Quarterly Report for Quarter Ending June 27, 2026 (Form 10-Q)

"BCO Independent Contractors"), unrelated trucking companies who provide truck capacity to the Company under non-exclusive contractual arrangements (the "Truck Brokerage Carriers"), air cargo carriers, ocean cargo carriers and railroads. Through this network of agents and capacity providers linked together by Landstar's ecosystem of digital technologies, Landstar operates a freight transportation and logistics business primarily throughout North America with revenue of $4.7 billion during the most recently completed fiscal year. The Company reports the results of two operating segments: the transportation logistics segment and the insurance segment.

The transportation logistics segment provides a wide range of freight transportation and logistics services. Transportation services are provided by Landstar's "Operating Subsidiaries": Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I. de C.V., and Landstar Blue, LLC. Transportation services offered by the Company include truckload, less-than-truckload and other truck transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, hazardous materials ("haz-mat"), cold chain/temperature-controlled, U.S.-Canada and U.S.-Mexico cross-border, project cargo and customs brokerage. Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics, military equipment and general commodities. In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers. The independent commission sales agents market services provided by the transportation logistics segment. Billings for freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue. During the twenty-six weeks ended June 27, 2026, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 40%, 53% and 2%, respectively, of the Company's consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 4% of the Company's consolidated revenue in the twenty-six-week period ended June 27, 2026.

The insurance segment is comprised of Signature Insurance Company ("Signature"), a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc. The insurance segment provides risk and claims management services to certain of Landstar's Operating Subsidiaries. In addition, it reinsures certain risks of the Company's BCO Independent Contractors and provides certain property and casualty insurance and reinsurance to certain of Landstar's Operating Subsidiaries. Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk is ultimately borne by Signature. Revenue at the insurance segment represented approximately 1% of the Company's consolidated revenue for the twenty-six-week period ended June 27, 2026.

Changes in Financial Condition and Results of Operations

Management believes the Company's success principally depends on its ability to generate freight transportation opportunities through its network of independent commission sales agents and to deliver freight safely, securely and efficiently utilizing BCO Independent Contractors and other third party capacity providers. Management believes the most significant factors to the Company's success include increasing revenue, sourcing capacity, empowering its network through technology-based tools and controlling costs, including insurance and claims.

Revenue

While customer demand, which is subject to overall economic conditions, ultimately drives increases or decreases in revenue, the Company primarily relies on its independent commission sales agents to establish customer relationships and generate revenue opportunities. Management's emphasis with respect to revenue growth is on revenue generated by independent commission sales agents who on an annual basis generate $1 million or more of Landstar revenue ("Million Dollar Agents"). Management believes future revenue growth is primarily dependent on its ability to increase both the revenue generated by Million Dollar Agents and the number of Million Dollar Agents through a combination of recruiting new agents, increasing the revenue opportunities generated by existing independent commission sales agents and providing its independent commission sales agents with technologies they may use to grow revenue and increase efficiencies at their businesses. During the 2025 fiscal year, 457 independent commission sales agents generated $1 million or more of Landstar revenue and thus qualified as Million Dollar Agents. During the 2025 fiscal year, the average revenue generated by a Million Dollar Agent was $9,827,000 and revenue generated by Million Dollar Agents in the aggregate represented 95% of consolidated revenue.

Management monitors business activity by tracking the number of loads (volume) and revenue per load by mode of transportation. Revenue per load can be influenced by many factors other than a change in price. Those factors include the average length of haul, freight type, special handling and equipment requirements, fuel costs and delivery time requirements. For shipments involving two or more modes of transportation, revenue is generally classified by the mode of transportation having the highest cost for the load. The following table summarizes this information by trailer type for truck transportation and by mode for all others:

Expenses

Purchased transportation

Also critical to the Company's success is its ability to secure capacity, particularly truck capacity, at rates that allow the Company to profitably transport customers' freight. The following table summarizes the number of available truck capacity providers on the dates indicated:

Purchased transportation represents the amount a BCO Independent Contractor or other third party capacity provider is paid to haul freight. The amount of purchased transportation paid to a BCO Independent Contractor is primarily based on a contractually agreed-upon percentage of revenue generated by loads hauled by the BCO Independent Contractor. Purchased transportation paid to a Truck Brokerage Carrier is based on either a negotiated rate for each load hauled or, to a lesser extent, a contractually agreed-upon fixed rate per load. Purchased transportation paid to railroads and ocean cargo carriers is based on either a negotiated rate for each load hauled or a contractually agreed-upon fixed rate per load. Purchased transportation paid to air cargo carriers is generally based on a negotiated rate for each load hauled. Purchased transportation as a percentage of revenue for truck brokerage, rail intermodal and ocean cargo services is normally higher than that of BCO Independent Contractor and air cargo services. Purchased transportation is the largest component of costs and expenses and, on a consolidated basis, increases or decreases as a percentage of consolidated revenue in proportion to changes in the percentage of consolidated revenue generated through BCO Independent Contractors and other third party capacity providers and external revenue from the insurance segment, consisting of reinsurance premiums. Purchased transportation as a percent of revenue also increases or decreases in relation to the availability of truck brokerage capacity and with changes in the price of fuel on revenue generated from shipments hauled by Truck Brokerage Carriers. The Company passes 100% of fuel surcharges billed to customers for freight hauled by BCO Independent Contractors to its BCO Independent Contractors. These fuel surcharges are excluded from revenue and the cost of purchased transportation. Purchased transportation costs are recognized over the freight transit period as the performance obligation to the customer is completed.

