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CST: 19/02/2019 13:12:31   

Landstar System Reports Record Fourth Quarter Revenue of $1.182 Billion and All-Time Quarterly Record Diluted Earnings Per Share of $1.68

19 Days ago

JACKSONVILLE, Fla., Jan. 30, 2019 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported record fourth quarter revenue of $1.182 billion in the 2018 fourth quarter, a 12 percent increase over revenue of $1.052 billion reported in the 2017 fourth quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 fourth quarter was $168.9 million, 13 percent above the 2017 fourth quarter, while 2018 fourth quarter operating income was $86.1 million, 23 percent above the 2017 fourth quarter. Operating income and gross profit in the 2018 fourth quarter were also each fourth quarter records.

Income before income taxes of $85.2 million was a fourth quarter record and increased approximately 23 percent over the 2017 fourth quarter. Diluted earnings per share in the 2018 fourth quarter was $1.68, an all-time quarterly record, compared to $1.54 in the 2017 fourth quarter.  Quarter over prior year quarter comparisons of net income and diluted earnings per share for the 2018 and 2017 fourth quarters as reported are not meaningful, mostly due to the effect of the enactment of the Tax Cuts and Jobs Act in December 2017. Net income and diluted earnings per share in the 2018 and 2017 fourth quarters were both favorably impacted by the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 35 percent to 21 percent effective for fiscal 2018, and various other tax items. The Company had previously estimated that its annual effective income tax rate would be 24.5 percent in fiscal year 2018 and 37.8 percent in fiscal year 2017. However, the Company’s actual effective income tax rates in the 2018 and 2017 fourth quarters were 19.8 percent and 6.9 percent, respectively. Of most significance in driving this decrease, were one-time tax benefits of approximately $19.5 million included in net income in the 2017 fourth quarter, or $0.46 per diluted share, related to the Company’s reasonable estimate of the change in future tax rates on net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act in December 2017.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 fourth quarter was $1.078 billion, or 91 percent of revenue, compared to $967.5 million, or 92 percent of revenue, in the 2017 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2018 fourth quarter was $705.0 million compared to $634.4 million in the 2017 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 fourth quarter was $346.6 million compared to $309.5 million in the 2017 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $84.8 million, or 7 percent of revenue, in the 2018 fourth quarter compared to $68.0 million, or 6 percent of revenue, in the 2017 fourth quarter.

Landstar purchased 1,000,000 shares of its common stock during the 2018 fourth quarter at an aggregate cost of approximately $102.6 million. Landstar purchased 2,000,000 shares of its common stock during fiscal year 2018 at an aggregate cost of approximately $208.1 million. On January 23, 2019, the Board of Directors authorized the Company to purchase up to 1,000,000 additional shares of its common stock, par value $0.01 per share, from time to time in the open market and in privately negotiated transactions under its existing share purchase program. Currently, Landstar is authorized to purchase up to a total of 2,000,000 shares of the Company’s common stock under its share purchase program. In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.165 per share payable on March 15, 2019, to stockholders of record as of the close of business on February 18, 2019. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.  As of December 29, 2018, the Company had $240 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility.

“I am very pleased with Landstar’s financial performance during the 2018 fourth quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 fourth quarter established fourth quarter records for revenue, gross profit and operating income, while diluted earnings per share was an all-time quarterly record. The Company also set a new all-time Landstar record for trucks provided by BCOs with 10,599 as of the end of the quarter.”

Gattoni continued, “Demand for our services continued to be strong in the 2018 fourth quarter. The number of loads hauled via truck was a fourth quarter record and increased 4 percent over a very robust 2017 fourth quarter, driven by a 4 percent increase in the number of loads hauled via van equipment, a 3 percent increase in the number of loads hauled via unsided/platform equipment and a 13 percent increase in less-than-truckload volume. The deceleration in the year-over-year percentage growth rate in truck volumes for the 2018 fourth quarter compared to that experienced in the first three quarters of 2018 was mostly due to seasonal softness in the fourth quarter of 2018, as sequential growth was below recent historical trends.”

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be strong during the 2018 fourth quarter.  Similar to truck volumes, however, we experienced a decelerating percentage growth rate in revenue per load on a year-over-year basis compared to the growth rates experienced in the first three quarters of 2018. The price deceleration was due to a much tougher year-over-year comparison applicable to the 2018 fourth quarter and seasonal softness that began at the end of the 2018 third quarter. Revenue per load on loads hauled via van equipment increased 7 percent over the 2017 fourth quarter and revenue per load on loads hauled via unsided/platform equipment increased 9 percent over the 2017 fourth quarter. As a result, revenue per load on loads hauled via truck was 7 percent higher than the 2017 fourth quarter.”

