1.48 to $1.54.
LSTR's current consensus EPS estimate for the third quarter 2019 is $1.51.
Landstar has experienced large jury verdicts for accidents in the past ($40 million being the highest in 2011). Landstar self-insures and retains liability up to $5 million per occurrence.
President and CEO James B. Gattoni intends to webcast remarks providing an update on revenue and earnings for the quarter during his presentation at the Morgan Stanley 7th Annual Laguna Conference on Sept. 12.
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