Commissions to agents

Commissions to agents are based on contractually agreed-upon percentages of (i) revenue, (ii) revenue less the cost of purchased transportation, or (iii) revenue less a contractually agreed upon percentage of revenue retained by Landstar and the cost of purchased transportation (the "retention contracts"). Commissions to agents as a percentage of consolidated revenue vary directly with fluctuations in the percentage of consolidated revenue generated by the various modes of transportation and reinsurance premiums and, in general, vary inversely with changes in the amount of purchased transportation as a percentage of revenue on services provided by Truck Brokerage Carriers, railroads, air cargo carriers and ocean cargo carriers. Commissions to agents are recognized over the freight transit period as the performance obligation to the customer is completed.

Other operating costs, net of gains on asset sales/dispositions

Maintenance costs for Company-provided trailing equipment, the provision for uncollectible advances and other receivables due from BCO Independent Contractors and independent commission sales agents and recruiting and qualification costs for BCO Independent Contractors are the largest components of other operating costs. Also included in other operating costs are trailer rental costs and gains/losses, if any, on sales of Company-owned trailing equipment.

As previously disclosed by the Company in current and periodic reports filed with the SEC, during the last week of the Company's 2025 first quarter, the Company identified a supply chain fraud relating to the Company's international freight forwarding operations. Other operating costs during the twenty-six-week period ended June 28, 2025 included a $4.8 million expense relating to this matter.

Insurance and claims

With respect to insurance and claims cost, potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable.

Landstar retains liability through a self-insured retention for commercial trucking claims up to $5 million per occurrence. The Company also maintains third party insurance arrangements providing coverage for commercial trucking liabilities in excess of $5 million. Historically, these third party insurance arrangements were based on policy year periods beginning on May 1 and ending on the subsequent April 30. Beginning with the policy year period commencing May 1, 2025, the Company and its third party insurance providers adjusted the applicable policy year period, beginning in 2026, to commence on June 1 and end on the subsequent May 31.

Effective June 1, 2026, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the "2026 Initial Excess Policy") with a third party insurance company. For commercial trucking claims incurred on or after June 1, 2026 through May 31, 2029, the 2026 Initial Excess Policy provides for a limit for a single loss of $5 million, with a $10 million per policy year aggregate limit and an aggregate limit of $15 million over the thirty-six month term. It also includes a $2.5 million per policy year aggregate loss corridor. Moreover, in the event paid aggregate losses under the 2026 Initial Excess Policy during the three year period ending May 31, 2029 exceed a pre-determined threshold amount, the 2026 Initial Excess Policy requires the Company to pay an additional premium up to a maximum amount of $4 million.

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10 million. These third party arrangements provide coverage on a per occurrence or aggregated basis. Over the past fifteen years, there has been a significant increase in the occurrence of trials in courts throughout the United States involving catastrophic injury and fatality claims against commercial motor carriers that have resulted in verdicts in excess of $10 million. Within the transportation logistics industry, these verdicts are often referred to as "Nuclear Verdicts." The increase in Nuclear Verdicts has had a significant impact on the cost of commercial auto liability claims throughout the United States. Due to the increasing cost of commercial auto liability claims, the availability of excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased. Since the annual policy year ended April 30, 2020, as compared to the annual policy year ending May 31, 2027, the Company experienced an increase of approximately $21 million, or approximately 390%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million.

Moreover, the Company from year to year manages the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other structured arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage. For example, with respect to a single hypothetical claim in the amount of $65 million incurred during the annual policy year ending May 31, 2027, the Company would have an aggregate financial exposure of approximately $33 million. Within the Company's third party insurance arrangements providing excess coverage for commercial trucking liabilities, structured arrangements with third party reinsurers within a specific loss layer may also include provisions that require additional payments of premium in the event of unfavorable loss experience or a refund of premium in the event of favorable loss experience.

Furthermore, the Company's third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure. No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels. Moreover, the occurrence of a Nuclear Verdict, or the settlement of a catastrophic injury and/or fatality claim that could have otherwise resulted in a Nuclear Verdict, could have a material adverse effect on Landstar's cost of insurance and claims and its results of operations.

