LSTR 10-K & 10-Q changes, risk factors and insider trading

Increased severity or frequency of accidents and other claims or a material unfavorable development of existing claims. As noted above in Item 1, “Business — Factors Significant to the Company’s Operations — Self-Insured Claims,” 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. EffectiveHistorically, May 1, 2023, the Company entered into a three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “2023 Initial Excess Policy”) with athese third party insurance company.arrangements Forwere commercial trucking claims incurredbased on orpolicy afteryear periods beginning on May 1 and ending on the subsequent April 30. Beginning with the policy year period commencing May 1, 20232025, throughthe AprilCompany 30,and its third party insurance providers adjusted the applicable policy year period, beginning in 2026, theto 2023commence Initialon ExcessJune Policy1 providesand forend an aggregate deductible of $18 million overon the thirty-six-monthsubsequent termMay 31. All applicable third party insurance arrangements with a policy period ending April 30, 2026.2026 Afterhave paymentbeen ofamended theto deductible, the 2023 Initial Excess Policy providesprovide for a limitpolicy for a single loss of $5 million, with an aggregate limit of $15 million for the thirty-six-month termperiod ending AprilMay 30,31, 2026.2026, as reflected below.

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 decade,fifteen years, there has been a significant increase in the prevalenceoccurrence 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 AprilMay 30,31, 2025,2026, the Company experienced an increase of approximately $22 million, or overapproximately 400%, 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 AprilMay 30,31, 2025,2026, the Company would have an aggregate financial exposure of approximately $30$36 million. 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, theThe 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 recent years, the amount of cargo theft throughout the freight transportation and logistics supply chain in the United States has significantly increased. The Company has experienced, and may continue to experience, increases in the amount of cargo theft, resulting in increased exposure to liability from cargo claims. 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 is reduced by various legal defenses and other factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims, including further increases in the amount of cargo theft, 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.

Dependence on independent commission sales agents. As noted above in Item 1, “Business — Factors Significant to the Company’s Operations — Agent Network,” the Company markets its services primarily through independent commission sales agents. During fiscal year 2024,2025, 485457 agents generated revenue for Landstar of at least $1 million each, or in the aggregate approximately 94%95% of Landstar’s consolidated revenue. Included among these Million Dollar Agents, 8177 agents generated at least $10,000,000 of Landstar revenue during the 20242025 fiscal year, or in the aggregate approximately 67%68% of Landstar’s consolidated revenue. Of these larger agencies, onetwo such Landstar independent commission sales agency,agencies itself with a very diversified customer base,each generated approximatelyover $470,000,000,10% of Landstar’s consolidated revenue, or 10%,in the aggregate approximately $994,000,000, or 21%, of Landstar’s consolidated revenue and approximately 5%16% of Landstar’s consolidated variable contribution in fiscal year 2024.2025.

A number of these larger agencies, including the second largest of Landstar’s independent commission sales agents by revenue, maintain administrative operations in countries outside of North America where the risks may be different than in the United States or Canada due to geopolitical, legal or other risks associated with maintaining administrative operations in such foreign jurisdictions. There can be no assurance regarding the potential disruption and impact adverse geopolitical developments in these foreign jurisdictions could have on the ability of certain large independent commission sales agents to generate and maintain administrative operations in support of significant amounts of Landstar revenue. As disclosed in a Current Report on Form 8-K filed by the Company on February 28, 2022, the second largest Landstar independent commission sales agency by 2025 revenue referenced above, while based in the United States, has significant administrative operations located in Ukraine. The administrative operations of this agency were significantly disrupted during the onset of the Russian invasion of Ukraine and continue to be affected by the ongoing conflict. The Company also has another of its largest independent commission sales agencies, as measured by revenue, that is based in the United States but conducts a portion of its administrative operations in western Ukraine. Russian efforts to destroy infrastructure throughout Ukraine has impacted the availability of electricity and other basic utilities at various times throughout the country. The priority for Landstar and both of these agencies is the safety and well-being of these agencies’ Ukrainian workforces and their families. No assurances can be provided regarding the conflict between Russia and Ukraine and the extent of potential future operational disruption the conflict may have on either of these Landstar agencies and the related impact of these disruptions on the Company.

