Landstar CEO Rules Out Big Brokerage Purchase, Favors 'Little M&A' To Win Agents
Frank Lonegro says Landstar will not compete with its own agents, while CFO Jim Todd sees a possible $100 million lift from agent revenue.
Landstar System, which arranges freight for shippers through independent agents and outside truck capacity, will not buy a large brokerage, CEO Frank Lonegro said on the company's third-quarter earnings call Tuesday. Answering a Jefferies analyst, he said the company will instead pursue small deals to draw in agent candidates.
No big deal, but 'little M&A'
Asked about consolidation among asset-light freight companies, Lonegro pointed to the Robinson and RXO situation and said many people ask whether Landstar will follow. His answer: "We are not going to buy a big brokerage and bring that in-house and compete against our agents."
Executives call the alternative "little M&A," he said: putting a little capital to work to bring on agent candidates who want to run their own businesses inside the Landstar network. He sees a chance in a post-Montgomery world to grow the count of agents producing $1 million or more in revenue. Montgomery is the court decision that, as Lonegro described it, exposes brokers to lawsuits in places where they previously had little liability.
Landstar relies on independent agents and truck owner-operators rather than owning most of its trucks. Lonegro said the company has a strong balance sheet that gives it optionality.
A $100 million agent tailwind
Lonegro said Landstar signed Show Me Global, a Midwest independent brokerage of about $20 million, and has traction with others that have not crossed the finish line. He said he expects Montgomery's effect to take a year or two to reach the broader brokerage and owner-operator world, because of insurance renewal cycles. "People are going to get religion pretty quickly," he said, about the value of scale.
CFO Jim Todd told a Wells Fargo analyst that Landstar's best new-agent revenue year was something like $180 million, with a couple of years as high as $140 million to $160 million. In the 2023, 2024 and 2025 freight recession years it ran $30 million to $50 million. If the company can return to strong years, Todd said, "there's probably a $100 million tailwind."
Todd said another decent-sized agent came across in the last week or so, and two more of pretty good size are in what he called the green zone.
Agent retention and the insurance drag
Todd said Landstar had 457 million-dollar agents in 2025 and has kept them at a 97-plus percent retention rate over about 15 years, slightly better last year. He said the company is on track to grow that group in 2026.
The quarter itself carried a cost: Lonegro cited about $22 million of net unfavorable adjustments to prior-year claim estimates, and the company is giving fourth-quarter commentary rather than formal guidance. Truck revenue rose 29% to $1.407 billion.
Landstar's next earnings call is set for late January, when it will report fourth-quarter results.
Sources
- Landstar Stock Gears Up to Report Q3 Earnings: Is A Beat in Store? — Yahoo Finance
- Landstar System Non-GAAP EPS of $1.42 misses by $0.24, revenue of $1.51B beats by $10M (LSTR:NASDAQ) — seekingalpha.com
- Landstar System Reports Third Quarter Revenue of $1.512B — globenewswire.com
