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Landstar System, Inc.$106.65$1.871.78%

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 Landstar System Reports Record Quarterly Revenue of $1.183 Billion and Record Second Quarter Diluted Earnings Per Share of $1.51
   Wednesday, July 25, 2018 4:15:00 PM ET

JACKSONVILLE, Fla., July 25, 2018 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ:LSTR) reported record quarterly revenue of $1.183 billion in the 2018 second quarter, a 36 percent increase over the $870 million revenue reported in the 2017 second quarter. Net income of $62.5 million and diluted earnings per share of $1.51 were each second quarter records and increased 67 percent and 70 percent, respectively, over net income and diluted earnings per share in the 2017 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 second quarter was $171.4 million, 29 percent above the 2017 second quarter, while 2018 second quarter operating income was $83.4 million, 37 percent above the 2017 second quarter. Gross profit and operating income in the 2018 second quarter were both all-time quarterly records.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 second quarter was $1.105 billion, or 93 percent of revenue, compared to $815.6 million, or 94 percent of revenue, in the 2017 second quarter. Truckload transportation revenue hauled via van equipment in the 2018 second quarter was $713.3 million compared to $509.1 million in the 2017 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 second quarter was $364.7 million compared to $283.5 million in the 2017 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $60.3 million, or 5 percent of revenue, in the 2018 second quarter compared to $43.1 million, or 5 percent of revenue, in the 2017 second quarter.

Landstar purchased approximately 986,000 shares of its common stock during the 2018 second quarter at an aggregate cost of approximately $104.0 million. Currently, the Company is authorized to purchase up to an additional 2,000,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of June 30, 2018, the Company had $189 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility.

In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.165 per share payable on August 31, 2018, to stockholders of record as of the close of business on August 13, 2018. This quarterly dividend includes a 10 percent increase to the amount of the Company’s regular quarterly dividend declared following each of the prior two quarters. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“I am extremely pleased with the financial performance of the Landstar model during the 2018 second quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 second quarter established all-time Landstar quarterly records for revenue, gross profit and operating income while diluted earnings per share was a second quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,155 as of the end of the quarter and net truck additions in a single quarter with the net addition of 287 trucks in the second quarter.”

Gattoni continued, “Demand for our services was strong throughout the 2018 first half. The number of loads hauled via truck in the 2018 second quarter was an all-time quarterly record and increased 11 percent over the 2017 second quarter, driven by a 13 percent increase in the number of loads hauled via van equipment, an 8 percent increase in the number of loads hauled via unsided/platform equipment and an 8 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 23 percent higher in the 2018 second quarter compared to the 2017 second quarter, primarily due to a 32 percent increase in rail intermodal volume.”

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 second quarter, as industry-wide truck capacity continued to be very tight. Revenue per load on loads hauled via van equipment increased 25 percent over the 2017 second quarter and revenue per load on loads hauled via unsided/platform equipment increased 19 percent over the 2017 second quarter. As a result, revenue per load on loads hauled via truck was 22 percent higher than the 2017 second quarter.”

Gattoni continued, “Through the first few weeks of July our truck load volumes continue to reflect strong demand. I expect that demand to continue through the 2018 third quarter and, therefore, expect the number of loads hauled via truck in the 2018 third quarter to approximate the number of loads hauled in the 2018 second quarter. My expectation is that pricing conditions for truck services in the 2018 third quarter will continue to be very strong with little change in the level of demand or available truck capacity. Assuming those conditions remain, I expect 2018 third quarter truck revenue per load to be higher than the 2017 third quarter in a 19 to 22 percent range.  I anticipate record revenue for the 2018 third quarter in a range of $1.175 billion to $1.225 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.5 percent of projected BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate record diluted earnings per share in the 2018 third quarter in a range of $1.58 to $1.64 per share compared to $1.01 per diluted share in the 2017 third quarter.”

Landstar will provide a live webcast of its quarterly earnings conference call tomorrow morning at 8:00 a.m. ET. To access the webcast, visit the Company’s website at www.landstar.com ; click on “Investor Relations” and “Webcasts,” then click on “Landstar’s Second Quarter 2018 Earnings Release Conference Call.”