Disruptions or failures in the Company’s computer systems; cyber and other information security incidents. As noted above in Item 1, “Business — Factors Significant to the Company’s Operations — Technology,” the Company’s information technology systems used in connection with its operations are located in Jacksonville, Florida and to a lesser extent in Rockford, Illinois. In addition, the Company utilizes several third party data centers throughout the United States. Landstar relies, in the regular course of its business, on the proper operation of its information technology systems to link its extensive network of customers, employees, agents and third party capacity providers, including its BCO Independent Contractors. Moreover, a majority of the Company’s employees work remotely or on a hybrid basis. Although the Company has redundant systems for its critical operations, any significant disruption or failure of its technology systems or those of third party data centers on which it relies could significantly disrupt the Company’s operations and impose significant costs on the Company. Moreover, it is critical that the data processed by or stored in the Company’s information technology systems or otherwise in the Company’s possession remain confidential, as it often includes confidential, proprietary and/or competitively sensitive information regarding our customers, employees, agents and third party capacity providers, key financial and operational results and statistics, and our strategic plans, including technology innovations, developments and enhancements. Cyber incidents that impact the security, availability, reliability, speed, accuracy or other proper functioning of these systems and data, including outages, computer viruses, break-ins and similar disruptions, could have a significant impact on our operations. Accordingly, information security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized accessaccess, including from AI enabled attacks, remain a priority for us. Our information systems and those of our third party service providers have been, and will likely continue to be, targeted by or subject to viruses, malware or other malicious codes, unauthorized access, cyber-attacks, cyber frauds, ransomware or other unauthorized occurrences which jeopardize the confidentiality, integrity or availability of our information or information systems. Cybersecurity threats are rapidly evolving and those threats and the means for obtaining access to our systems are becoming increasingly sophisticated. Cybersecurity threats can originate from a wide variety of sources including terrorists, nation states, financially motivated actors, hacktivists, internal actors, or third parties, such as external service providers or other third parties who may use an external service provider as a conduit to access our systems, and the techniques used change frequently and often are not recognized until after they have been launched. The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks including the deployment of artificial intelligence technologies by threat actors. Although we believe that we have robust security procedures and other safeguards in place, as threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any security vulnerabilities. At any given time, we face known and unknown cybersecurity risks and threats that are not fully mitigated, and we may discover vulnerabilities as we continuously work to enhance our cybersecurity risk management program. A significant incident, including system failure, security breach, disruption by malware or ransomware, or other damage, could interrupt or delay our operations, damage our reputation with customers, agents, third party capacity providers, employees, vendors, investors or other stakeholders, cause a loss of customers, agents and/or third party capacity providers, expose us to a risk of loss or litigation, and/or cause us to incur significant time and expense to remedy such an event, any of which could have a material adverse impact on our results of operations and financial condition.

Decreased demand for transportation services; U.S. trade relationships.relationships and potential or imposed tariffs. The transportation industry historically has experienced cyclical financial results as a result of slowdowns in economic activity, the business cycles of customers, and other economic factors beyond Landstar’s control. If a slowdown in economic activity or a downturn in the Company’s customers’ business cycles causes a reduction in the volume of freight shipped by those customers, the Company’s operating results could be materially adversely affected.