Gattoni continued, “Landstar’s financial performance in fiscal year 2018 was by far the best in the Company’s history. Landstar set many annual financial and operational high water marks in 2018, including revenue, gross profit, operating income, net income, diluted earnings per share, truck loads and year end truck count provided by BCOs. Revenue in fiscal 2018 was approximately $4.6 billion, an annual record, and was approximately $969 million higher than the previous record set in 2017. Gross profit in 2018 was $667 million, also an annual record. Record revenue and gross profit in 2018 was provided on the strength of approximately 2,060,000 loads hauled via truck capacity, the highest number of loads hauled via truck in any year in Landstar history. Operating income in 2018 was an annual record of $332 million and represented year-over-year growth of 36 percent. Diluted earnings per share in 2018 was an annual record of $6.18. These 2018 achievements speak to the strength and depth of the Landstar network and our ability to execute.  I am extremely pleased by our continued organic load volume growth and our ability to attract productive agents and capacity to the network.”

Gattoni further commented, “With respect to near term performance, during the first four weeks of 2019, year-over-year growth in the number of loads hauled via truck is trending slightly higher than the comparable period of 2018. As such, I expect loads hauled via truck in the 2019 first quarter to grow in a low single-digit percentage range over the 2018 first quarter. As it pertains to revenue per load on loads hauled via truck, the 2018 first quarter was one of very few first quarters in Landstar history that experienced an increase in truck revenue per load from the preceding fourth quarter. In the four years prior to 2018, truck revenue per load decreased seasonally on average 7 percent from the fourth quarter to the immediately following first quarter. We expect a more normal seasonal trend in the 2019 first quarter as rates appear to have stabilized through the first four weeks of January. As such, I expect revenue per load on loads hauled via truck in the 2019 first quarter to decrease in a low single-digit percentage range from the 2018 first quarter. Assuming the current environment continues throughout the 2019 first quarter, I anticipate revenue for the 2019 first quarter to be in a range of $1.025 billion to $1.075 billion. Assuming that range of estimated revenue, I would anticipate 2019 first quarter diluted earnings per share to be in a range of $1.51 to $1.57 per share. This estimated range of diluted earnings per share assumes insurance and claims costs at 3.6 percent of BCO revenue, representing the historical annual average of insurance and claims costs to BCO revenue over the preceding five years, and an effective income tax rate of approximately 21.1 percent, which represents the Company’s annual estimated effective income tax rate of 24.2 percent, net of a discrete item related to equity compensation specific to the 2019 first 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 Fourth 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)
                     
                     
        Fiscal Years Ended   Fiscal Quarters Ended
        December 29,   December 30,   December 29,   December 30,
        2018   2017   2018   2017
                     
Revenue   $ 4,615,144     $ 3,646,364     $ 1,182,351   $ 1,051,592  
Investment income     3,816       2,498       1,062     765  
                     
Costs and expenses:                
  Purchased transportation     3,569,961       2,805,109       911,251     815,171  
  Commissions to agents     378,002       297,410       102,174     86,732  
  Other operating costs, net of gains/losses on asset sales/dispositions     31,803       28,687       7,627     6,190  
  Insurance and claims     75,677       62,545       17,959     16,212  
  Selling, general and administrative     188,212       170,583       47,264     47,404  
  Depreciation and amortization     43,570       40,560       11,050     10,599  
                     
    Total costs and expenses     4,287,225       3,404,894       1,097,325     982,308  
                     
Operating income     331,735       243,968       86,088     70,049  
Interest and debt expense     3,354       3,166       899     607  
                     
Income before income taxes     328,381       240,802       85,189     69,442  
Income taxes     73,168       63,806       16,889     4,759  
                     
Net income     255,213       176,996       68,300     64,683  
Less: Net loss/income attributable to noncontrolling interest     (68 )     (92 )     44     (69 )
Net income attributable to Landstar System,                
  Inc. and subsidiary   $ 255,281     $ 177,088     $ 68,256   $ 64,752  
                     
Earnings per common share attributable to                
  Landstar System, Inc. and subsidiary   $ 6.19     $ 4.22     $ 1.69   $ 1.54  
                     
Diluted earnings per share attributable to                
  Landstar System, Inc. and subsidiary   $ 6.18     $ 4.21     $ 1.68   $ 1.54  
                     
Average number of shares outstanding:                
  Earnings per common share     41,273,000       41,938,000       40,501,000     41,981,000  
  Diluted earnings per share     41,310,000       42,024,000       40,514,000     42,054,000  
                     
Dividends per common share   $ 0.630     $ 1.880     $ 0.165   $ 1.600  
                     

 

             
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
             
             
        December 29,   December 30,
        2018   2017
ASSETS      
Current assets:      
  Cash and cash equivalents $ 199,736     $ 242,416  
  Short-term investments   40,058       48,928  
  Trade accounts receivable, less allowance      
    of $6,413 and $6,131   691,604       631,164  
  Other receivables, including advances to independent      
    contractors, less allowance of $6,216 and $6,012   23,744       24,301  
  Other current assets   16,287       14,394  
    Total current assets   971,429       961,203  
             
Operating property, less accumulated depreciation      
      and amortization of $250,153 and $218,700   284,032       276,011  
Goodwill     38,232       39,065  
Other assets   86,871       76,181  
Total assets $ 1,380,564     $ 1,352,460  
             