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not based on historical facts are “forward-looking statements”. This press release contains 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: 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; decreased demand for transportation services; U.S. foreign trade relationships; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber and other information security incidents; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; regulations focused on diesel emissions and other air quality matters; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10K for the 2017 fiscal year, described in Item 1A Risk Factors, and in other SEC 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.

About Landstar:
Landstar System, Inc. is a worldwide, 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. Landstar transportation services companies are certified to ISO 9001:2015 quality management system standards and RC14001:2015 environmental, health, safety and security management system standards.  Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

(Tables follow)




Landstar System, Inc. and Subsidiary 
Consolidated Statements of Income 
(Dollars in thousands, except per share amounts) 
(Unaudited) 
              
              
      Twenty Six Weeks Ended Thirteen Weeks Ended 
      June 30, July 1, June 30, July 1, 
      2018  2017 2018  2017 
              
Revenue   $  2,230,712  $  1,651,342 $  1,182,786  $  870,434 
Investment income     1,752     1,022    891     608 
              
Costs and expenses:          
 Purchased transportation    1,727,237     1,263,111    916,940     667,588 
 Commissions to agents    176,524     134,080    94,399     70,282 
 Other operating costs, net of gains on asset sales/dispositions    15,210     14,400    7,606     7,503 
 Insurance and claims     38,899     28,406    21,539     13,893 
 Selling, general and administrative    94,249     79,184    48,998     40,861 
 Depreciation and amortization    21,766     19,831    10,769     9,897 
              
  Total costs and expenses    2,073,885     1,539,012    1,100,251     810,024 
              
Operating income     158,579     113,352    83,426     61,018 
Interest and debt expense     1,639     1,902    839     819 
              
Income before income taxes    156,940     111,450    82,587     60,199 
Income taxes      36,975     41,557    20,095     22,689 
              
Net income      119,965     69,893    62,492     37,510 
Less: Net loss attributable to noncontrolling interest    (75)    -    (31)    - 
Net income attributable to Landstar System,         
 Inc. and subsidiary  $  120,040  $  69,893 $  62,523  $  37,510 
              
Earnings per common share attributable to         
 Landstar System, Inc. and subsidiary $  2.88  $  1.67 $  1.51  $  0.89 
              
Diluted earnings per share attributable to         
 Landstar System, Inc. and subsidiary $  2.87  $  1.66 $  1.51  $  0.89 
              
Average number of shares outstanding:         
 Earnings per common share     41,744,000     41,907,000    41,450,000     41,935,000 
 Diluted earnings per share    41,795,000     42,004,000    41,491,000     42,010,000 
              
Dividends per common share $  0.30  $  0.18 $  0.15  $  0.09 
              


Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
          
          
       June 30, December 30,
       2018  2017 
ASSETS      
Current assets:      
 Cash and cash equivalents  $  148,641  $  242,416 
 Short-term investments     40,323     48,928 
 Trade accounts receivable, less allowance   
  of $6,549 and $6,131     688,961     631,164 
 Other receivables, including advances to independent   
  contractors, less allowance of $6,495 and $6,012   20,737     24,301 
 Other current assets     29,553     14,394 
  Total current assets     928,215     961,203 
          
Operating property, less accumulated depreciation   
  and amortization of $232,760 and $218,700   256,096     276,011 
Goodwill       38,704     39,065 
Other assets      85,880     76,181 
Total assets   $  1,308,895  $  1,352,460 
          
LIABILITIES AND EQUITY     
Current liabilities:      
 Cash overdraft   $  45,365  $  42,242 
 Accounts payable     311,768     285,132 
 Current maturities of long-term debt    38,869     42,051 
 Insurance claims     42,546     38,919 
 Dividends payable     -      62,985 
 Accrued compensation     19,041     30,103 
 Other current liabilities     51,285     47,211 
  Total current liabilities     508,874     548,643 
          
Long-term debt, excluding current maturities   65,093     83,062 
Insurance claims      30,205     30,141 
Deferred income taxes and other non-current liabilities   43,790     36,737 
          
