Landstar System, Inc. (LSTR) Cash Flow Statement

The ratio ranged from roughly 0.2x to above 4x across the ten quarters, which suggests that reported net income is not a reliable proxy for cash generation in any single period. The 2026Q2 quarter, where operating cash flow turned to -$50.4M against $49.0M of net income, appears to reflect a working capital build rather than an operating deterioration. Investors should monitor whether this conversion pattern normalizes over a full cycle before drawing conclusions about earnings quality.

The magnitude of these swings relative to quarterly net income suggests that collections timing, and possibly agent settlement cycles, materially influence reported operating cash flow. The swing from a large outflow to inflow within two quarters may point to a receivables build that later reversed, though the data does not isolate the components. This pattern warrants further investigation into receivables aging and agent payment terms before inferring any change in collection efficiency.

Capital expenditure consumed only 0.2% to 0.6% of revenue across the period, so free cash flow is driven almost entirely by operating cash flow and working capital movements rather than investment intensity. Because the asset-light model requires little capital, the free cash flow margin tracks the operating conversion pattern closely. The thin and volatile margin suggests limited cushion in quarters where working capital absorbs cash.

Over the ten quarters, dividend and buyback outflows frequently exceeded free cash flow in the same period, with 2026Q1 combined returns of roughly $104M against free cash flow of $72.4M. Funding these distributions from the company's cash balance rather than current earnings is consistent with a conservative, low-leverage posture, though it reduces the cash cushion over time. Investors should monitor whether sustained returns above free cash flow are sustainable through the next freight downturn.