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CST: 22/05/2019 20:00:26   

Landstar System Reports First Quarter Revenue of $1.033 Billion and Record First Quarter Diluted Earnings Per Share of $1.58

28 Days ago

JACKSONVILLE, Fla., April 24, 2019 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported record first quarter diluted earnings per share of $1.58 in the 2019 first quarter, on first quarter revenue of $1.033 billion. Landstar reported diluted earnings per share of $1.37 on revenue of $1.048 billion in the 2018 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $155.6 million, a record first quarter gross profit, in the 2019 first quarter compared to $155.5 million in the 2018 first quarter. Operating margin, representing operating income divided by gross profit, was 52.0 percent in the 2019 first quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2019 first quarter was $953.1 million, or 92 percent of revenue, compared to $979.1 million, or 93 percent of revenue, in the 2018 first quarter. Truckload transportation revenue hauled via van equipment in the 2019 first quarter was $619.0 million compared to $656.1 million in the 2018 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2019 first quarter was $310.7 million compared to $299.4 million in the 2018 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $60.7 million, or 6 percent of revenue, in the 2019 first quarter compared to $52.8 million, or 5 percent of revenue, in the 2018 first quarter.

Trailing twelve-month return on average shareholders’ equity was 37 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 32 percent. Landstar purchased 124,481 shares of its common stock during the 2019 first quarter at an aggregate cost of approximately $13.0 million. Currently, the Company is authorized to purchase up to approximately 1,876,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of March 30, 2019, the Company had $305 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility. Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.165 per share payable on May 31, 2019, to stockholders of record as of the close of business on May 9, 2019.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“I am pleased with Landstar’s financial performance during the 2019 first quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “We began the quarter facing very difficult year over year comparisons plus decelerating rates of growth in both truck revenue per load and truck loadings that began in late 2018. Truck capacity became more readily available at the end of 2018 and that market condition carried through the 2019 first quarter putting additional pressure on rates. Landstar performed very well during the 2019 first quarter given the softening environment. Diluted earnings per share was $1.58 in the 2019 first quarter, the highest first quarter diluted earnings per share in Landstar history. Gross profit, operating income and the number of loads hauled via truck each also set new all-time Landstar first quarter records. The Company set a new all-time record for trucks provided by BCOs with 10,637 as of the end of the quarter.”

Gattoni continued, “The number of loads hauled via truck was higher than any first quarter in Landstar history. Given the freight environment during the quarter, I am pleased with the increase in truckload volumes. The number of loads hauled via truck in the 2019 first quarter increased 2 percent over the 2018 first quarter, driven by a 1 percent increase in the number of loads hauled via van equipment, a 4 percent increase in the number of loads hauled via unsided/platform equipment and a 6 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 2 percent higher in the 2019 first quarter compared to the 2018 first quarter.”

Gattoni further commented, “As expected, the pricing environment for our truck services softened in the 2019 first quarter, as industry-wide truck capacity was more readily available than during the 2018 first quarter. The Company’s guidance issued on January 30, 2019 called for a decrease in revenue per load on loads hauled via truck in a low single-digit percentage range from the 2018 first quarter. Revenue per load on loads hauled via van equipment decreased 7 percent from the 2018 first quarter and revenue per load on loads hauled via unsided/platform equipment decreased 1 percent from the 2018 first quarter. As a result, revenue per load on loads hauled via truck was 5 percent lower than the 2018 first quarter.”

Gattoni continued, “Through the first few weeks of April, the number of loads hauled via truck was consistent with the volumes experienced in the corresponding period of 2018. I expect that trend to continue during the remainder of the 2019 second quarter.  Accordingly, I expect the number of loads hauled via truck in the 2019 second quarter to approximate the number of loads hauled by truck in the 2018 second quarter. My expectation is that pricing conditions for truck services in the 2019 second quarter will continue to come under pressure with little change in the level of truck capacity available in the marketplace. Assuming those capacity market conditions continue throughout the rest of the second quarter, I expect 2019 second quarter truck revenue per load to be lower than the 2018 second quarter in a high single-digit percentage range. I anticipate revenue for the 2019 second quarter to be in a range of $1.075 billion to $1.125 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.6 percent of BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate 2019 second quarter diluted earnings per share to be in a range of $1.56 to $1.62 per share compared to $1.51 per diluted share in the 2018 second 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 First Quarter 2019 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 2018 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)  
                   
                   
            Thirteen Weeks Ended  
            March 30,   March 31,  
              2019       2018    
                   
Revenue       $   1,033,000     $   1,047,926    
Investment income         1,138         861    
                   
Costs and expenses:            
  Purchased transportation       791,755         810,297    
  Commissions to agents       85,671         82,125    
  Other operating costs, net of gains on asset sales/dispositions       8,239         7,604    
  Insurance and claims         14,993         17,360    
  Selling, general and administrative       41,268         45,251    
  Depreciation and amortization       11,316         10,997    
                   
    Total costs and expenses       953,242         973,634    
                   
Operating income         80,896         75,153    
Interest and debt expense         805         800    
                   
Income before income taxes       80,091         74,353    
Income taxes            16,791         16,880    
                   
Net income           63,300         57,473    
Less: Net loss attributable to noncontrolling interest       (17 )       (44 )  
Net income attributable to Landstar System,          
  Inc. and subsidiary     $   63,317     $   57,517    
                   