Further, the Company retains liability of up to $2,000,000 for each general liability claim, $250,000 for each workers' compensation claim and $250,000 for each cargo claim. In addition, under reinsurance arrangements by Signature of certain risks of the Company's BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers' compensation claims. The Company's exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company may be reduced by various legal defenses and other factors including the extent to which such carriers maintain their own insurance coverage. However, Montgomery v. Caribe Transport II, LLC has narrowed our ability to rely on Federal Aviation Administration Authorization Act of 1994 (the "FAAAA") preemption as a defense by holding that state-law negligent selection claims against freight brokers fall within the statute's motor vehicle safety exception, which could have an adverse impact on our claims experience. A material increase in the frequency or severity of accidents, cargo claims or workers' compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar's cost of insurance and claims and its results of operations. For more information, see Part II, Item 1A, "Risk Factors-Increased exposure to Broker Liability Claims" in this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors-Increased severity or frequency of accidents and other claims or a material unfavorable development of existing claims" in the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2025.

Selling, general and administrative

During the twenty-six-week period ended June 27, 2026, employee compensation and benefits accounted for approximately 64% of the Company's selling, general and administrative costs. Employee compensation and benefits include wages and employee benefit costs as well as incentive compensation and stock-based compensation expense. Incentive compensation and stock-based compensation expense is highly variable in nature in comparison to wages and employee benefit costs.

Depreciation and amortization

Depreciation and amortization primarily relate to depreciation of trailing equipment and information technology hardware and software.

Costs of revenue

The Company incurs costs of revenue related to the transportation of freight and, to a much lesser extent, to reinsurance premiums received by Signature. Costs of revenue include variable costs of revenue and other costs of revenue. Variable costs of revenue include purchased transportation and commissions to agents, as these costs are entirely variable on a shipment-by-shipment basis. Other costs of revenue include fixed costs of revenue and semi-variable costs of revenue, where such costs may vary over time based on certain economic factors or operational metrics such as the number of Company-controlled trailers, the number of BCO Independent Contractors, the frequency and severity of insurance claims, the number of miles traveled by BCO Independent Contractors, or the number and/or scale of information technology projects in process or in-service to support revenue generating activities, rather than on a shipment-by-shipment basis. Other costs of revenue associated with the transportation of freight include: (i) other operating costs, primarily consisting of trailer maintenance, the provision for uncollectible advances and other receivables due from BCO Independent Contractors and independent commission sales agents and BCO Independent Contractor recruiting and qualification costs, as reported in the Company's Consolidated Statements of Income, (ii) transportation-related insurance premiums paid and claim costs incurred, included as a portion of insurance and claims in the Company's Consolidated Statements of Income, (iii) costs incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support the Company's independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company's Consolidated Statements of Income; and (iv) depreciation on Company-owned trailing equipment, included as a portion of depreciation and amortization in the Company's Consolidated Statements of Income. Other costs of revenue associated with reinsurance premiums received by Signature are comprised of broker commissions and other fees paid related to the administration of insurance programs to BCO Independent Contractors and are included in selling, general and administrative in the Company's Consolidated Statements of Income. In addition to costs of revenue, the Company incurs various other costs relating to its business, including most selling, general and administrative costs and portions of costs attributable to insurance and claims and depreciation and amortization. Management continually monitors all components of the costs incurred by the Company and establishes annual cost budgets that, in general, are used to benchmark costs incurred on a monthly basis.

Gross Profit, Variable Contribution, Gross Profit Margin and Variable Contribution Margin

The following table sets forth calculations of gross profit, defined as revenue less costs of revenue, and gross profit margin, defined as gross profit divided by revenue, for the periods indicated. The Company refers to revenue less variable costs of revenue as "variable contribution" and variable contribution divided by revenue as "variable contribution margin." Variable contribution and variable contribution margin are each non-GAAP financial measures. The closest comparable GAAP financial measures to variable contribution and variable contribution margin are, respectively, gross profit and gross profit margin. The Company believes variable contribution and

variable contribution margin are useful measures of the variable costs that we incur at a shipment-by-shipment level attributable to our transportation network of third party capacity providers and independent commission sales agents in order to provide services to our customers. The Company believes variable contribution and variable contribution margin are important performance measurements and management considers variable contribution and variable contribution margin in evaluating the Company's financial performance and in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs.

The reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin are each presented below:

In general, variable contribution margin on revenue generated by BCO Independent Contractors represents a fixed percentage due to the nature of the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. For revenue generated by Truck Brokerage Carriers, variable contribution margin may be either a fixed or variable percentage, depending on the contract with each individual independent commission sales agent. Variable contribution margin on revenue generated from shipments hauled by railroads, air cargo carriers, ocean cargo carriers and Truck Brokerage Carriers, other than those under retention contracts, is variable in nature, as the Company's contracts with independent commission sales agents provide commissions to agents at a contractually agreed upon percentage of the amount represented by revenue less purchased transportation for these types of shipments. Approximately 44% of the Company's consolidated revenue in the twenty-six-week period ended June 27, 2026 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while approximately 56% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.

Operating income as a percentage of gross profit and operating income as a percentage of variable contribution

The following table presents operating income as a percentage of gross profit and operating income as a percentage of variable contribution. The Company's operating income as a percentage of variable contribution is a non-GAAP financial measure calculated as operating income divided by variable contribution. The Company believes that operating income as a percentage of variable contribution is useful and meaningful to investors for the following principal reasons: (i) the variable costs of revenue for a significant portion of the business are highly influenced by short-term market-based trends in the freight transportation industry, whereas other costs, including other costs of revenue, are much less impacted by short-term freight market trends; (ii) disclosure of this measure allows investors to better understand the underlying trends in the Company's results of operations; (iii) this measure is meaningful to investors' evaluations of the Company's management of costs attributable to operations other than the purely variable costs associated with purchased transportation and commissions to agents that the Company incurs to provide services to our customers; and (iv) management considers this financial information in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs.