Substantial industry competition. As noted above in Item 1, “Business — Factors Significant to the Company’s Operations — Competition,” Landstar competes primarily in the transportation and logistics services industry. This industry is extremely competitive and fragmented. Landstar competes primarily with truckload carriers, intermodal transportation service providers, railroads, less-than-truckload carriers, third party logistics companies, digital freight brokers and other asset-light transportation and logistics service providers. Management believes that competition for the freight transported by the Company is based on service, efficiency, safety and freight rates, which are influenced significantly by the economic environment, particularly the amount of available transportation capacity and freight demand. In recent years, the use of technology and the implementation of technology-based innovationsinnovations, which may increasingly incorporate AI, have become increasingly important to compete within the transportation and logistics industry. In particular, management believes leadership in the development, operation and support of an ecosystem of digital technologies and applications is an ongoing part of providing high quality service. The failure of the Company to maintain or enhance its technology ecosystem in response to changing demands from customers, agents, and capacity providers could have a significant adverse impact on Landstar’s ability to compete for customers, agents and capacity providers in the transportation and logistics industry.

In addition, competition in our industry, historically, has created downward pressure on freight rates. Many large shippers use 3PLs other than the Company to outsource the management and coordination of their transportation needs rather than directly arrange for transportation services with carriers. As noted above, there were 10eight transportation service providers, including 3PLs, included in the Company’s top 25 customers for the fiscal year ended December 28,27, 2024.2025. Usage by large shippers of 3PLs often provides carriers, such as the Company, with a less direct relationship with the shipper and, as a result, may increase pressure on freight rates while making it more difficult for the Company to compete primarily based on service and efficiency. A prolonged decrease in freight rates could have a material adverse effect on Landstar, including its revenue and operating income.

In particular, the FMCSA may propose regulatory changes that affect the operation of commercial motor carriers across the United States. For example, effective May 20, 2025, the FMCSA established a new enforcement policy with respect to English language proficiency (“ELP”) requirements applicable to commercial motor vehicle drivers and the ability of such drivers to communicate effectively with law enforcement and understand highway traffic signs throughout the United States. In 2025, the FMCSA also proposed amendments to federal regulations applicable to the issuance by State Driver’s Licensing Agencies (“SDLAs”) of CDLs to foreign-domiciled individuals in order to significantly limit the authority of SDLAs to issue and renew CDLs with respect to individuals domiciled in a foreign jurisdiction and/or who do not maintain a lawful immigration status in the United States. It is difficult to predict in what form FMCSA regulations may be implemented, modified or enforced and what impact any such regulations may have on motor carrier operations or the aggregate number of trucks that provide hauling capacity to the Company. No assurances can be given with respect to what impact new or revised motor carrier oversight programs implemented by the FMCSA could have on the Company, its motor carrier operations or the aggregate number of trucks that provide hauling capacity to the Company.

Regulations requiring the purchase and use of zero-emission vehicles (“ZEVs”). Currently, the long-haul trucking industry in North America is diesel-fuel based and long-haul trucking operations powered by electricity, natural gas, or hydrogen-based powertrains rather than diesel are not commercially feasible at scale in North America. Significant challenges remain with respect to the economic feasibility of these trucks and the further development of this technology is necessary considering power, torque, range, efficiency and other aspects of long-haul trucking operations. Moreover, the extensive nationwide charging/fueling infrastructure and maintenance network that would be necessary to support such operations does not exist. Nevertheless, federal, state and local governmental agencies may engage in efforts to support legislation and regulations mandating the transition of diesel-fuel based commercial motor vehicles, such as Class 8 tractors operated by the Company’s BCO Independent Contractors and Truck Brokerage Carriers, to ZEVs. For example, CARB has adopted a regulation, the Advanced Clean Trucks (“ACT”) regulation intended to accelerate a large-scale transition to medium-and heavy-duty ZEVs. The regulation includes a manufacturer sales requirement and a reporting requirement that applies to large employers including retailers, manufacturers, brokers and others, as well as fleet owners with 50 or more trucks operating in California. The following states have also adopted the ACT regulation: Colorado, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this document that are not based on historical facts are “forward-looking statements.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-K contain forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “will,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: decreased demand for transportation services; U.S. trade relationships and potential or imposed tariffs; an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; the impact of the Russian conflict with Ukraine on the operations of certain independent commission sales agents, including the Company’s second largest such agent by revenue in the 20242025 fiscal year; decreased demand for transportation services; U.S. trade relationships; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber and other information security incidents; dependence on key vendors; potential changes in taxes; status of independent contractors; regulatory and legislative changes; regulations focused on diesel emissions and other air quality matters; regulations requiring the purchase and use of zero-emission vehicles; intellectual property; acquisitions and investments; and other operational, financial or legal risks or uncertainties detailed in this and Landstar’s other SEC filings from time to time and described in Item 1A in this Form 10-K under the heading “Risk Factors.” These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc. (collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), is a technology-enabled, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world. The Company’s services emphasize safety, cargo security, information coordination and customer service and are delivered through a network of approximately 1,050960 independent commission sales agents and over 78,00070,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company. The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.

