Landstar's fourth quarter featured standout heavy haul growth, with revenue up 23% and a full-year record of $569 million, plus improving BCO truck utilization and an eighth consecutive quarter of turnover improvement, even as the freight recession persisted into a third year. Results were hurt by several discrete insurance and claims charges totaling about $22 million pre-tax, which helped push gross profit margin down to 7.3% from 9%, while BCO truck count fell roughly 4% and non-truck revenue dropped 28%. Management noted January loads tracking near normal seasonality with revenue per load up about 4% year-over-year, but cautioned that late-January winter storms are expected to weigh on Q1 2026 BCO utilization.
Thanks, Elmer. Good afternoon, and welcome to Landstar's 2025 fourth quarter earnings conference call. Before we begin, let me read the following statement. The following is a safe harbor statement on the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts are forward-looking statements. During this conference call, we may make statements that contain forward-looking information that relates to Landstar's business objectives, plans, strategies, and expectations. Such information is, by nature, subject to uncertainties and risks, including, but not limited to, the operational, financial, and legal risks detailed in Landstar's Form 10-K for the 2024 fiscal year, described in the section Risk Factors, Landstar's Form 10-Q for the 2025 first quarter, and our other SEC filings from time to time.
These risks and uncertainties could cause results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information. I'll now pass it to Landstar's CEO, Frank Lonegro, for his opening remarks.
Thanks, JT, and good afternoon, everyone. I'd like to thank our BCOs and agents and all of Landstar employees who support them every day. The capability, resiliency, and level of commitment exhibited day in and day out by our network of independent business owners is unique in the freight transportation industry. Their adaptability and dedication to safety, security, and service for our customers is truly impressive. They are exceptional business leaders and key to driving the continued success of Landstar's business model. Before we jump into fourth quarter results, I'd like to take a few minutes to provide a brief reflection on my first two years leading this great organization. Despite the unprecedented freight recession continuing longer than many of us had expected, we achieved some significant accomplishments over the past two years.
We created our key priorities, what we call the Five Points of the Star, to guide our business, accelerating the model, executing on our growth strategy, managing risk, leveraging our financial strength, and enhancing our support. The one at the top of the star is accelerating the model, which is all about our agents and BCOs. When they are strong and growing and equipped with the tools and support they need to succeed, the Landstar model really shines. We doubled down on the company's strategic growth initiatives, with two of those, heavy haul and U.S.-Mexico cross-border, representing approximately 20% of our business. While the cross-border business has been impacted by geopolitics, we are more than ready to leverage our new cross-border leadership, as well as our strong agent presence and market position when the environment improves.
On the heavy haul side, with new leadership and strong agent focus, not to mention our ability to do the hard things well, Landstar's heavy haul set a new revenue record of $569 million during the 2025 fiscal year, approximately 14% above 2024's record-setting year. We're continuing to build the leadership team of the future with our executives and VPs, what we call our Top 60, with nearly half of that team new to their role, new to their responsibilities, or new to the company. That group is collectively focused and incented to drive Landstar's growth and profitability and to maintain our industry-leading transportation and logistics business, premised on three key elements: safety, security, and service. We've reduced the time it takes to become a Landstar BCO while maintaining our highly stringent qualification standards. Huge thanks go to Matt Miller for his efforts here.
This year, we will also implement a redesigned BCO onboarding and training program to ensure the delivery of relevant, high-quality instruction and to support Landstar BCOs in upholding the highest standards of service for our customers. We're leaning into the future and deploying technology, and specifically AI, to benefit our agents, BCOs, and Landstar employees. It's all about enhancing our support for the Landstar network. You'll hear more this afternoon about our AI strategy and specific initiatives like the contact center, our path to deploying an ERP, and AI-enhanced tools focused on pricing, BCO retention, trailer requests, and credit approvals. You'll also hear about our new web portal, featuring embedded agentic AI, that was built specifically for the needs of Landstar freight agents, and that we believe is unique in the industry.
