UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 1, 2017
LANDSTAR SYSTEM, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 021238 | 06-1313069 | ||
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||
| of incorporation) | File Number) | Identification No.) | ||
| 13410 Sutton Park Drive South, Jacksonville, Florida | 32224 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(904) 398-9400
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
On February 1, 2017, Landstar System, Inc. issued a press release announcing results for the fourth quarter of fiscal 2016. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in Item 7.01 concerning the presentation to Landstar investors is hereby incorporated into this Item 2.02 by reference.
The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
| Item 7.01 | Regulation FD Disclosure |
A slide presentation, dated February 1, 2017, is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The slide presentation provides information that may be referred to by the Company on its conference call with investors scheduled to occur on February 2, 2017 in connection with the Company’s release of results for the fourth quarter of fiscal 2016.
The information furnished under Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
| Item 9.01 | Financial Statements and Exhibits |
Exhibits
| 99.1 | News Release dated February 1, 2017 of Landstar System, Inc. | |
| 99.2 | Slide Presentation dated February 1, 2017 of Landstar System, Inc. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LANDSTAR SYSTEM, INC. | ||||||
| Date: February 1, 2017 | By: | /s/ L. Kevin Stout | ||||
| Name: | L. Kevin Stout | |||||
| Title: | Vice President and Chief Financial Officer | |||||
Exhibit 99.1
| For Immediate Release | Contact: Kevin Stout | |
| Landstar System, Inc. | ||
| www.landstar.com | ||
| February 1, 2017 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS RECORD QUARTERLY REVENUE
OF $893 MILLION AND RECORD QUARTERLY DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS OF $0.94
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported net income of $39.6 million, or $0.94 per diluted share, in the 2016 fourteen-week fourth quarter on revenue of $893 million. Landstar reported net income of $37.9 million, or $0.88 per diluted share, on revenue of $849 million in the 2015 thirteen-week fourth quarter. Revenue for the 2016 fourth quarter was the highest quarterly revenue in Landstar history while diluted earnings per share for the 2016 fourth quarter was the highest quarterly diluted earnings per share from continuing operations in Landstar history. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $132.8 million in the 2016 fourth quarter compared to $126.4 million in gross profit in the 2015 fourth quarter. Operating income was $63.8 million in the 2016 fourth quarter and operating margin, representing operating income divided by gross profit, was 48.0 percent.
The Company’s fiscal year ends each year on the last Saturday in December. As such, the Company’s 2016 fourth quarter included fourteen weeks of operations whereas the 2015 fourth quarter included thirteen weeks. We estimate the extra week in 2016 contributed revenue of approximately $36 million. In comparison, however, the 2015 fourth quarter included $38 million of revenue from a special project for a customer in the automotive sector. That project ended at year end 2015.
LANDSTAR SYSTEM/ 2
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2016 fourth quarter was $832.2 million, or 93 percent of revenue, compared to $786.4 million, or 93 percent of revenue, in the 2015 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2016 fourth quarter was $548.4 million compared to $481.4 million in the 2015 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2016 fourth quarter was $263.3 million compared to $285.6 million in the 2015 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $48.7 million, or 5 percent of revenue, in the 2016 fourth quarter compared to $50.6 million, or 6 percent of revenue, in the 2015 fourth quarter.
Return on average shareholders’ equity was 28 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 22 percent in fiscal year 2016. Landstar purchased approximately 773,000 shares of its common stock during the fiscal year ended December 31, 2016 at an aggregate cost of $50.5 million. Currently, there are approximately 1,036,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program. As of December 31, 2016, the Company had $245 million in cash and short term investments and $214 million available for borrowing under the Company’s senior credit facility.
In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.09 per share payable on March 17, 2017 to stockholders of record at the close of business on February 20, 2017. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
Commenting on Landstar’s 2016 fourth quarter results, Landstar’s President and CEO Jim Gattoni said, “I am very pleased with Landstar’s performance in the 2016 fourth quarter given the challenges of a low growth macro environment and more readily available capacity. Diluted earnings per share was $0.94 in the 2016 fourth quarter, the highest quarterly diluted earnings per share in Landstar history, other than the fourth quarter of 2013 when we had a significant, one-time gain on the sale of our former supply chain companies. 2016 fourth quarter revenue was $893 million, the highest quarterly revenue in Landstar history. Moreover, gross profit of $132.8 million in the 2016 fourth quarter was the highest quarterly Landstar gross profit in any quarter over the last ten years.”