The transportation logistics segment provides a wide range of integrated transportation management solutions. 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, intra-Mexico, intra-Canada, 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 andelectronics, 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 fiscal year 2024,2025, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 38%, 52%53% and 2%, respectively, of the Company’s consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 6%5% of the Company’s consolidated revenue during fiscal year 2024.2025.

Management believes the Company’s success principally depends on its ability to generate freight through its network of independent commission sales agents and to deliver freight safelysafely, 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.

In fiscal year 2025, the change in the number of Million Dollar Agents was primarily attributable to agents who remained with the Company yet experienced lower year-over-year revenue that resulted in such agents moving below the Million Dollar Agent category due to the soft freight demand environment. Included among the Company’s Million Dollar Agents in the 2025 fiscal year, the Company had 77 independent sales agencies that generated at least $10 million in Landstar revenue. In fiscal year 2024, the change in the number of Million Dollar Agents was primarily attributable to agents who remained with the Company yet experienced lower year-over-year revenue that resulted in such agents moving below the Million Dollar Agent category due to the softersoft freight demand environment. Included among the Company’s Million Dollar Agents in the 2024 fiscal year, the Company had 81 independent sales agencies that generated at least $10 million in Landstar revenue. In fiscal year 2023, the change in the number of Million Dollar Agents was attributable to agents who remained with the Company yet experienced lower year-over-year revenue that resulted in such agents moving below the Million Dollar Agent category due to the softer freight demand environment. Included among the Company’s Million Dollar Agents in the 2023 fiscal year, the Company had 87 independent sales agencies that generated at least $10 million in Landstar revenue.

Landstar retains liability through a self-insured retention for commercial trucking claims up to $5 million per occurrence. Effective May 1, 2023, the Company entered into a three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “2023 Initial Excess Policy”) with a third party insurance company. For commercial trucking claims incurred on or after May 1, 2023 through AprilMay 30,31, 2026, the 2023 Initial Excess Policy provides for an aggregate deductible of $18 million over the thirty-six-monththirty-seven-month term ending AprilMay 30,31, 2026. After payment of the deductible, the 2023 Initial Excess Policy provides for a limit for a single loss of $5 million, with an aggregate limit of $15 million for the thirty-six-monththirty-seven-month term ending AprilMay 30,31, 2026.

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 decade,fifteen years, there has been a significant increase in the prevalenceoccurrence 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 AprilMay 30,31, 2025,2026, the Company experienced an increase of approximately $22 million, or overapproximately 400%, 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 AprilMay 30,31, 2025,2026, the Company would have an aggregate financial exposure of approximately $30$36 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 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. WithDuring the 2025 fiscal year, with respect to one such three yearthree-year commercial auto liability reinsurance arrangement relating to certain excess claims incurred between May 1, 2020 through April 30, 2023, it is anticipated that during the 2025 second fiscal quarter, the Company will receive areceived $12,000,000 of cash paymentpayments from a third party reinsurance providerproviders in the form of a “no claims bonus” due to favorable loss experience with respect to claims incurred during the applicable policy period. As further described in Note 11 in the “Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K, in connection with the Judgment (as defined below) in the Cabral Matter, the Company has recorded the “no claims bonus” within current insurance claims in the consolidated balance sheet as of December 27, 2025. The Company intends to recordvigorously appeal the receiptCabral ofMatter, this payment as a deferred gain onincluding the balanceJudgment; sheethowever, untilno such time as all underlying claims with exposure under the applicable excess layer insurance arrangement are resolved and the gainassurances can be recognized.provided regarding whether the Company will ultimately be able to recognize a gain with respect to the “no claims bonus.” For more information about the Cabral Matter, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Legal Proceedings.”