As we continue our efforts to find new ways to embed AI in our business, I'm pleased to report that approximately 50% of our IT CapEx budget for 2026 is dedicated to AI enablement and solutions. Importantly, we've continued Landstar's rich tradition of strong capital returns to our shareholders. Over the last two years, Landstar returned approximately $261 million to shareholders in the form of share repurchases and another $245 million in cash dividends. We remain committed to our capital return program while continuing to invest capital to improve and grow our business and making our network of entrepreneurs as successful as possible. We've been busy these last two years. We're excited about the future, and we look forward to sharing more with you down the road.
Turning back to the 2025 fourth quarter results, the challenging demand conditions experienced in the truckload freight environment over the past three years continued during the 2025 fourth quarter. Volatile federal trade policy and lingering inflation concerns continued to generate supply chain uncertainty. Nevertheless, the Landstar team of independent business owners and employees performed well. Truck transportation revenue in the fourth quarter was nearly flat year-over-year, as the slight decrease in total revenue was primarily attributable to decreased ocean revenue. Moreover, as previously disclosed, we are in the process of selling Landstar Metro, the company's Mexican logistics subsidiary.
Excluding the revenue contribution from Landstar Metro for both 2025 and 2024 fourth quarters, as well as approximately $16 million in reported revenue during the 2024 fourth quarter, that was associated with the previously disclosed agent fraud matter, total revenue decreased approximately 1% year-over-year in the 2025 fourth quarter. As disclosed in our pre-release 8-K filed with the SEC on January 21st, the 2025 fourth quarter financial results were negatively impacted by several discrete items, impacting insurance and claims expense. First, the company recorded pre-tax charges of $11 million, or $0.24 per share, related to two separate tragic vehicular accidents involving BCOs leased on with subsidiaries of the company.
Second, the company recorded a pre-tax charge of $5.7 million, or $0.13 per share, in connection with the court entry of a judgment in January 2026, that Landstar intends to appeal, and which related to a trial that ended in August 2025, relating to an accident that occurred in fiscal year 2022. Third, the company reported a $5.3 million pre-tax charge, or $0.12 per share, related to an increase in the company's actuarially determined claim reserves. JT will cover these items in greater detail during his prepared remarks. Nevertheless, we are encouraged by several positive signs. One consistent highlight is the continued strength in the unsided platform equipment business, which posted another strong quarter with an 11% year-over-year revenue increase, driven by the performance of Landstar's heavy haul service offering.
We generated approximately $170 million of heavy haul revenue during the 2025 fourth quarter, or a 23% increase over the 2024 fourth quarter. This achievement reflected a 16% increase in heavy haul revenue per load and a 7% increase in heavy haul volume. Our focus continues to be on accelerating our business model and executing on our strategic growth initiatives. We are continuing to invest in the foundational work that will put Landstar in a great position to leverage the freight environment as it turns our way. We are also focused on our commitment to continuous improvement in the level of service and support we provide to our customers, agents, BCOs, and carriers, each and every day. Turning to slide five, the freight environment in the 2025 fourth quarter was characterized by relatively soft demand from a seasonal perspective.
The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending, while the industrial economy remains soft, as evidenced by an ISM Index below 50 for the entire 2025 fourth quarter. We were pleased to see sequential outperformance by our overall truck revenue per load compared to pre-pandemic normal seasonal patterns, despite fiscal October underperforming pre-pandemic seasonal trends. As noted in the press release, we were encouraged to see our overall truck revenue per load increase approximately 6% from fiscal October to fiscal December, and appreciate everything the U.S. DOT is doing to support the American trucker.
Considering that backdrop, Landstar's revenue performance was admirable in the 2025 fourth quarter, with the number of loads hauled via truck down approximately 1%, almost entirely offset by approximately 1% increase in truck revenue per load compared to the 2024 fourth quarter. Our balance sheet continues to be very strong, and our capital allocation priorities are unchanged. We will continue to patiently and opportunistically execute on our existing buyback authority to benefit our long-term stockholders. As noted in the slide deck, during 2025, we deployed approximately $180 million of capital toward buybacks and repurchased approximately 1.3 million shares of our common stock. Yesterday afternoon, our board declared a $0.40 quarterly dividend payable on March 11 to shareholders of record as of the close of business on February 18.