LANDSTAR SYSTEM/ 3
Gattoni continued, “The number of loads hauled via truck in the 2016 fourth quarter increased 11 percent over the 2015 fourth quarter, while the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers increased 6 percent over the 2015 fourth quarter. There are a few factors impacting the comparison of the number of loads hauled via truck in the 2016 fourth quarter compared to the 2015 fourth quarter. As previously mentioned, the 2016 fourth quarter included an extra week. Additionally, in 2016, Christmas day fell on a Sunday whereas in 2015 it fell on a Friday, making the week prior to Christmas in 2016 more productive than the comparable week of 2015. We estimate that the extra week, plus the increased productivity due to the timing of Christmas, added approximately 30,000 loads to the 2016 fourth quarter, while the special project for the automotive customer that ended at the end of 2015 added 19,000 loads hauled via unsided/platform equipment to the 2015 fourth quarter. Excluding these items, we estimate the number of loads hauled via truck in the 2016 fourth quarter exceeded the 2015 fourth quarter by approximately 8 percent. As expected, revenue per load on loads hauled via truck was 4 percent lower in the 2016 fourth quarter as compared to the 2015 fourth quarter, mostly due to a somewhat softer freight environment and the impact of more readily available truck capacity.”
Gattoni further stated, “Landstar executed well throughout fiscal year 2016 despite the tough industrial macro conditions and more readily available truck capacity that, along with the $100 million in revenue (51,000 loads hauled via truck) from the special project in 2015, made for difficult year-over-year comparisons. Revenue for 2016 was approximately $3.2 billion and gross profit was approximately $488 million, the second highest annual gross profit in Landstar history behind only 2015. Revenue in 2016 was provided on the strength of approximately 1,746,000 loads hauled via truck capacity, the highest number of loads hauled via truck in any year in Landstar history. These fiscal year 2016 achievements speak to the strength and depth of the Landstar network and ability to execute in almost any environment. I am pleased by our continued organic load volume growth and our ability to continue to attract productive agents and capacity to the network.”
LANDSTAR SYSTEM/ 4
Gattoni continued, “The impact of potential changes in 2017 to U.S. trade, tax and other economic policies on the domestic and global economies contribute to a highly unpredictable environment for our industry. As such, I will not be providing annual revenue or earnings guidance for fiscal year 2017. As it pertains to anticipated costs and expenses, however, there are several specific assumptions we wish to highlight with respect to the 2017 fiscal year:
| • | We continue to invest in the agent network and, as previously disclosed, are currently underway in a multi-year project aimed at increasing efficiencies, primarily through technology, at both Landstar and across all of our agent offices. We believe this initiative will support growth in the years to come. We expect the cost of this project to be in the range of $6.5 million to $9.5 million, or approximately $0.10 to $0.15 per diluted share, in fiscal year 2017. The cost of this initiative was $6.6 million in 2016, or $0.10 per diluted share. |
| • | We estimate that the costs of insurance and claims will approximate our historical average of 3.3 percent of BCO revenue. |
| • | We expect higher depreciation expense in 2017 as we have grown our trailer fleet and our trailer fleet is newer than it has been in recent years. |
| • | Certain bonus targets under the Company’s incentive compensation plan were not achieved in 2016, as operating income and earnings per share targets were not met. The achievement of a one-time target bonus payment in 2017 would result in approximately $7 million of bonus expense that was not included in 2016, and we could exceed that amount if we exceed our 2017 targets. |
| • | We have assumed no changes to the applicable U.S. statutory corporate income tax rate and, therefore, assume an effective income tax rate for the Company of 38.2 percent for 2017.” |
LANDSTAR SYSTEM/ 5
Gattoni further commented, “With respect to near term performance, during the first three weeks of the 2017 first quarter, we are experiencing growth in the number of loads hauled via truck, but at a somewhat lower rate as compared to the quarter-over-quarter volume growth rates experienced during the 2016 fourth quarter. I expect the number of loads hauled via truck in the 2017 first quarter to increase in a mid to high-single digit range over the 2016 first quarter. As it pertains to revenue per load on loads hauled via truck, rates appear to have stabilized over the last several months and I do not expect a significant change in the rate environment over the balance of the 2017 first quarter. As such, I expect revenue per load on loads hauled via truck in the 2017 first quarter to be equal to or slightly below the 2016 first quarter. Assuming the current environment continues throughout the 2017 first quarter, I anticipate revenue for the 2017 first quarter to be in a range of $725 million to $775 million. Assuming that range of estimated revenue and no material changes with respect to the expense assumptions set forth above, I would anticipate 2017 first quarter diluted earnings per share to be in a range of $0.70 to $0.75 per share. We believe that the potential changes to U.S. trade, tax and other economic policies will lead to a very interesting time for our industry. Regardless of the changes that may occur, Landstar’s variable cost business model performs well in almost any environment and I would expect Landstar to outperform industry fundamentals in the years ahead.”