Equity       
Landstar System, Inc. and subsidiary shareholders' equity   
 Common stock, $0.01 par value, authorized 160,000,000   
  shares, issued 67,847,692 and 67,740,380 shares   678     677 
 Additional paid-in capital     216,328     209,599 
 Retained earnings     1,719,475     1,611,158 
 Cost of 26,754,810 and 25,749,493 shares of common   
  stock in treasury     (1,273,489)    (1,167,600)
 Accumulated other comprehensive loss   (5,284)    (3,162)
  Total Landstar System, Inc. and subsidiary shareholders'   
   equity      657,708     650,672 
Noncontrolling interest     3,225     3,205 
  Total equity      660,933     653,877 
Total liabilities and equity  $  1,308,895  $  1,352,460 
          


 Landstar System, Inc. and Subsidiary
 Supplemental Information
 (Unaudited)
              
              
     Twenty Six Weeks Ended  Thirteen Weeks Ended 
     June 30, July 1,  June 30, July 1, 
     2018  2017   2018  2017  
Revenue generated through (in thousands):          
              
 Truck transportation          
  Truckload:          
   Van equipment $  1,369,476  $  978,918   $  713,341  $  509,135  
   Unsided/platform equipment    664,045     520,658      364,676     283,481  
  Less-than-truckload    50,948     42,799      27,364     22,942  
   Total truck transportation    2,084,469     1,542,375      1,105,381     815,558  
 Rail intermodal    61,587     44,357      32,295     21,515  
 Ocean and air cargo carriers    51,506     41,185      28,029     21,595  
 Other (1)     33,150     23,425      17,081     11,766  
     $  2,230,712  $  1,651,342   $  1,182,786  $  870,434  
              
 Revenue on loads hauled via BCO Independent Contractors (2)          
  included in total truck transportation $  998,953  $  776,085   $  527,803  $  411,177  
              
Number of loads:          
              
 Truck transportation          
  Truckload:          
   Van equipment  691,866   613,565    354,947   315,499  
   Unsided/platform equipment  255,334   236,427    135,543   125,242  
  Less-than-truckload  70,670   64,508    37,250   34,589  
   Total truck transportation  1,017,870   914,500    527,740   475,330  
 Rail intermodal  26,840   20,960    13,560   10,310  
 Ocean and air cargo carriers  13,030   11,940    6,700   6,210  
      1,057,740   947,400    548,000   491,850  
              
 Loads hauled via BCO Independent Contractors (2)          
  included in total truck transportation  480,890   453,860    247,710   235,630  
              
Revenue per load:          
              
 Truck transportation          
  Truckload:          
   Van equipment $  1,979  $  1,595   $  2,010  $  1,614  
   Unsided/platform equipment    2,601     2,202      2,690     2,263  
  Less-than-truckload    721     663      735     663  
   Total truck transportation    2,048     1,687      2,095     1,716  
 Rail intermodal    2,295     2,116      2,382     2,087  
 Ocean and air cargo carriers    3,953     3,449      4,183     3,477  
              
 Revenue per load on loads hauled via BCO Independent Contractors (2) $  2,077  $  1,710   $  2,131  $  1,745  
              
Revenue by capacity type (as a % of total revenue);          
              
 Truck capacity providers:          
  BCO Independent Contractors (2)  45%  47%   45%  47% 
  Truck Brokerage Carriers  49%  46%   49%  46% 
 Rail intermodal  3%  3%   3%  2% 
 Ocean and air cargo carriers  2%  2%   2%  2% 
 Other   1%  1%   1%  1% 
              
          June 30, July 1, 
           2018   2017  
Truck Capacity Providers          
              
 BCO Independent Contractors (2)         9,501     8,818  
 Truck Brokerage Carriers:          
 Approved and active (3)         37,045     31,636  
 Other approved         15,406     15,381  
             52,451     47,017  
 Total available truck capacity providers         61,952     55,835  
              
 Trucks provided by BCO Independent Contractors (2)         10,155     9,404  
              
(1) Includes primarily reinsurance premium revenue generated by the insurance segment and, during the 2018 fiscal year and quarter, intra-Mexico transportation
  services revenue generated by Landstar Metro.          
              
(2) BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.  
              
(3) Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end.   


Contact:  Kevin Stout
Landstar System, Inc.
www.landstar.com
904-398-9400

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Source: Landstar System, Inc.


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