LIABILITIES AND EQUITY      
Current liabilities:      
  Cash overdraft $ 55,339     $ 42,242  
  Accounts payable   314,134       285,132  
  Current maturities of long-term debt   43,561       42,051  
  Insurance claims   40,176       38,919  
  Dividends payable   -       62,985  
  Accrued compensation   29,489       30,103  
  Other current liabilities   53,119       47,211  
    Total current liabilities   535,818       548,643  
             
Long-term debt, excluding current maturities   84,864       83,062  
Insurance claims   30,429       30,141  
Deferred income taxes and other non-current liabilities   40,320       36,737  
             
Equity        
Landstar System, Inc. and subsidiary shareholders' equity      
  Common stock, $0.01 par value, authorized 160,000,000      
    shares, issued 67,870,962 and 67,740,380 shares   679       677  
  Additional paid-in capital   226,852       209,599  
  Retained earnings   1,841,279       1,611,158  
  Cost of 27,755,001 and 25,749,493 shares of common      
    stock in treasury   (1,376,111 )     (1,167,600 )
  Accumulated other comprehensive loss   (5,875 )     (3,162 )
    Total Landstar System, Inc. and subsidiary shareholders'      
      equity   686,824       650,672  
Noncontrolling interest   2,309       3,205  
    Total equity   689,133       653,877  
Total liabilities and equity $ 1,380,564     $ 1,352,460  
             

 

   
  Landstar System, Inc. and Subsidiary
  Supplemental Information
  (Unaudited)
                         
                         
          Fiscal Years Ended     Fiscal Quarters Ended
          December 29,   December 30,     December 29,   December 30,
          2018   2017     2018   2017
Revenue generated through (in thousands):                  
                         
  Truck transportation                  
    Truckload:                  
      Van equipment   $ 2,791,494     $ 2,163,832       $ 704,971     $ 634,430  
      Unsided/platform equipment     1,386,387       1,134,660         346,603       309,466  
    Less-than-truckload     102,531       89,041         26,083       23,644  
      Total truck transportation     4,280,412       3,387,533         1,077,657       967,540  
  Rail intermodal     128,976       96,416         32,950       27,846  
  Ocean and air cargo carriers     134,577       110,898         51,858       40,190  
  Other (1)     71,179       51,517         19,886       16,016  
          $ 4,615,144     $ 3,646,364       $ 1,182,351     $ 1,051,592  
                         
  Revenue on loads hauled via BCO Independent Contractors (2)                  
    included in total truck transportation   $ 2,001,665     $ 1,655,026       $ 482,321     $ 443,462  
                         
Number of loads:                  
                         
  Truck transportation                  
    Truckload:                  
      Van equipment     1,398,388       1,282,632         353,066       339,738  
      Unsided/platform equipment     516,613       487,652         127,854       124,716  
    Less-than-truckload     145,269       132,776         38,630       34,036  
      Total truck transportation     2,060,270       1,903,060         519,550       498,490  
  Rail intermodal     53,030       45,000         12,770       12,960  
  Ocean and air cargo carriers     28,970       25,420         7,720       7,270  
            2,142,270       1,973,480         540,040       518,720  
                         
  Loads hauled via BCO Independent Contractors (2)                  
    included in total truck transportation     949,330       916,190         231,860       229,360  
                         
Revenue per load:                  
                         
  Truck transportation                  
    Truckload:                  
      Van equipment   $ 1,996     $ 1,687       $ 1,997     $ 1,867  
      Unsided/platform equipment     2,684       2,327         2,711       2,481  
    Less-than-truckload     706       671         675       695  
      Total truck transportation     2,078       1,780         2,074       1,941  
  Rail intermodal     2,432       2,143         2,580       2,149  
  Ocean and air cargo carriers     4,645       4,363         6,717       5,528  
                         
  Revenue per load on loads hauled via BCO Independent Contractors (2) $ 2,109     $ 1,806       $ 2,080     $ 1,933  
                         
Revenue by capacity type (as a % of total revenue);                  
                         
  Truck capacity providers:                  
    BCO Independent Contractors (2)     43 %     45 %       41 %     42 %
    Truck Brokerage Carriers     49 %     48 %       50 %     50 %
  Rail intermodal     3 %     3 %       3 %     3 %
  Ocean and air cargo carriers     3 %     3 %       4 %     4 %
  Other       2 %     1 %       2 %     2 %
                         
                         
                    December 29,   December 30,
                    2018   2017
Truck Capacity Providers                  
                         
  BCO Independent Contractors (2)               9,884       9,087  
  Truck Brokerage Carriers:                  
    Approved and active (3)               41,069       34,243  
    Other approved               17,985       15,691  
                      59,054       49,934  
  Total available truck capacity providers               68,938       59,021  
                         
  Trucks provided by BCO Independent Contractors (2)               10,599       9,696  
                         
                         
(1) Includes primarily reinsurance premium revenue generated by the insurance segment and 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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