Earnings per common share attributable to          
  Landstar System, Inc. and subsidiary   $   1.58     $   1.37    
                   
Diluted earnings per share attributable to           
  Landstar System, Inc. and subsidiary   $   1.58     $   1.37    
                   
Average number of shares outstanding:          
  Earnings per common share        40,161,000         42,038,000    
  Diluted earnings per share       40,166,000         42,098,000    
                   
Dividends per common share   $   0.165     $   0.150    
                   

 

Landstar System, Inc. and Subsidiary  
Consolidated Balance Sheets  
(Dollars in thousands, except per share amounts)  
(Unaudited)  
                     
                     
              March 30,   December 29,  
                2019       2018    
ASSETS              
Current assets:              
  Cash and cash equivalents     $   264,625     $   199,736    
  Short-term investments         39,958         40,058    
  Trade accounts receivable, less allowance        
    of $7,144 and $6,413         601,128         691,604    
  Other receivables, including advances to independent        
    contractors, less allowance of $6,907 and $6,216     27,565         23,744    
  Other current assets         10,919         16,287    
    Total current assets         944,195         971,429    
                     
Operating property, less accumulated depreciation        
     and amortization of $256,707 and $250,153     276,193         284,032    
Goodwill             38,343         38,232    
Other assets           92,208         86,871    
Total assets       $   1,350,939     $   1,380,564    
                     
LIABILITIES AND EQUITY            
Current liabilities:              
  Cash overdraft       $   41,519     $   55,339    
  Accounts payable         273,181         314,134    
  Current maturities of long-term debt       41,184         43,561    
  Insurance claims         40,270         40,176    
  Accrued compensation         9,647         29,489    
  Contractor escrow         25,383         25,202    
  Other current liabilities         42,060         27,917    
    Total current liabilities         473,244         535,818    
                     
Long-term debt, excluding current maturities     75,246         84,864    
Insurance claims           29,776         30,429    
Deferred income taxes and other non-current liabilities     44,413         40,320    
                     
Equity                
Landstar System, Inc. and subsidiary shareholders' equity        
  Common stock, $0.01 par value, authorized 160,000,000         
    shares, issued 68,047,041 and 67,870,962 shares     680         679    
  Additional paid-in capital         223,551         226,852    
  Retained earnings         1,897,967         1,841,279    
  Cost of 27,884,681 and 27,755,001 shares of common        
    stock in treasury         (1,389,612 )       (1,376,111 )  
  Accumulated other comprehensive loss     (4,326 )       (5,875 )  
    Total Landstar System, Inc. and subsidiary shareholders'        
     equity           728,260         686,824    
Noncontrolling interest         -          2,309    
    Total equity           728,260         689,133    
Total liabilities and equity      $   1,350,939     $   1,380,564    
                     

 

  Landstar System, Inc. and Subsidiary
  Supplemental Information
  (Unaudited)
               
               
          Thirteen Weeks Ended
          March 30,   March 31,
            2019       2018  
Revenue generated through (in thousands):        
               
  Truck transportation        
  Truckload:        
   Van equipment   $   619,014     $   656,135  
   Unsided/platform equipment       310,721         299,369  
   Less-than-truckload       23,376         23,584  
   Total truck transportation       953,111         979,088  
  Rail intermodal       30,015         29,292  
  Ocean and air cargo carriers       30,669         23,477  
  Other (1)        19,205         16,069  
          $   1,033,000     $   1,047,926  
               
  Revenue on loads hauled via BCO Independent Contractors (2)        
   included in total truck transportation   $   449,308     $   471,150  
               
Number of loads:        
               
  Truck transportation        
   Truckload:        
   Van equipment     341,821       336,919  
   Unsided/platform equipment     125,170       119,791  
   Less-than-truckload     35,309       33,420  
   Total truck transportation     502,300       490,130  
  Rail intermodal     12,460       13,280  
  Ocean and air cargo carriers     7,510       6,330  
            522,270       509,740  
               
  Loads hauled via BCO Independent Contractors (2)        
   included in total truck transportation     234,850       233,180  
               
Revenue per load:        
               
  Truck transportation        
   Truckload:        
   Van equipment   $   1,811     $   1,947  
   Unsided/platform equipment       2,482         2,499  
   Less-than-truckload       662         706  
   Total truck transportation       1,897         1,998  
  Rail intermodal       2,409         2,206  
  Ocean and air cargo carriers       4,084         3,709  
               
  Revenue per load on loads hauled via BCO Independent Contractors (2) $   1,913     $   2,021  
               
Revenue by capacity type (as a % of total revenue);        
               
  Truck capacity providers:        
   BCO Independent Contractors (2)     43 %     45 %
   Truck Brokerage Carriers     49 %     48 %
  Rail intermodal     3 %     3 %
  Ocean and air cargo carriers     3 %     2 %
  Other       2 %     2 %
               
               
          March 30,   March 31,
            2019       2018  
Truck Capacity Providers        
               
  BCO Independent Contractors (2)       9,911         9,243  
  Truck Brokerage Carriers:        
  Approved and active (3)       40,404         34,659  
  Other approved       18,659         15,687  
              59,063         50,346  
  Total available truck capacity providers       68,974         59,589  
               
  Trucks provided by BCO Independent Contractors (2)       10,637         9,868  
               
               
(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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