The increase in operating income as a percentage of gross profit from the 2025 twenty-six-week period to the 2026 twenty-six-week period resulted from the increase of operating income at a more rapid percentage rate than the increase in gross profit, as the Company was able to scale its fixed cost infrastructure, primarily certain components of selling, general and administrative costs, across a larger gross profit base, and the impact of the supply chain fraud matter in the 2025 twenty-six-week period. The decrease in operating income as a percentage of gross profit from the 2025 thirteen-week period to the 2026 thirteen-week period was primarily due to an increased provision for incentive compensation in the 2026 thirteen-week period.

The increase in operating income as a percentage of variable contribution from the 2025 twenty-six-week period to the 2026 twenty-six-week period resulted from the increase of operating income at a more rapid percentage rate than the increase in variable contribution, as the Company was able to scale its fixed cost infrastructure, primarily certain components of selling, general and administrative costs across a larger variable contribution base, and the impact of the supply chain fraud matter in the 2025 twenty-six-week period. The slight increase in operating income as a percentage of variable contribution from the 2025 thirteen-week period to the 2026 thirteen-week period resulted from the increase in operating income occurring at a slightly more rapid percentage rate than the increase in variable contribution, as the Company was able to scale its fixed cost infrastructure, primarily certain components of selling, general and administrative costs, across a larger variable contribution base, almost entirely offset by increased insurance and claims costs and an increased provision for incentive compensation in the 2026 thirteen-week period.

Also, as previously mentioned, the Company reports two operating segments: the transportation logistics segment and the insurance segment. External revenue at the insurance segment, representing reinsurance premiums, has historically been relatively consistent on an annual basis at 2% or less of consolidated revenue and generally corresponds directly with the number of trucks provided by BCO Independent Contractors. The discussion of cost line items in Management's Discussion and Analysis of Financial Condition and Results of Operations considers the Company's costs on a consolidated basis rather than on a segment basis. Management believes this presentation format is the most appropriate to assist users of the financial statements in understanding the Company's business for the following reasons: (1) the insurance segment has no other operating costs; (2) discussion of insurance and claims at either segment without reference to the other may create confusion amongst investors and potential investors due to intercompany arrangements and specific deductible programs that affect comparability of financial results by segment between various fiscal periods but that have no effect on the Company from a consolidated reporting perspective; (3) selling, general and administrative costs of the insurance segment comprise less than 10% of consolidated selling, general and administrative costs and have historically been relatively consistent on a year-over-year basis; and (4) the insurance segment has no depreciation and amortization.

TWENTY-SIX WEEKS ENDED JUNE 27, 2026 COMPARED TO TWENTY-SIX WEEKS ENDED JUNE 28, 2025

Revenue for the 2026 twenty-six-week period was $2,603,555,000, an increase of $239,670,000, or 10%, compared to the 2025 twenty-six-week period. Transportation revenue increased $240,334,000, or 10%. The increase in transportation revenue was attributable to an increased revenue per load of approximately 11%, while the number of loads was relatively flat as compared to the 2025 twenty-six-week period. Reinsurance premiums were $28,789,000 and $29,453,000 for the 2026 and 2025 twenty-six-week periods, respectively. The decrease in revenue from reinsurance premiums was primarily attributable to a decrease in the average number of trucks provided by BCO Independent Contractors in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the "third party truck capacity providers") for the 2026 twenty-six-week period was $2,416,159,000, representing 93% of total revenue, an increase of $248,303,000, or 11%, compared to the 2025 twenty-six-week period. Revenue per load on loads hauled by third party truck capacity providers increased approximately 12% in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period, while the number of loads hauled by third party truck capacity providers was relatively flat in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period.

The increase in revenue per load on loads hauled via truck was primarily due to a tightening truck capacity environment in the 2026 twenty-six-week period and the impact of higher diesel fuel costs on loads hauled via Truck Brokerage Carrier. During the 2026 twenty-six-week period, revenue per load on less-than-truckload loadings increased 19%, on loads hauled via unsided/platform equipment increased 16%, and on loads hauled via van equipment increased 11%, while revenue per load on other truck transportation services decreased 9%, in each case, as compared to the 2025 twenty-six-week period.

The number of loads hauled via truck for the 2026 twenty-six-week period compared to the 2025 twenty-six-week period was relatively flat. Loads hauled via other truck transportation services increased 6%, loads hauled via van equipment increased 1% and loads hauled via unsided/platform equipment were relatively flat, while less-than-truckload loadings decreased 14%, in each case, as compared to the 2025 twenty-six-week period.

Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $71,237,000 and $54,016,000 in the 2026 and 2025 twenty-six-week periods, respectively. It should be noted that billings to many customers of the Company's truck brokerage services include a single all-in rate that do not separately identify fuel surcharges on loads hauled via Truck Brokerage Carriers. Accordingly, the overall impact of changes in fuel prices on revenue and revenue per load on loads hauled via truck is likely to be greater than that indicated.

Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the "multimode capacity providers") for the 2026 twenty-six-week period was $144,788,000, or 6% of total revenue, a decrease of $11,153,000, or 7%, compared to the 2025 twenty-six-week period. The number of loads hauled by multimode capacity providers decreased approximately 5% in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period, and revenue per load on revenue generated by multimode capacity providers decreased approximately 2% over the same period. The decrease in the number of loads hauled by multimode capacity providers was due to a 19% decrease in ocean loadings and an 8% decrease in air loadings, while rail loadings increased 8%. The 19% decrease in ocean loadings was broad-based with decreases at several customers. The 8% decrease in air loadings was primarily attributable to decreases at two specific agencies. The 8% increase in rail loadings was primarily attributable to increased loadings at one specific agency. Revenue per load on loads hauled via ocean decreased approximately 1%, while air and rail intermodal revenue per load increased approximately 23% and 10%, respectively, during the 2026 twenty-six-week period as compared to the 2025 twenty-six-week period. The decrease in revenue per load on loads hauled by ocean cargo carriers was primarily attributable to decreases at several customers during the 2026 twenty-six-week period. The increase in revenue per load on loads hauled by air cargo carriers was primarily attributable to increases at several specific customers during the 2026 twenty-six-week period. The increase in revenue per load on loads hauled by rail intermodal carriers was attributable to increases at several specific customers during the 2026 twenty-six-week period. Revenue per load on revenue generated by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity.

Purchased transportation was 78.0% and 77.8% of revenue in the 2026 and 2025 twenty-six-week periods, respectively. The increase in purchased transportation as a percentage of revenue was primarily due to an increased rate of purchased transportation on revenue generated by Truck Brokerage Carriers, partially offset by favorable mix. Commissions to agents were 7.7% and 8.2% of revenue in the 2026 and 2025 twenty-six-week periods, respectively. The decrease in commissions to agents as a percentage of revenue was primarily attributable to an increased cost of purchased transportation as a percentage of revenue on revenue generated by Truck Brokerage Carriers.

Investment income was $5,679,000 and $7,327,000 in the 2026 and 2025 twenty-six-week periods, respectively. The decrease in investment income was attributable to a lower average investment balance held by the insurance segment in the 2026 twenty-six-week period and lower average rates of return on investments during the 2026 twenty-six-week period.

Other operating costs increased $1,321,000 in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period. The increase in other operating costs compared to the prior year was primarily due to increased trailer equipment maintenance costs, increased trailer rental costs and decreased gains on sales of operating property, partially offset by an approximately $4,800,000 expense relating to the supply chain fraud matter in the 2025 twenty-six-week period referenced above under "Expenses - Other operating costs, net of gains on asset sales/dispositions."

Insurance and claims increased $4,622,000 in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period. The increase in insurance and claims expense compared to the prior year was primarily due to increased net unfavorable development of prior years' claims in the 2026 twenty-six-week period and increased BCO miles traveled during the 2026 twenty-six-week period, partially offset by decreased frequency of both current year trucking and current year cargo claims during the 2026 twenty-six-week period. During the 2026 and 2025 twenty-six-week periods, insurance and claims costs included $15,393,000 and $13,641,000 of net unfavorable adjustments to prior years' claims estimates, respectively.

Selling, general and administrative costs increased $11,870,000 in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period. The increase in selling, general and administrative costs compared to prior year was primarily attributable to increased provisions for incentive compensation and stock-based compensation expense and increased wages, partially offset by a decreased provision for customer bad debt in the 2026 twenty-six-week period. Included in selling, general and administrative costs was incentive compensation expense of $9,832,000 and $1,950,000, respectively, and stock-based compensation expense of $5,420,000 and $3,657,000, respectively, for the 2026 and 2025 twenty-six-week periods.

Depreciation and amortization decreased $3,406,000 in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period. The decrease in depreciation and amortization expense was primarily due to decreased depreciation on information technology software and decreased trailing equipment depreciation in the 2026 twenty-six-week period.

Interest and debt expense increased $791,000 in the 2026 twenty-six-week period compared to the 2025 twenty-six-week period. The increase in interest and debt expense was primarily attributable to decreased interest income earned on cash balances held by the transportation logistics segment, partially offset by decreased interest expense related to finance lease obligations.

The provisions for income taxes for the 2026 and 2025 twenty-six-week periods were based on estimated annual effective income tax rates of 25.1% and 24.3%, respectively, adjusted for discrete events, such as excess tax benefits or deficiencies resulting from stock-based awards. The effective income tax rate for the 2026 twenty-six-week period was 25.2%. The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2026 period primarily attributable to state taxes. The effective income tax rate for the 2025 twenty-six-week period was 24.7%. The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2025 period primarily attributable to state taxes.