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 marginmargin.”. 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 decrease in operating income as a percentage of gross profit from fiscal year 2024 to fiscal year 2025 resulted from the decrease of operating income at a more rapid percentage rate than the decrease in gross profit, primarily due to the impact of the impairment of certain intangible and other assets 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. The decrease in operating income as a percentage of gross profit from fiscal year 2023 to fiscal year 2024, as well as from fiscal year 2022 to fiscal year 2023,2024 resulted from the decrease of operating income at a more rapid percentage rate than the decrease in gross profit, primarily due to 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.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for fiscal year 2024 was $4,346,554,000, representing 90% of total revenue, a decrease of $482,976,000, or 10%, compared to fiscal year 2023. The number of loads hauled by third party truck capacity providers decreased approximately 8% in fiscal year 2024 compared to fiscal year 2023, and revenue per load on loads hauled by third party truck capacity providers decreased approximately 2% compared to fiscal year 2023.

Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for fiscal year 2024 was $374,230,000, or 8% of total revenue, an increase of $9,295,000, or 3%, compared to fiscal year 2023. Revenue per load on revenue generated by multimode capacity providers increased approximately 3% in fiscal year 2024 compared to fiscal year 2023, while the number of loads hauled by multimode capacity providers was approximately the same in fiscal year 2024 compared to fiscal year 2023. Revenue per load on loads hauled via ocean increased 15%, while revenue per load on loads hauled via air and rail intermodal decreased 51% and 9%, respectively, during fiscal year 2024 as compared to fiscal year 2023. The increase in revenue per load on loads hauled by ocean was broad-based across many customers and reflected the impact of various geopolitical events on ocean shipping rates, generally. The decrease in revenue per load on loads hauled by air cargo carriers was primarily attributable to the impact of high value air loadings at one specific customer during fiscal year 2023. The decrease in revenue per load on loads hauled by rail intermodal was broad-based across many customers. 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.

ThereExcept as set forth below, there have been no material changes to the Risk Factors described in Part I “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025 as filed with the SEC.

The following discussion should be read in conjunction with the interim consolidated financial statements and notes thereto included herein, and with the Company’s audited financial statements and notes thereto for the fiscal year ended December 27, 2025 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Annual Report on Form FORWARD-LOOKING STATEMENTS The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this document that are not based on historical facts are “forward-looking statements.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q contain forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “would,” “will,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: decreased demand for transportation services; U.S. trade relationships and potential or imposed tariffs; an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; substantial verdicts or settlements rendered in connection with accidents or other claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; the impact of the Russian conflict with Ukraine on the operations of certain independent commission sales agents, including the Company’s second largest such agent by revenue in the 2025 fiscal year; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber and other information security incidents; dependence on key vendors; potential changes in taxes; status of independent contractors; regulatory and legislative changes; regulations focused on diesel emissions and other air quality matters; regulations requiring the purchase and use of zero-emission vehicles; intellectual property; acquisitions and investments; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2025 fiscal year, described in Item 1A “Risk Factors,” in this report or in Landstar’s other Securities and Exchange Commission filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

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 thirteentwenty-six weeks ended MarchJune 28,27, 2026, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 41%,40%, 52%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 thirteen-weektwenty-six-week period ended MarchJune 28,27, 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 thirteen-weektwenty-six-week period ended MarchJune 28,27, 2026.