Landstar will provide a live webcast of its quarterly earnings conference call tomorrow morning at 8:00 am 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 2016 Earnings Release Conference Call.”
This earnings announcement, as well as an accompanying slide presentation, is available through the Company’s website at http://investor.landstar.com under “Presentations” and on a Form 8-K filed with the Securities and Exchange Commission.
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,” “assumes,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “would,” “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; 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; catastrophic loss of a Company facility; intellectual property; unclaimed property; regulations focused on diesel emissions and other air quality matters; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10K for the 2015 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.
LANDSTAR SYSTEM/ 6
About Landstar:
Landstar System, Inc. is a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation logistics services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees. All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2013 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/ 7
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
| Fiscal Years Ended | Fiscal Quarters Ended | |||||||||||||||
| December 31, | December 26, | December 31, | December 26, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue |
$ | 3,167,634 | $ | 3,321,091 | $ | 892,829 | $ | 848,602 | ||||||||
| Investment income |
1,502 | 1,396 | 402 | 353 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
2,415,663 | 2,551,343 | 684,918 | 651,030 | ||||||||||||
| Commissions to agents |
264,205 | 270,260 | 75,130 | 71,147 | ||||||||||||
| Other operating costs, net of gains/losses on asset sales/dispositions |
29,702 | 31,618 | 8,218 | 7,230 | ||||||||||||
| Insurance and claims |
57,280 | 48,754 | 14,485 | 11,144 | ||||||||||||
| Selling, general and administrative |
143,239 | 149,704 | 37,028 | 37,907 | ||||||||||||
| Depreciation and amortization |
35,796 | 29,102 | 9,687 | 7,849 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total costs and expenses |
2,945,885 | 3,080,781 | 829,466 | 786,307 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income |
223,251 | 241,706 | 63,765 | 62,648 | ||||||||||||
| Interest and debt expense |
3,794 | 2,949 | 1,069 | 741 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before income taxes |
219,457 | 238,757 | 62,696 | 61,907 | ||||||||||||
| Income taxes |
82,107 | 91,068 | 23,122 | 24,052 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 137,350 | $ | 147,689 | $ | 39,574 | $ | 37,855 | ||||||||
|
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|
|
|
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|
|
|
|||||||||
| Earnings per common share |
$ | 3.26 | $ | 3.38 | $ | 0.95 | $ | 0.89 | ||||||||
|
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|
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|
|
|
|
|||||||||
| Diluted earnings per share |
$ | 3.25 | $ | 3.37 | $ | 0.94 | $ | 0.88 | ||||||||
|
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|
|
|
|
|||||||||
| Average number of shares outstanding: |
||||||||||||||||
| Earnings per common share |
42,112,000 | 43,664,000 | 41,805,000 | 42,729,000 | ||||||||||||
|
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|
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|
|
|||||||||
| Diluted earnings per share |
42,236,000 | 43,813,000 | 41,938,000 | 42,849,000 | ||||||||||||
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|
|||||||||
| Dividends per common share |
$ | 0.34 | $ | 0.30 | $ | 0.09 | $ | 0.08 | ||||||||
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|||||||||
LANDSTAR SYSTEM/ 8
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| December 31, | December 26, | |||||||
| 2016 | 2015 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 178,897 | $ | 114,520 | ||||
| Short-term investments |
66,560 | 48,823 | ||||||
| Trade accounts receivable, less allowance of $5,161 and $4,327 |
463,102 | 462,699 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $5,523 and $4,143 |
18,567 | 18,472 | ||||||
| Other current assets |
10,281 | 11,604 | ||||||
|
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|