We continue to invest through the cycles in leading technology and AI solutions for the benefit of our network of independent business owners, and have allocated a significant amount of capital this year towards refreshing our fleet of trailing equipment, with a particular focus on investment in new van equipment. At this stage of the call, I would normally hand it off to JT, but we felt it was important to provide analysts and investors with an update on our AI-related activities. I'll now pass the call to Jim Applegate for a discussion of in-flight and planned AI-related initiatives going on at Landstar. Jim?
Great. Thank you, Frank. Since 2016, Landstar has been executing a digital transformation strategy to ensure our network of agents and BCOs remains highly competitive in an increasingly technology-driven freight environment. Our goal from the outset was not simply modernization, but enablement, delivering tools that help automate the agent office, simplify the experience of operating as a Landstar business capacity owner, and scale the efficiency and effectiveness of our entrepreneurs. Those early efforts, branded as Landstar 2020, included the rollout of a new transportation management system, advanced pricing and capacity tools, agent analytics, BCO retention capabilities, mobile applications, and trailer management. Landstar 2020 was never viewed as an endpoint. It is the foundation of a long-term commitment to building and deploying industry-leading technology across our entire ecosystem. As we move beyond 2020, that commitment expanded.
We invested further into digital capabilities within our corporate operation and the support we provided the network, including the rollout of modern contact center technology and significant upgrades to our financial, settlements, and back-office systems. These investments strengthen the overall connectivity and support provided to our entrepreneurial network. What truly differentiates Landstar's technology strategy is how it's conceived and deployed. Our approach is not driven by top-down mandates designed solely to reduce costs. Instead, it's built through close collaboration with our agents and BCOs, with a clear focus on enabling growth. By aligning technology investments with the needs of our entrepreneurs, we're able to deliver tools that are adopted and leveraged to drive growth and deliver wins in the highly competitive transportation sector. Our agency model, growth is often constrained by resources.
Without technology, a new agent may reach $2 million in revenue before needing to add headcount. This is a difficult decision, given the financial risk involved. Our objective has been to deploy technology to fundamentally change that equation. By automating workflows and improving office efficiency, we have helped agents who embrace our tools to significantly increase their revenue base without adding resources. The same philosophy applies to our BCOs. By eliminating manual and administrative friction, we enable them to be more productive, haul more freight, and better serve our agents and customers. The end result is a differentiated value proposition for customers. A combination of advanced, purpose-built technology and highly motivated professionals with a direct economic stake in delivering freight safely, securely, and with exceptional service. Artificial intelligence represents the next major acceleration of this strategy.
The pace of innovation and breadth of potential applications are unprecedented, and we view AI as a powerful enabler of our entrepreneurial ecosystem. Importantly, our AI strategy is evolutionary, not experimental. We're building on the strong digital foundation we already have in place. Today, machine learning is embedded within our pricing and BCO retention tools, allowing them to continuously improve as we scale the available data. Our new contact center platform leverages AI to enhance the knowledge base of the service representatives, analyze sentiment, automate routine tasks, summarize interactions, and free our teams to focus on higher-value problem-solving. We've embedded AI into our Landstar Agent Portal, improving access to information, providing actionable business insights, and enabling better, faster decision-making. We've also deployed an AI-powered fraud detection solution that analyzes behavioral patterns, documentation, invoice images, and shipment characteristics to identify high-risk freight and reduce shipment losses.