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. All applicable third party insurance arrangements with a policy period ending April 30, 2026, have been amended to provide for a policy period ending May 31, 2026, as reflected below.

Effective MayJune 1, 2023,2026, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “20232026 Initial Excess Policy”) with a third party insurance company. For commercial trucking claims incurred on or after MayJune 1, 20232026 through May 31, 2026,2029, the 2023 Initial Excess Policy provides for an aggregate deductible of $18 million over the thirty-seven-month term ending May 31, 2026. After payment of the deductible, the 20232026 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 forover the thirty-seven-monththirty-six termmonth 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, 2026.2029 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.

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 ismay 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.

During the thirteen-weektwenty-six-week period ended MarchJune 28,27, 2026, employee compensation and benefits accounted for approximately 66%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.

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 45%44% of the Company’s consolidated revenue in the thirteen-weektwenty-six-week period ended MarchJune 28,27, 2026 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 55%approximately 56% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.

The increase in operating income as a percentage of gross profit from the 2025 thirteen-weektwenty-six-week period to the 2026 thirteen-weektwenty-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 andto decreasedthe insurance2026 andthirteen-week claimsperiod costswas 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 thirteen-weektwenty-six-week period to the 2026 thirteen-weektwenty-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 decreasedadministrative 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.

THIRTEENTWENTY-SIX WEEKS ENDED MARCHJUNE 28,27, 2026 COMPARED TO THIRTEENTWENTY-SIX WEEKS ENDED MARCHJUNE 29,28, 2025 Revenue for the 2026 thirteen-weektwenty-six-week period was $1,171,291,000,$2,603,555,000, an increase of $18,789,000,$239,670,000, or 2%,10%, compared to the 2025 thirteen-weektwenty-six-week period. Transportation revenue increased $19,256,000,$240,334,000, or 2%.10%. The increase in transportation revenue was attributable to an increased revenue per load of approximately 4%,11%, while the number of loads hauledwas decreasedrelatively approximately 3%flat as compared to the 2025 thirteen-weektwenty-six-week period. Reinsurance premiums were $14,290,000$28,789,000 and $14,757,000$29,453,000 for the 2026 and 2025 thirteen-weektwenty-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 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-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 thirteen-weektwenty-six-week period was $1,082,281,000,$2,416,159,000, representing 92%93% of total revenue, an increase of $32,563,000,$248,303,000, or 3%,11%, compared to the 2025 thirteen-weektwenty-six-week period. Revenue per load on loads hauled by third party truck capacity providers increased approximately 6%12% in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-six-week period, while the number of loads hauled by third party truck capacity providers decreasedwas approximatelyrelatively 2%flat in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-six-week period.