Net income was $88,391,000, or $2.60 per basic and diluted share, in the 2026 twenty-six-week period. Net income was $71,699,000, or $2.05 per basic and diluted share, in the 2025 twenty-six-week period.

THIRTEEN WEEKS ENDED JUNE 27, 2026 COMPARED TO THIRTEEN WEEKS ENDED JUNE 28, 2025

Revenue for the 2026 thirteen-week period was $1,432,264,000, an increase of $220,881,000, or 18%, compared to the 2025 thirteen-week period. Transportation revenue increased $221,078,000, or 18%. The increase in transportation revenue was attributable to an increased revenue per load of approximately 16% and an increased number of loads hauled of approximately 2% as compared to the 2025 thirteen-week period. Reinsurance premiums were $14,499,000 and $14,696,000 for the 2026 and 2025 thirteen-week periods, respectively. The decrease in revenue from reinsurance premiums was primarily attributable to a decrease in the average number of trucks provided by BCO Independent Contractors in the 2026 thirteen-week period compared to the 2025 thirteen-week period.

Truck transportation revenue generated by third party truck capacity providers for the 2026 thirteen-week period was $1,333,878,000, representing 93% of total revenue, an increase of $215,740,000, or 19%, compared to the 2025 thirteen-week period. Revenue per load on loads hauled by third party truck capacity providers increased approximately 17% in the 2026 thirteen-week period compared to the 2025 thirteen-week period, and the number of loads hauled by third party truck capacity providers increased approximately 2% in the 2026 thirteen-week period compared to the 2025 thirteen-week period.

The increase in revenue per load on loads hauled via truck was primarily due to a tightening truck capacity environment in the 2026 thirteen-week period and the impact of higher diesel fuel costs on loads hauled via Truck Brokerage Carriers. During the 2026 thirteen-week period, revenue per load on less-than-truckload loadings increased 32%, via unsided/platform equipment increased 20% and on loads hauled via van equipment increased 16%, while revenue per load on other truck transportation services decreased 8%, in each case, as compared to the 2025 thirteen-week period.

The increase in the number of loads hauled via truck for the 2026 thirteen-week period compared to the 2025 thirteen-week period was primarily due to increased demand from the 2025 thirteen-week period for the Company's van, unsided/platform and other truck transportation services and, secondarily, due to efforts by customers in the 2025 first quarter to "pull-forward" shipments typically scheduled to occur later in the year in an effort to avoid the potential impact of tariffs that subsequently may have become effective in fiscal year 2025. Loads hauled via other truck transportation services increased 7%, loads hauled via van equipment increased 5% and loads hauled via unsided/platform equipment increased 2%, while less-than-truckload loadings decreased 25%, in each case, as compared to the 2025 thirteen-week period.

Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $44,546,000 and $27,091,000 in the 2026 and 2025 thirteen-week periods, respectively.

Transportation revenue generated by multimode capacity providers for the 2026 thirteen-week period was $77,505,000, or 5% of total revenue, an increase of $4,688,000, or 6%, compared to the 2025 thirteen-week period. Revenue per load on revenue generated by multimode capacity providers increased approximately 4% in the 2026 thirteen-week period compared to the 2025 thirteen-week period, and the number of loads hauled by multimode capacity providers increased approximately 3% over the same period. Revenue per load on loads hauled via air and rail intermodal increased approximately 50% and 16%, respectively, while ocean revenue per load decreased approximately 5% during the 2026 thirteen-week period as compared to the 2025 thirteen-week period. The increase in revenue per load on loads hauled by air cargo carriers was primarily attributable to increases at several specific customers during the 2026 thirteen-week period. The increase in revenue per load on loads hauled by rail intermodal carriers was broad-based with increases at multiple customers during the 2026 thirteen-week period. The decrease in revenue per load on loads hauled by ocean was primarily attributable to decreases at several customers during the 2026 thirteen-week period. Revenue per load on revenue generated by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity. The increase in the number of loads hauled by multimode capacity providers was due to a 9% increase in rail loadings, while air loadings decreased 5% and ocean loadings decreased 3%. The 9% increase in rail loadings was primarily attributable to increased loadings at one specific agency. The 5% decrease in air loadings was primarily attributable to decreases at one specific agency. The 3% decrease in ocean loadings was broad-based with decreases at several customers.

Purchased transportation was 78.4% and 77.7% of revenue in the 2026 and 2025 thirteen-week periods, respectively. The increase in purchased transportation as a percentage of revenue was primarily due to an increased cost of purchased transportation as a percentage of revenue on revenue generated by Truck Brokerage Carriers, partially offset by favorable mix. Commissions to agents were 7.6% and 8.2% of revenue in the 2026 and 2025 thirteen-week periods, respectively. The decrease in commissions to agents as a percentage of revenue was primarily attributable to an increased cost of purchased transportation as a percentage of revenue on revenue generated by Truck Brokerage Carriers.

Investment income was $2,705,000 and $3,729,000 in the 2026 and 2025 thirteen-week periods, respectively. The decrease in investment income was attributable to a lower average investment balance held by the insurance segment in the 2026 thirteen-week period and lower average rates of return on investments during the 2026 thirteen-week period.

