Oct 27, 2026 earnings call — Insurance, heavy haul growth, and BCO momentum
Revenue was up 18% year-over-year, with heavy haul revenue approximately $164 million in the quarter.
Revenue $1.5B (est $1.5B) · EPS $1.42 (est $1.67)
Key quotes
"We had a challenging insurance and claims quarter with approximately $10.5 million of net unfavorable adjustment to prior year claims estimates."
"We generated approximately $164 million of heavy haul revenue during the 2026 second quarter, an 18% increase over the 2025 second quarter."
"Our net 68 truck additions during the second quarter was the strongest quarterly improvement since the first quarter of 2022."
Analyst Q&A 13
Insurance and business after Montgomery
Q (Scott Group · Wolfe): How the business looks after last week's nuclear verdict; worry about insurance costs for big brokers; could Landstar win brokers or larger agents.
A: They renewed their insurance tower effective June 1 and feel amply covered. Management said scale, safety and service will matter most post-Montgomery and they are seeing a larger pipeline of potential agent candidates, including bigger additions than historically.
"We have renewed our insurance tower for the next 12 months." — Frank Lonegro (CEO)
Q3 demand and pricing trends
Q (Jonathan Chappell · Evercore): Can you frame how Q3 is tracking versus historical year-over-year trends through the first four weeks of the quarter?
A: Demand has been near 15-year averages since March, with some months slightly better or worse. Pricing outperformed earlier in the year (April, May, June) and in July was about 150 basis points better than normal, which helps modelers for Q3.
"We are holding about 150 basis points better than normal in July, John." — Jim Todd
Why brokerage volumes are down
Q (Paul Stoddard · Goldman Sachs): Is brokerage running negative because volumes haven't firmed or because agents are directing more volumes to BCOs?
A: Agents go to market to serve customers and access capacity; Landstar runs a non-forced dispatch model. BCO utilization is very strong (annualized 101.9 BCO loadings), so BCOs are hauling more and there is less freight to lay off to third-party carriers.
"Utilization, if you just take BCO utilization second quarter year-to-date and annualize it, we'd be at 101.9 BCO loadings." — Jim Todd
Will VC margin compress less with more BCO loads?
Q (Speaker 7): If volumes are not growing much but revenue per load is up, will VC margin compress less because more loads go through BCOs instead of brokerage?
A: BCO mix dipped sequentially, which is not unusual for Q2 given higher loadings. Brokerage saw a tailwind to revenue per load, but net revenue margin on brokerage compressed 129 basis points and fuel surcharge differences also matter.
"As a result, I think you heard Frank mention our net revenue margin on brokerage business compressed 129 basis points." — Jim Todd
Risk for smaller brokers
Q (Brandon Oglenski · Barclays): Should we expect stable insurance costs going forward or could there be a big reset; will smaller brokerages be hit harder?
A: Insurance outcomes depend on safety, claims history and market events. Smaller brokers are more exposed: if you move 100 loads and one or two go bad, litigation and legal fees can be crippling, so Landstar sees an opportunity to attract such brokers as agents.
"You have, let's say, you move 100 loads and you have one or two that go bad as a small broker, as JT pointed out in answer to one of the earlier questions, you're going to have litigation costs that you never had before, if you're in an F4A jurisdiction that was in effect previously, but not in effect now because of Montgomery." — Frank Lonegro (CEO)
Carrier selection and federal standards
Q (Tom Wadewitz · UBS): How have carrier selection criteria changed (down to ~64,000 carriers)? Will it keep declining and what would you want from FMCSA or courts?
A: They have tightened vetting and reduced approved carriers driven by cargo fraud and new technology, and will keep pressing safety, security and service. Management would like federal minimum vetting standards so companies can show they exercised ordinary care against a consistent federal benchmark.
"I do think a point that Matt made earlier, and I mentioned in my prepared remarks, is going to be really important, and that is having some sort of minimum federal selection standards, vetting standards is going to be really important." — Frank Lonegro (CEO)
AI and tech for agents
Q (Brian Ossenbeck · JPMorgan): Update on AI initiatives at both distributed (agent) level and corporate level and plans for deployment.
A: They have delivered several AI applications that improve agent workflow, information retrieval and exception handling. Starting mid-Q3 they will ramp getting technology into agent offices to make agents more efficient and help them grow business, noting tech complements but does not replace relationships.
"We've delivered several applications that are improving agent workflow." — Jim Applegate (CEO)
BCO utilization and reserve changes
Q (Uday · TD Cowen): How did BCO utilization look in Q2 and can it accelerate; were the three brokerage reserves new because of Montgomery?
A: BCO utilization has improved with pent-up demand and agent selling; Matt said utilization was up 12% year-over-year. On the reserves, management said the three referenced items were previously $0 reserves and they reevaluate at each quarter-end under FAS 5, and they will confirm details offline.
"I believe all three were $0 reserves previously, and then at each quarter-end balance sheet date, we have got to reevaluate from a FAS five standpoint." — Frank Lonegro (CEO)
Is Landstar model more valuable now?
Q (Bascome Majors · Stephens): With rising claim costs, is Landstar's model becoming more valuable to entrepreneurs on both BCO and agent sides?
A: Scale, safety and service are increasingly important and customers may prefer scale players. Claim cost severity has risen industry-wide; Landstar remains safer, but higher claim severity is a pressure and participants will need to recapture some of that in the top line, which they are seeing in early 2026.
"Claim cost severity has been going one way for some period of time." — Jim Todd
M&A interest post-Montgomery
Q (Stephanie Moore · Jefferies): Does the post-Montgomery landscape change Landstar's M&A view for small/medium brokers or agents?
A: They have looked at various possibilities and are not averse to deals that fit their model. Management prefers attracting more mid-sized agents (example: $18 million annualized) onto the Landstar model and will deploy capital where it fits risk-adjusted returns.
"We're certainly not averse to looking at it and have looked at a number of possibilities over the last few years" — Frank Lonegro (CEO)
Agent prior liabilities
Q (Bruce Chan): If agents join Landstar, do prior liabilities from those agents transfer to Landstar?
A: Agents keep separate corporate status when they join, so Landstar would not inherit their liabilities. For LTL moves, the decline was agent- and customer-specific and not a broad market trend, so they would not draw much from it.
"No, they maintain a separate corporate status, so we would not inherit liabilities from them." — Frank Lonegro (CEO)
Backlog of claims after Montgomery
Q (Chris Wetherbee · Wells Fargo): Has the backlog or activity of broker-liability cases meaningfully changed since Montgomery?
A: They have not seen any meaningful uptick or downtick in new cases; activity so far is steady. Management noted some reserve adjustments for ongoing cases were normal, and plaintiffs may be emboldened, but they haven't seen a surge yet.
"I mean, we haven't seen any meaningful uptick or downtick for that matter." — Frank Lonegro (CEO)
Broker vs BCO per-load risk
Q (Harrison Bauer · Susquehanna): Can you compare total or per-load claims/legal fees on a BCO load versus a broker load and will broker risk converge to BCO levels?
A: They have detailed loss data for BCOs and most crashes resolve in the primary policy layer; brokerage losses are fewer and historically much smaller. Management said primary policies (about $1 million) resolve roughly 98% of crashes, so brokerage risk is unlikely to equal owner-operator levels.
"Probably 98% of the crashes are going to get resolved within that $1 million primary policy." — Jim Todd