The increase in revenue per load on loads hauled via truck was primarily due to increaseda 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 loads hauled via unsided/platform equipment, which was partially attributable to an increase in the percentage of revenue contributed by heavy/specialized equipment, which typically has a higher revenue per load than unsided/platformless-than-truckload loadings transportedincreased using standard flatbed and other less specialized pieces of platform equipment. During the 2026 thirteen-week period, revenue per load19%, on loads hauled via unsided/platform equipment increased 11%, on less-than-truckload loadings increased 8%16%, and on loads hauled via van equipment increased 5%,11%, while revenue per load on other truck transportation services decreased 11%,9%, in each case, as compared to the 2025 thirteen-weektwenty-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 $26,691,000$71,237,000 and $26,925,000$54,016,000 in the 2026 and 2025 thirteen-weektwenty-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 thirteen-weektwenty-six-week period was $67,283,000,$144,788,000, or 6% of total revenue, a decrease of $15,841,000,$11,153,000, or 19%,7%, compared to the 2025 thirteen-weektwenty-six-week period. The number of loads hauled by multimode capacity providers decreased approximately 13%5% in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-six-week period, and revenue per load on revenue generated by multimode capacity providers decreased approximately 7%2% over the same period. The decrease in the number of loads hauled by multimode capacity providers was due to a 31%19% decrease in ocean loadings and aan 12%8% decrease in air loadings, while rail loadings increased 7%.8%. The 31%19% decrease in ocean loadings was broad-based with decreases at several customers, which the Company partially attributes 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.customers. The 12%8% decrease in air loadings was primarily attributable to decreases at onetwo specific agency.agencies. The 7%8% increase in rail loadings was primarily attributable to increased loadings at one specific agency. Revenue per load on loads hauled via airocean decreased approximately 3%,1%, while oceanair and rail intermodal revenue per load increased approximately 4%23% and 3%,10%, respectively, during the 2026 thirteen-weektwenty-six-week period as compared to the 2025 thirteen-weektwenty-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 decreasesincreases at several specific customers during the 2026 thirteen-week period. The increase in revenue per load on loads hauled by ocean was primarily attributable to increases at several customers during the 2026 thirteen-weektwenty-six-week period. The increase in revenue per load on loads hauled by rail intermodal carriers was broad-basedattributable withto increases at multipleseveral specific customers during the 2026 thirteen-weektwenty-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 77.4%78.0% and 77.9%77.8% of revenue in the 2026 and 2025 thirteen-weektwenty-six-week periods, respectively. The decreaseincrease in purchased transportation as a percentage of revenue was primarily due to an increased percentage of revenue generated by BCO Independent Contractors, which typically has a lower rate of purchased transportation thanon revenue generated by Truck Brokerage Carriers.Carriers, partially offset by favorable mix. Commissions to agents were 7.9%7.7% and 8.1%8.2% of revenue in the 2026 and 2025 thirteen-weektwenty-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 $2,974,000$5,679,000 and $3,598,000$7,327,000 in the 2026 and 2025 thirteen-weektwenty-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 thirteen-weektwenty-six-week period and lower average rates of return on investments during the 2026 thirteen-weektwenty-six-week period.

Other operating costs increased $2,971,000$1,321,000 in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-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.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 decreasedincreased $4,288,000$4,622,000 in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-six-week period. The decreaseincrease in insurance and claims expense compared to the prior year was primarily due to decreasedincreased net unfavorable development of prior years’ claims in the 2026 thirteen-week period, partially offset by increased frequency of current year trucking claims during the 2026 thirteen-weektwenty-six-week period and increased BCO miles traveled during the 2026 thirteen-weektwenty-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 thirteen-weektwenty-six-week periods, insurance and claims costs included $4,888,000$15,393,000 and $11,352,000$13,641,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs decreasedincreased $617,000$11,870,000 in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-six-week period. The decreaseincrease in selling, general and administrative costs compared to prior year was primarily attributable to approximatelyincreased $4,800,000provisions offor incentive compensation and stock-based compensation expense relating to the supply chain fraud matter referenced above under “Expenses—Selling, general and administrative”increased inwages, thepartially 2025offset thirteen-week period andby a decreased provision for customer bad debt, almost entirely offset by an increased provision for incentive compensation and increased employee benefit costsdebt in the 2026 thirteen-weektwenty-six-week period. Included in selling, general and administrative costs was incentive compensation expense of $3,396,000$9,832,000 and $1,000,000,$1,950,000, respectively, and stock-based compensation expense of $5,420,000 and $3,657,000, respectively, for the 2026 and 2025 thirteen-weektwenty-six-week periods.

Depreciation and amortization decreased $1,666,000$3,406,000 in the 2026 thirteen-weektwenty-six-week period compared to the 2025 thirteen-weektwenty-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 thirteen-weektwenty-six-week period.

The year-over-prior-year change in interestInterest and debt expense (income)increased was $677,000, with net interest and debt expense of $518,000$791,000 in the 2026 thirteen-weektwenty-six-week period compared to net interest and debt income of $159,000 inthe 2025 thirteen-weektwenty-six-week period. The increase in interest and debt expense (income) 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-weektwenty-six-week periods were based on estimated annual effective income tax rates of 24.9%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-weektwenty-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 thirteen-weektwenty-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 $39,440,000,$88,391,000, or $1.16$2.60 per basic and diluted share, in the 2026 thirteen-weektwenty-six-week period. Net income was $29,806,000,$71,699,000, or $0.85$2.05 per basic and diluted share, in the 2025 thirteen-weektwenty-six-week period.