Looking ahead, beginning in the first quarter of 2026, our AI task force will work with transportation-focused agentic AI startups and established technology partners to accelerate AI applications across the shipper life cycle and within agent offices. These efforts are focused on driving efficiency, improving decision-making, and further unlocking growth across our network. As technology continues to evolve, Landstar intends to remain at the forefront. We see AI as a strategic enhancement to the competitive advantage of the Landstar business model and the resiliency and capability of our strong network of entrepreneurs. Entering this new era, we believe AI represents another meaningful opportunity to strengthen the safety, security, and service we provide to our customers every day on every load. Back to you, Frank.
Thanks, Jim. Turning to slide 10, and looking at our network, the scale, systems, and support inherent in the Landstar model helped to drive the operating results generated during the 2025 fourth quarter. JT will get into the details on revenue, loadings, and rate per load in a few minutes. As noted during previous earnings calls, Landstar's safety-first culture is a crucial component of our continued success. Our safety performance is a direct result of the professionalism of the thousands of Landstar BCOs operating safely every day, and the agents and employees who work to reinforce the critical importance of safety at Landstar.
I'm proud to report an accident frequency rate of 0.59 DOT reportable accidents per million miles during 2025, well below the last available national average DOT reportable frequency released from the FMCSA for 2021, and slightly better than the company's trailing five-year average of 0.61. This long-run average is an impressive operating metric that speaks to the strength, skill, talent, and dedication of our BCOs and provides a point of differentiation our agents are able to highlight in discussions with our freight customers. We remain committed to driving a best-in-class safety culture. I'd also like to take a moment to recognize Landstar's 457 Million Dollar Agents based on our 2025 fiscal year results. Importantly, retention within the Million Dollar Agent network continues to be extremely high.
Turning to slide 11, on a year-over-year basis, BCO truck count decreased approximately 4% compared to the end of the 2024 fourth quarter and approximately 1% sequentially. BCO turnover continues to be influenced by a persistent, relatively low rate per load environment, combined with the significant increase in the cost to maintain and operate a truck today compared to before the pandemic. Directionally, we are pleased to see our trailing twelve-month truck turnover rate drop from 34.5% as of fiscal year-end 2024 to 31.4% at the end of the 2025 fourth quarter. Through the first four weeks of the 2026 first fiscal quarter, the number of trucks provided by BCO independent contractors is down fractionally, consistent with typical first quarter seasonality.
I will now pass the call back to JT to walk you through the 2025 fourth quarter financials in more detail. JT?
Thanks, Frank. Turn to slide 13. As Frank mentioned earlier, overall, truck revenue per load was up approximately 1% in the 2025 fourth quarter compared to the 2024 fourth quarter, primarily attributable to a 7.5% increase in revenue per load on loads hauled by unsided platform equipment, and a 2% increase in revenue per load on less than truckload loadings, partially offset by a 3.4% decrease in van revenue per load and a 4.2% decrease in revenue per load on other truck transportation loadings. On a sequential basis, truck revenue per load increased 1.5% in the 2025 fourth quarter versus the 2025 third quarter, outperforming typical pre-pandemic normal seasonality increase of approximately 1%, despite a relatively soft start out of the gate, with fiscal October underperforming normal seasonality.
...In comparison to overall truck revenue per load, we consider revenue per mile on loads hauled by BCO trucks a pure reflection of market pricing, as it excludes fuel surcharges billed to customers that are paid 100% to the BCO. In the 2025 fourth quarter, both revenue per mile on unsided platform equipment hauled by BCOs and revenue per mile on van equipment hauled by BCOs were 1% below the 2024 fourth quarter. Delving deeper into seasonal trends, revenue per mile on loads hauled by BCOs on unsided platform equipment declined 2% from September to October, was flat from October to November, and increased 4% from November to December. The September to October decline underperformed pre-pandemic seasonal trends, while the October to November flat and the November to December increase both outperformed pre-pandemic historical trends.