|
|||||
| Total current assets |
737,407 | 656,118 | ||||||
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|
|||||
| Operating property, less accumulated depreciation and amortization of $190,374 and $182,591 |
272,843 | 225,927 | ||||||
| Goodwill |
31,134 | 31,134 | ||||||
| Other assets |
55,207 | 78,339 | ||||||
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|
|||||
| Total assets |
$ | 1,096,591 | $ | 991,518 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Cash overdraft |
$ | 36,251 | $ | 35,609 | ||||
| Accounts payable |
219,409 | 223,709 | ||||||
| Current maturities of long-term debt |
45,047 | 42,499 | ||||||
| Insurance claims |
26,121 | 19,757 | ||||||
| Other current liabilities |
53,483 | 47,963 | ||||||
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| Total current liabilities |
380,311 | 369,537 | ||||||
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|
|||||
| Long-term debt, excluding current maturities |
93,257 | 81,793 | ||||||
| Insurance claims |
26,883 | 21,477 | ||||||
| Deferred income taxes and other non-current liabilities |
53,583 | 52,474 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,585,675 and 67,391,616 shares |
676 | 674 | ||||||
| Additional paid-in capital |
199,414 | 195,841 | ||||||
| Retained earnings |
1,512,993 | 1,389,975 | ||||||
| Cost of 25,747,541 and 24,972,079 shares of common stock in treasury |
(1,167,437 | ) | (1,116,765 | ) | ||||
| Accumulated other comprehensive loss |
(3,089 | ) | (3,488 | ) | ||||
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| Total shareholders’ equity |
542,557 | 466,237 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,096,591 | $ | 991,518 | ||||
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LANDSTAR SYSTEM/ 9
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Fiscal Years Ended | Fiscal Quarters Ended | |||||||||||||||
| December 31, | December 26, | December 31, | December 26, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue generated through (in thousands): |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 1,900,406 | $ | 1,894,221 | $ | 548,426 | $ | 481,397 | ||||||||
| Unsided/platform equipment |
963,649 | 1,109,356 | 263,280 | 285,589 | ||||||||||||
| Less-than-truckload |
74,530 | 80,687 | 20,464 | 19,390 | ||||||||||||
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| Total truck transportation |
2,938,585 | 3,084,264 | 832,170 | 786,376 | ||||||||||||
| Rail intermodal |
103,721 | 105,347 | 26,734 | 28,659 | ||||||||||||
| Ocean and air cargo carriers |
78,513 | 86,664 | 22,013 | 21,939 | ||||||||||||
| Other (1) |
46,815 | 44,816 | 11,912 | 11,628 | ||||||||||||
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| $ | 3,167,634 | $ | 3,321,091 | $ | 892,829 | $ | 848,602 | |||||||||
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| Revenue on loads hauled via BCO Independent Contractors (2) included in total truck transportation |
$ | 1,488,925 | $ | 1,522,513 | $ | 402,077 | $ | 381,643 | ||||||||
| Number of loads: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
1,179,183 | 1,102,654 | 331,975 | 282,431 | ||||||||||||
| Unsided/platform equipment |
451,686 | 485,993 | 120,460 | 126,224 | ||||||||||||
| Less-than-truckload |
115,521 | 112,363 | 31,205 | 28,525 | ||||||||||||
|
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|||||||||
| Total truck transportation |
1,746,390 | 1,701,010 | 483,640 | 437,180 | ||||||||||||
| Rail intermodal |
48,820 | 45,060 | 12,700 | 12,710 | ||||||||||||
| Ocean and air cargo carriers |
20,690 | 18,060 | 5,780 | 4,740 | ||||||||||||
|
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|||||||||
| 1,815,900 | 1,764,130 | 502,120 | 454,630 | |||||||||||||
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| Loads hauled via BCO Independent Contractors (2) included in total truck transportation |
865,430 | 826,600 | 234,550 | 210,190 | ||||||||||||
| Revenue per load: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 1,612 | $ | 1,718 | $ | 1,652 | $ | 1,704 | ||||||||
| Unsided/platform equipment |
2,133 | 2,283 | 2,186 | 2,263 | ||||||||||||
| Less-than-truckload |
645 | 718 | 656 | 680 | ||||||||||||
| Total truck transportation |
1,683 | 1,813 | 1,721 | 1,799 | ||||||||||||
| Rail intermodal |
2,125 | 2,338 | 2,105 | 2,255 | ||||||||||||