Working capital and the ratio of current assets to current liabilities were $552,881,000$597,123,000 and 1.91.8 to 1, respectively, at MarchJune 28,27, 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 $78,211,000$27,810,000 in the 2026 thirteen-weektwenty-six-week period compared with $55,698,000$62,836,000 in the 2025 thirteen-weektwenty-six-week period. The increasedecrease in cash flow provided by operating activities was primarily attributable to theunfavorable timingnet ofworking paymentscapital ofimpacts in connection with increased net receivables, defined as accounts payablereceivable andless accounts payable, partially offset by the impact of increased net income, partially offset by the timing of payments of insurance claims.income.

The Company declared and paid $0.40$0.80 per share, or $13,614,000$27,181,000 in the aggregate, in cash dividends during the thirteen-weektwenty-six-week period ended MarchJune 28,27, 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 $0.36$0.76 per share, or $12,688,000$26,604,000 in the aggregate, in cash dividends during the thirteen-weektwenty-six-week period ended MarchJune 29,28, 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 thirteen-weektwenty-six-week period ended MarchJune 28,27, 2026, the Company purchased 150,923 shares of its common stock at a total cost of $22,587,000,$22,563,000, including $22,387,000 in cash purchases and accrued excise tax of $200,000,$176,000, which is included in other current liabilities in the consolidated balance sheet at MarchJune 28,27, 2026. During the thirteen-week period ended March 29, 2025, theThe Company purchasedalso 386,318paid shares$1,762,000 ofin excise tax on its common stock at a total cost of $60,945,000, including $60,361,000 in cash purchases and accrued excise tax of $584,000,purchases, which was included in other current liabilities in the consolidated balance sheet at MarchDecember 29,27, 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 MarchJune 28,27, 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 $69,266,000$66,774,000 at MarchJune 28,27, 2026, $7,556,000$10,048,000 lower than at December 27, 2025.

Shareholders’ equity was $798,976,000,$836,730,000, or 92%93% of total capitalization (defined as long-term debt including current maturities plus equity), at MarchJune 28,27, 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, almost entirelypartially offset by dividends declared by the Company and purchases of shares of the Company’s common stock and dividends declared by the Company in the 2026 thirteen-weektwenty-six-week period.

On June 30, 2026, and as previously disclosed in a Form 8-K filed with the SEC on July 1,6, 2022,2026, Landstar entered into a secondthird amended and restated credit agreementagreement, dated June 30, 2026, with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (as further amended as of June 21, 2024, 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 JulyJune 1,30, 2027,2031, provides for borrowing capacity in the form of a revolving credit facility of $300,000,000, $45,000,000$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 providing for a possible increase ofpermitting up to an aggregateadditional amount$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 borrowingJune capacity27, of2026, $600,000,000.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 fixed chargeinterest 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 the Companymanagement 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 MarchJune 28,27, 2026, the Company had no borrowings outstanding and $34,916,000$34,886,000 of letters of credit outstanding under the Credit Agreement. At MarchJune 28,27, 2026, there was $265,084,000$265,114,000 available for future borrowings under the Credit Agreement and access to an additional $300,000,000$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 MarchJune 28,27, 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 thirteen-weektwenty-six-week period, the Company purchased $5,814,000$8,714,000 of operating property.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 $113,000,000$105,000,000 in operating property consisting primarily of new trailing equipment to replace older trailing equipment and information technology hardware and software.

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 thirteen-weektwenty-six-week periods, insurance and claims costs included $4,888,000$15,393,000 and $11,352,000$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 MarchJune 28,27, 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.