Revenue per mile on van equipment hauled by BCOs sequentially decreased 1% from September to October, and an additional 1% from October to November, underperforming pre-pandemic historical trends. However, in what we hope was a possible inflection point, revenue per mile on van equipment hauled by BCOs increased 3% from November to December, slightly above pre-pandemic historical trends. It should be noted that month-to-month seasonal trends on unsided platform equipment are generally more volatile compared to that of van equipment. This relative volatility is often due to the mix between heavy specialized loads and standard flatbed volume. As Frank alluded to, we've been pleased with the recent performance in our heavy haul service offering. Heavy haul revenue was up an impressive 23% year-over-year in the fourth quarter, significantly outperforming core truckload revenue.
Heavy haul loadings were up approximately 7% year-over-year, and revenue per heavy haul load increased 16% year-over-year. This represented a mixed tailwind to our unsided platform revenue per load, as heavy haul revenue as a percentage of the category increased from approximately 38% during the 2024 fourth quarter to approximately 42% in the 2025 fourth quarter. Non-truck transportation service revenue in the 2025 fourth quarter was 28%, or $30 million, below the 2024 fourth quarter. Excluding approximately $16 million in revenue reported during the 2024 fourth quarter that was associated with the previously disclosed agent fraud matter, non-truck transportation service revenue in the 2025 fourth quarter decreased by approximately $14 million, or 15% compared to the 2024 fourth quarter.
Turning to slide 14, we've provided revenue share by commodity and year-over-year change in revenue by commodity. Transportation logistics segment revenue was down 2.9% year-over-year on a 2% decrease in revenue per load and a 1% decrease in loads compared to the 2024 fourth quarter. Within our largest commodity category, consumer durables, revenue decreased approximately 2% year-over-year on a 3% decrease in volume, partially offset by a 1% increase in revenue per load. Aggregate revenue across our top five commodity categories, which collectively make up about 71% of our transportation revenue, increased approximately 2% compared to the 2024 fourth quarter. While slide 14 displays revenue share by commodity, we thought it would also be helpful to include some color on volume performance within our top five commodity categories.
From the 2024 fourth quarter to the 2025 fourth quarter, total loadings of machinery increased 6%, automotive equipment and parts decreased 5%, building products decreased 11%, and hazmat decreased 3%. Additionally, substitute linehaul loadings, one of the strongest performers for us during the pandemic and one which varies significantly based on consumer demand, increased 3% from the 2024 fourth quarter. As we've mentioned many times before, Landstar's a truck capacity provider to other trucking companies, 3PLs and truck brokers. During periods of tight truck capacity, those other freight transportation providers reach out to Landstar to provide truck capacity more often than during times of more readily available truck capacity.
The amount of freight hauled by Landstar on behalf of other truck transportation companies is reflected in almost all of our commodity groupings, including our substitute linehaul service offering. Overall, revenue hauled on behalf of other truck transportation companies in the 2025 fourth quarter was 15% below the 2024 fourth quarter, an indicator that capacity is reasonably accessible in the marketplace. Revenue hauled on behalf of other truck transportation companies was 11% and 13% of transportation revenue in the 2025 and 2024 fourth quarters, respectively. Even with the ups and downs in various customer categories, our business remains highly diversified, with over 20,000 customers, none of which contributed over 8% of our revenue in the 2025 fiscal year.
Turning to slide 15, in the 2025 fourth quarter, gross profit was $85.6 million, compared to gross profit of $109.4 million in the 2024 fourth quarter. Gross profit margin was 7.3% of revenue in the 2025 fourth quarter, as compared to gross profit margin of 9% in the corresponding period of 2024. In the 2025 fourth quarter, variable contribution margin was $166 million, compared to $166.5 million in the 2024 fourth quarter. Variable contribution margin was 14.1% of revenue in the 2025 fourth quarter and 13.8% in the 2024 fourth quarter.
Turning to slide 16, operating income declined as a percentage of gross profit, primarily due to the impact of highly elevated insurance and claim costs in the 2025 fourth quarter and the impact of the company's fixed cost infrastructure, principally certain components of selling, general, and administrative costs, in comparison to a smaller gross profit base. Operating income declined as a percentage of variable contribution, primarily due to the impact of the highly elevated insurance and claim costs in the 2025 fourth quarter and the impact of the company's fixed cost infrastructure, while the variable contribution bases were essentially equal. Other operating costs were $14.6 million in both the 2025 and 2024 fourth quarters.