| Ocean and air cargo carriers |
3,795 | 4,799 | 3,808 | 4,628 | ||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (2) |
$ | 1,720 | $ | 1,842 | $ | 1,714 | $ | 1,816 | ||||||||
| Revenue by capacity type (as a % of total revenue); |
||||||||||||||||
| Truck capacity providers: |
||||||||||||||||
| BCO Independent Contractors (2) |
47 | % | 46 | % | 45 | % | 45 | % | ||||||||
| Truck Brokerage Carriers |
46 | % | 47 | % | 48 | % | 48 | % | ||||||||
| Rail intermodal |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Ocean and air cargo carriers |
2 | % | 3 | % | 2 | % | 3 | % | ||||||||
| Other |
1 | % | 1 | % | 1 | % | 1 | % | ||||||||
| December 31, | December 26, | |||||||||||||||
| 2016 | 2015 | |||||||||||||||
| Truck Capacity Providers |
||||||||||||||||
| BCO Independent Contractors (2) |
8,824 | 8,907 | ||||||||||||||
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| Truck Brokerage Carriers: |
||||||||||||||||
| Approved and active (3) |
31,471 | 29,728 | ||||||||||||||
| Other approved |
15,982 | 14,715 | ||||||||||||||
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| 47,453 | 44,443 | |||||||||||||||
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| Total available truck capacity providers |
56,277 | 53,350 | ||||||||||||||
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| Trucks provided by BCO Independent Contractors (2) |
9,439 | 9,500 | ||||||||||||||
| (1) | Includes primarily reinsurance premium revenue generated by the insurance segment. |
| (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 preceeding the fiscal quarter end. |
February 1, 2017 Landstar System, Inc. Earnings Conference Call Fourth Quarter 2016 Date Published: 02/01/2017 Exhibit 99.2
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements made during this presentation that are not based on historical facts are “forward looking statements.” During this presentation, I may make certain statements, containing forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Such statements are by nature subject to uncertainties and risks, including but not limited to: the operational, financial and legal risks detailed in Landstar’s Form 10-K for the 2015 fiscal year, described in the section Risk Factors, and 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 Landstar undertakes no obligation to publicly update or revise any forward-looking statements. Date Published: 02/01/2017
Model Definition Landstar 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. Date Published: 02/01/2017
The Network Landstar Employees Approx. 1,200 Agents Approx. 1,200 Customers 25,000+ Capacity 56,000+ 2016 Results $3.2 billion in revenue 1.8 million loadings 502 million dollar agents 9,439 BCO trucks (2016 year-end) 47,453 Carriers (2016 year-end) 15,000+ Trailers (2016 year-end) Date Published: 02/01/2017
Percentage of Revenue 4Q15 4Q16 Truck Transportation Truckload Van equipment 57% 61% Unsided/platform equipment 34% 29% Less-than-truckload 2% 2% Rail intermodal 3% 3% Ocean and air cargo 3% 2% Transportation Management Services Date Published: 02/01/2017
The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2016 fourth quarter included fourteen weeks of operations whereas the 2015 fourth quarter included thirteen weeks. Fiscal year 2016 included fifty three weeks of operations whereas fiscal year 2015 included fifty two. Percentage change in rate is calculated on a revenue per load basis. Percentage change in volume is calculated on the number of loads hauled. Revenue ($’s in thousands) Date Published: 02/01/2017 Quarter (1) Fiscal Year (1) Qtr over Prior Year Qtr Rate (2) Volume (3) Change Truck Revenue -4.3% 0.106 5.8% Rail Intermodal Revenue -6.6% -1 -6.7% Ocean/Air Revenue -0.17699999999999999 0.219 .3% Insurance Premiums NA NA 2.1% Total Revenue 5.2% Year over Prior Year Rate (2) Volume (3) Change Truck Revenue -7.2% 2.7% -4.7% Rail Intermodal Revenue -9.0999999999999998 8.3% -1.5% Ocean/Air Revenue -0.20899999999999999 0.14599999999999999 -9.4% Insurance Premiums NA NA 4.5% Total Revenue -4.6%
Van Equipment Unsided/Platform Equipment Truckload Loadings and Revenue per Load (Excludes LTL) Date Published: 02/01/2017 The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2016 fourth quarter included fourteen weeks of operations whereas the 2015, 2014 and 2013 fourth quarters included thirteen weeks.
