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Logistics firm Landstar System (LSTR -3.44%) faced scrutiny from investors as the trading week drew to a close, with its stock price falling nearly 4% on news of a reporting delay. This decline stood out starkly against a backdrop of positive market performance, as the benchmark S&P 500 index rose by 0.6% on the same day.
A concerning postponement
On that Friday morning, Landstar announced a significant change to its financial reporting schedule. The earnings report for the first quarter, which was initially slated for release on April 29, has been rescheduled to May 13, also a Tuesday. The company intends to formally notify the U.S. Securities and Exchange Commission (SEC) about this late filing.
In its press release, Landstar revealed that the cause for the delay stemmed from the identification of a supply chain fraud. Notably, this issue does not pertain to its primary North American truckload services. However, the company provided limited details on this troubling situation, indicating that they needed to assess its implications further.
Landstar mentioned that the impact on its financial fundamentals would be significant but is projected to be contained to a maximum of $15 million in net income losses, translating to approximately $0.43 per share.
Demand for clarity
As an interim measure, Landstar released some preliminary figures for the quarter. Total revenue exceeded $1.15 billion, and earnings per share, excluding the fraud fallout, were reported at $0.95. Both results were close to the upper limits of the company’s earlier guidance.
While it is somewhat reassuring that Landstar remains profitable, the implication of fraud raises valid concerns among investors. Stakeholders will be eager for a comprehensive explanation once the first-quarter results are ultimately disclosed, and a series of challenging inquiries are anticipated during the upcoming conference call designed to discuss these outcomes.
Source
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