Insurance and claim costs were $56.1 million in the 2025 fourth quarter, compared to $30.1 million in 2024. Total insurance and claim costs were 12.3% of BCO revenue in the 2025 fourth quarter, as compared to 6.7% in the 2024 fourth quarter. The increase in insurance and claim costs as compared to 2024, was primarily attributable to, one, $11 million of costs related to two separate tragic vehicular accidents involving BCO independent contractors, leased on with subsidiaries of the company, each of which occurred during the 2025 fourth quarter.
Two, a $5.7 million pre-tax, $5.7 million dollars pre-tax charge associated with a broker liability judgment entered on January 13, 2026, where a trial court in El Paso, Texas, found Landstar Ranger responsible for 100% of the $22.8 million of total damages awarded, rather than the 15% apportioned to Landstar by the jury during the summer of 2025. Landstar disagrees with the judgment and plans to vigorously appeal this matter. And three, the impact of a $5.3 million dollar increase in actuarially determined IBNR reserves, relating specifically to loss exposure in excess of $1 million dollars per claim.
During the 2025 and 2024 fourth quarters, insurance and claim costs included $9.2 million and $2.2 million of net unfavorable adjustment to prior year claim estimates, respectively. Importantly, $5.7 million of the $9.2 million of prior year development reported in the 2025 fourth quarter was attributable to the El Paso broker liability judgment entered during January 2026. Selling, general, and administrative costs were $56.2 million in the 2025 fourth quarter, compared to $55.1 million in the 2024 fourth quarter. The increase in selling, general, and administrative costs were primarily attributable to an increased provision for incentive compensation, increased stock-based compensation expense, and increased wages, partially offset by a decreased provision for customer bad debt.
Thanks, JT. Given the highly fluid freight transportation backdrop and an uncertain political and macroeconomic environment, as well as challenging industry trends with respect to insurance and claim costs, the company will be providing first quarter revenue commentary rather than formal guidance. Turning to slide 19, the number of loads hauled via truck in January was approximately 1% below January 2025 on a dispatch basis, while revenue per load in January was approximately 4% above January 2025 on a process basis. As a result, we view truck revenue per load in January as modestly outperforming normal seasonality, while January truck volumes are trending essentially in line with normal seasonality.
Looking at historical seasonality from Q4 to Q1, pre-pandemic patterns would normally yield a 4% decrease in both the number of loads hauled via truck and truck revenue per load, yielding a top line that typically decreases by a mid-single-digit to a high single-digit percentage. As just noted, though, fiscal January truck revenue per load outperformed normal seasonality, while truck volumes trended essentially in line. It should be noted that we face a challenging year-over-year truck volume comparison during the first quarter, as 2025 first quarter truck volumes exceeded the immediately preceding fourth quarter truck volumes for the first time in 15 years, with tariff pull-forward behavior likely driving the strength. Moving through the first quarter, historically, truck revenue per load sequentially declines approximately 1.5% from fiscal January to fiscal February, before improving approximately 1.8% from fiscal February to fiscal March.
We estimate that in the event fiscal February and fiscal March, truck revenue per load outperformed normal seasonality in line with the outperformance we experienced in fiscal January, the sequential revenue change experienced during the 2026 first quarter could be down low single digits versus the fourth quarter of 2025. With respect to variable contribution margin, the company typically experiences a 40-60 basis point expansion in variable contribution margin from the fourth quarter to the first quarter, typically driven by increased BCO mix. However, I would note we had a very strong BCO utilization in the fourth quarter of 2025 at +8% year-over-year. In addition, winter storm activity experienced in January could have a negative impact to first quarter 2026 BCO utilization, resulting in a first quarter 2026 VCM performance that does not necessarily follow normal seasonal patterns.
With that, Elmer, we'd like to open the line for questions.