Other operating costs decreased $1,650,000 in the 2026 thirteen-week period compared to the 2025 thirteen-week period. The decrease in other operating costs compared to the prior year was primarily due to the reclassification of the approximately $4,800,000 expense relating to the supply chain fraud matter referenced above under "Expenses - Other operating costs, net of gains on asset sales/dispositions" from selling, general and administrative costs in the 2025 thirteen-week period, partially offset by increased trailer equipment maintenance costs, increased trailer rental costs and decreased gains on sales of operating property in the 2026 thirteen-week period.

Insurance and claims increased $8,910,000 in the 2026 thirteen-week period compared to the 2025 thirteen-week period. The increase in insurance and claims expense compared to the prior year was primarily due to increased net unfavorable development of prior years' claims in the 2026 thirteen-week period, increased BCO miles traveled during the 2026 thirteen-week period and increased severity of current year trucking claims during the 2026 thirteen-week period, partially offset by decreased frequency of both current year trucking and current year cargo claims during the 2026 thirteen-week period. During the 2026 and 2025 thirteen-week periods, insurance and claims costs included $10,505,000 and $2,289,000 of net unfavorable adjustments to prior years' claims estimates, respectively.

Selling, general and administrative costs increased $12,487,000 in the 2026 thirteen-week period compared to the 2025 thirteen-week period. The increase in selling, general and administrative costs compared to prior year was primarily attributable to an increased provision for incentive compensation, reclassification of the approximately $4,800,000 expense relating to the supply chain fraud matter referenced above under "Expenses - Other operating costs, net of gains on asset sales/dispositions" to other operating costs in the 2025 thirteen-week period, increased stock-based compensation expense and increased information technology project consulting fees, partially offset by decreased employee benefit costs, primarily attributable to decreased medical and pharmacy costs under the self-insured portion of the Company's medical plan, in the 2026 thirteen-week period. Included in selling, general and administrative costs was incentive compensation expense of $6,436,000 and $950,000, respectively, and stock-based compensation expense of $2,933,000 and $1,619,000, respectively, for the 2026 and 2025 thirteen-week periods.

Depreciation and amortization decreased $1,740,000 in the 2026 thirteen-week period compared to the 2025 thirteen-week period. The decrease in depreciation and amortization expense was primarily due to decreased depreciation on information technology software and decreased trailing equipment depreciation in the 2026 thirteen-week period.

Interest and debt expense increased $114,000 in the 2026 thirteen-week period compared to the 2025 thirteen-week period. The increase in interest and debt expense was primarily attributable to decreased interest income earned on cash balances held by the transportation logistics segment, partially offset by decreased interest expense related to finance lease obligations.

The provisions for income taxes for the 2026 and 2025 thirteen-week periods were based on estimated annual effective income tax rates of 25.1% and 24.3%, respectively, adjusted for discrete events, such as excess tax benefits or deficiencies resulting from stock-based awards. The effective income tax rate for the 2026 thirteen-week period was 25.2%. The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2026 period primarily attributable to state taxes. The effective income tax rate for the 2025 thirteen-week period was 24.6%. The effective income tax rate was higher than the statutory federal income tax rate of 21% in the 2025 period primarily attributable to state taxes.

Net income was $48,951,000, or $1.44 per basic and diluted share, in the 2026 thirteen-week period. Net income was $41,893,000, or $1.20 per basic and diluted share, in the 2025 thirteen-week period.

CAPITAL RESOURCES AND LIQUIDITY

Working capital and the ratio of current assets to current liabilities were $597,123,000 and 1.8 to 1, respectively, at June 27, 2026, compared with $520,486,000 and 1.7 to 1, respectively, at December 27, 2025. Landstar has historically operated with current ratios within the range of 1.5 to 1 to 2.0 to 1. Cash provided by operating activities was $27,810,000 in the 2026 twenty-six-week period compared with $62,836,000 in the 2025 twenty-six-week period. The decrease in cash flow provided by operating activities was primarily attributable to unfavorable net working capital impacts in connection with increased net receivables, defined as accounts receivable less accounts payable, partially offset by the impact of increased net income.

The Company declared and paid $0.80 per share, or $27,181,000 in the aggregate, in cash dividends during the twenty-six-week period ended June 27, 2026 and, during such period, also paid $68,117,000 of dividends payable which were declared in December 2025 and included in current liabilities in the consolidated balance sheet at December 27, 2025. The Company declared and paid $0.76 per share, or $26,604,000 in the aggregate, in cash dividends during the twenty-six-week period ended June 28, 2025 and, during such period, also paid $70,632,000 of dividends payable which were declared in December 2024 and included in current liabilities in the consolidated balance sheet at December 28, 2024. During the twenty-six-week period ended June 27, 2026, the Company purchased 150,923 shares of its common stock at a total cost of $22,563,000, including $22,387,000 in cash purchases and accrued excise tax of $176,000, which is included in other current liabilities in the consolidated balance sheet at June 27, 2026. The Company also paid $1,762,000 in excise tax on its common stock purchases, which was included in other current liabilities in the consolidated balance sheet at December 27, 2025. During the twenty-six-week period ended June 28, 2025, the Company purchased 686,459 shares of its common stock at a total cost of $103,295,000, including $102,300,000 in cash purchases and accrued excise tax of $995,000, which was included in other current liabilities in the consolidated balance sheet at June 28, 2025. As of June 27, 2026, the Company may purchase in the aggregate up to 1,115,195 shares of its common stock under its authorized stock purchase programs. Long-term debt, including current maturities, was $66,774,000 at June 27, 2026, $10,048,000 lower than at December 27, 2025.