As a Percentage of Revenue 4Q15 4Q16 Quarter over Prior Year Quarter Growth Consumer Durables 18.7 21.6 22% Machinery 13.7 14.2 9% Automotive 13.2 9.1 -27% Building Products 8.0 8.1 7% Metals 6.2 6.1 2% AA&E, Hazmat 6.7 7.2 14% Foodstuffs 5.0 5.5 15% Energy 3.9 3.1 -15% Other 24.6 25.1 7% Transportation Revenue 100.0 100.0 5% Industries Served Date Published: 02/01/2017
14.9% 14.9% Gross profit equals revenue less the cost of purchased transportation and commissions to agents. Gross profit margin equals gross profit divided by revenue. The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2016 fourth quarter included fourteen weeks of operations whereas the 2015 fourth quarter included thirteen weeks. Fiscal year 2016 included fifty three weeks of operations whereas fiscal year 2015 included fifty two. Revenue on transactions with a fixed gross profit margin was 55% of revenue in both the 2015 and 2016 year-to-date periods and 54% and 53% of revenue in the 2015 and 2016 fourth quarters, respectively. Gross Profit (1) and Gross Profit Margin (2) ($’s in thousands) Date Published: 02/01/2017 Quarter (3) Fiscal Year (3) 15.0% 15.4% 4th Qtr (4) Changes in gross profit margin % 2015 Period 14.9 Revenue - fixed gp margin 0.1 Revenue - variable gp margin 0 Change in mix and other -0.1 2016 Period 14.9 Fiscal Year (4) Changes in gross profit margin % 2015 Period 15 Revenue - fixed gp margin 0.2 Revenue - variable gp margin 0.1 Change in mix and other 0.1 2016 Period 15.4
50.5% 48.4% 4 Operating margin equals operating income divided by gross profit. The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2016 fourth quarter included fourteen weeks of operations whereas the 2015 fourth quarter included thirteen weeks. Fiscal year 2016 included fifty three weeks of operations whereas fiscal year 2015 included fifty two. Operating Income and Operating Margin (1) ($’s in thousands) Date Published: 02/01/2017 Quarter (2) Fiscal Year (2) 49.6% 48.0% 48.4% 10 45.8% 4th Qtr Changes in operating margin % 2015 Period 49.6 Other operating costs -0.5 Insurance and claims -2.1 SG&A 2.1 Depreciation and amortization -1.1000000000000001 2016 Period 48 Fiscal Year Changes in operating margin % 2015 Period 48.4 Other operating costs 0.3 Insurance and claims -2 SG&A 0.6 Depreciation and amortization -1.5 2016 Period 45.8
Date Published: 02/01/2017 Truck Capacity Data (All information is provided as of the end of the period) Dec 26, Dec 31, 2015 2016 BCO Independent Contractors 8,907 8,824 Truck Brokerage Carriers: Approved and Active (1) 29,728 31,471 Other Approved 14,715 15,982 44,443 47,453 Total Available Truck Capacity Providers 53,350 56,277 Trucks Provided by BCO Independent Contractors 9,500 9,439 (2) Fuel surcharges billed to customers on freight hauled by BCO Independent Contractors, which are paid 100% to the BCO and excluded from revenue and the cost of purchased transportation were $129,653 and $174,661 in the 2016 and 2015 year-to-date periods, respectively, and $38,631 and $37,574 in the 2016 and 2015 fourth quarters respectively. (1) Active refers to truck brokerage carriers who hauled freight for Landstar in the 180 day period immediately preceding the period end. (2) (2)
(1) Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. Date Published: 02/01/2017 Key Balance Sheet and Cash Flow Statistics ($’s in thousands) YTD YTD Dec 26, Dec 31, 2015 2016 Balance sheet (period end amounts) : Debt to Capital 21% 20% Net Cash (1) 39,051 $ 107,153 $ Cash flow: Cash flow from operations 216,022 $ 190,242 $ Capital expenditures 4,804 $ 22,645 $ Share repurchases 161,152 $ 50,516 $ Dividends paid 57,882 $ 14,332 $ Returns: TTM Return on Equity 31% 28% TTM Return on Invested Capital 25% 22% TTM Return on Assets 15% 14%
Free Cash Flow (1) / Share Purchases Date Published: 02/01/2017 (In Thousands) (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide.
Date Published: 02/01/2017