Shareholders' equity was $836,730,000, or 93% of total capitalization (defined as long-term debt including current maturities plus equity), at June 27, 2026, compared to $795,665,000, or 91% of total capitalization, at December 27, 2025. The increase in shareholders' equity was primarily the result of net income, partially offset by dividends declared by the Company and purchases of shares of the Company's common stock in the 2026 twenty-six-week period.

On June 30, 2026, and as previously disclosed in a Form 8-K filed with the SEC on July 6, 2026, Landstar entered into a third amended and restated credit agreement, dated June 30, 2026, with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (the "Third Amended and Restated Credit Agreement") which amended and restated the existing second amended and restated credit agreement. The Third Amended and Restated Credit Agreement, which matures June 30, 2031, provides for borrowing capacity in the form of a revolving credit facility of $300,000,000, $100,000,000 of which may be utilized in the form of letters of credit. The Third Amended and Restated Credit Agreement also includes an uncommitted "accordion" feature permitting up to an additional $500,000,000 in increases to the revolving credit facility. The Third Amended and Restated Credit Agreement is also referred to herein as the "Credit Agreement." As of June 27, 2026, the Company had no borrowings outstanding under the Credit Agreement.

The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum interest coverage ratio, as described in the Credit Agreement, and maintain a Net Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company's capital stock to the extent there is a default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Net Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Company's most recently completed fiscal quarter. The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires 35% or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company's directors or the directors cease to consist of a majority of Continuing Directors, as defined in the Credit Agreement. None of these covenants are presently considered by management to be materially restrictive to the Company's operations, capital resources or liquidity. The Company is currently in compliance with all of the debt covenants under the Credit Agreement.

At June 27, 2026, the Company had no borrowings outstanding and $34,886,000 of letters of credit outstanding under the Credit Agreement. At June 27, 2026, there was $265,114,000 available for future borrowings under the Credit Agreement and access to an additional $500,000,000 under the Credit Agreement's "accordion" feature. In addition, the Company has $75,331,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $83,701,000 at June 27, 2026. Investments, all of which are carried at fair value, include primarily investment-grade bonds, asset-backed securities, commercial paper and U.S. Treasury obligations having maturities of up to five years. Fair value of investments is based primarily on quoted market prices. See "Notes to Consolidated Financial Statements" included herein for further discussion on measurement of fair value of investments.

Historically, the Company has generated sufficient operating cash flow to meet its debt service requirements, fund continued growth, both organic and through acquisitions, complete or execute share purchases of its common stock under authorized share purchase programs, pay dividends and meet working capital needs. As an asset-light provider of integrated transportation management solutions, the Company's annual capital requirements for operating property are generally for trailing equipment and information technology hardware and software. In addition, a significant portion of the trailing equipment used by the Company is provided by third party capacity providers, thereby reducing the Company's capital requirements. During the 2026 twenty-six-week period, the Company purchased $8,714,000 of operating property and acquired $5,197,000 of trailing equipment by entering into finance leases. Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2026 approximately $105,000,000 in operating property consisting primarily of new trailing equipment to replace older trailing equipment and information technology hardware and software.

Management believes that available cash and cash flow from operations combined with the Company's borrowing capacity under the Credit Agreement will be adequate to meet Landstar's debt service requirements, fund continued growth, both internal and through acquisitions, pay dividends, complete the authorized share purchase programs and meet working capital needs.

LEGAL MATTERS

The Company is involved in certain claims and pending litigation arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable and reasonably estimable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by the Company. The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim. Historically, the Company has experienced both favorable and unfavorable development of prior years' claims estimates within its various programs. During the 2026 and 2025 twenty-six-week periods, insurance and claims costs included $15,393,000 and $13,641,000 of net unfavorable adjustments to prior years' claims estimates, respectively. It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims liability at June 27, 2026, primarily due to the inherent difficulty in estimating the severity of commercial trucking claims and the potential judgment or settlement amount that may be incurred in connection with the resolution of such claims.

Significant variances from the Company's estimates for the ultimate resolution of self-insured claims could be expected to positively or negatively affect Landstar's earnings in a given quarter or year. However, management believes that the ultimate resolution of these items, given a range of reasonably likely outcomes, will not significantly affect the long-term financial condition of Landstar or its ability to fund its continuing operations.

SEASONALITY

Landstar's operations are subject to seasonal trends common to the trucking industry. Historically, truckload shipments for the quarter ending in March are typically lower than for the quarters ending June, September and December.