Form 8-K

 

 

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) July 26, 2017

 

 

 

LOGO

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   021238   06-1313069

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition

On July 26, 2017, Landstar System, Inc. issued a press release announcing results for the second quarter of fiscal 2017. 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 July 26, 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 July 27, 2017 in connection with the Company’s release of results for the second quarter of fiscal 2017.

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 July 26, 2017 of Landstar System, Inc.
99.2    Slide Presentation dated July 26, 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: July 26, 2017     By:  

/s/ L. Kevin Stout

    Name:   L. Kevin Stout
    Title:   Vice President and Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

 

For Immediate Release     Contact: Kevin Stout
    Landstar System, Inc.
    www.landstar.com
July 26, 2017     904-398-9400

LANDSTAR SYSTEM REPORTS DILUTED EARNINGS PER SHARE OF $0.89

ON RECORD SECOND QUARTER REVENUE OF $870 MILLION

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $0.89 on record second quarter revenue of $870 million in the 2017 second quarter. Landstar reported diluted earnings per share of $0.76 on revenue of $775 million in the 2016 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was a second quarter record of $132.6 million in the 2017 second quarter compared to $121.0 million in the 2016 second quarter. Operating margin, representing operating income divided by gross profit, was 46.0 percent in the 2017 second quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2017 second quarter was $815.6 million, or 94 percent of revenue, compared to $718.5 million, or 93 percent of revenue, in the 2016 second quarter. Truckload transportation revenue hauled via van equipment in the 2017 second quarter was $509.1 million compared to $458.0 million in the 2016 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2017 second quarter was $283.5 million compared to $242.0 million in the 2016 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $43.1 million, or 5 percent of revenue, in the 2017 second quarter compared to $45.1 million, or 6 percent of revenue, in the 2016 second quarter.

Trailing twelve-month return on average shareholders’ equity was 27 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 22 percent. Currently, there are approximately


LANDSTAR SYSTEM/ 2

 

1,036,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program. As of July 1, 2017, the Company had $273 million in cash and short term investments and $214 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 $0.10 per share payable on September 1, 2017, to stockholders of record as of the close of business on August 14, 2017. This quarterly dividend includes an 11 percent increase to the amount of the Company’s quarterly dividend declared following each of the prior four quarters. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

Commenting on Landstar’s 2017 second quarter, Landstar’s President and CEO Jim Gattoni said, “I am very pleased with Landstar’s performance in the 2017 second quarter. On April 26th, we provided second quarter revenue guidance of $820 million to $870 million and second quarter diluted earnings per share guidance of $0.84 to $0.89. Revenue and diluted earnings per share for the 2017 second quarter both came in at the top end of guidance. Revenue of $870 million was a second quarter record and represented growth of 12 percent over the 2016 second quarter. Diluted earnings per share of $0.89 grew 17 percent over the 2016 second quarter.”

Gattoni continued, “The number of loads hauled via truck in the 2017 second quarter increased 10 percent over the 2016 second quarter, driven by a 10 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 a 20 percent increase in less-than-truckload volume. The number of loads hauled via truck in the second quarter of 2017 was a second quarter record. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 5 percent lower in the 2017 second quarter compared to the 2016 second quarter, due to continued softness in rail intermodal volume.”

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to show slow improvement in the 2017 second quarter, as industry-wide truck capacity is firming in certain regions, especially with respect to flatbed loads.


LANDSTAR SYSTEM/ 3

 

As a result, revenue per load on loads hauled via truck was 3 percent higher in the 2017 second quarter compared to the 2016 second quarter. The percentage change in year-over-year revenue per load on loads hauled via truck was consistent each month during the quarter. 2017 second quarter operating margin was 46.0 percent, in line with our historical second quarter operating margin.”

Gattoni continued, “Historically, revenue in the Company’s third fiscal quarter has been relatively consistent with revenue generated in the Company’s second fiscal quarter. We typically have experienced revenue per load on loads hauled via truck in the Company’s third quarter as slightly ahead of the second quarter while the number of loads hauled via truck in the third quarter as slightly below the second quarter. Through the first few weeks of July, we have experienced the normal seasonal uptick in revenue per load on loads hauled via truck. Also, the number of loads hauled via truck during the first few weeks of July is trending with the historical second quarter to third quarter pattern. As such, I expect 2017 third quarter revenue to be similar to the Company’s 2017 second quarter revenue. Assuming insurance and claims costs in the 2017 third quarter are approximately 3.3 percent of BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past 5 years, I would expect diluted earnings per share to be in a range of $0.88 to $0.93 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 2017 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,” “believes,” “estimates,”


LANDSTAR SYSTEM/ 4

 

“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 2016 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 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/ 5

 

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Twenty Six Weeks Ended      Thirteen Weeks Ended  
     July 1,      June 25,      July 1,      June 25,  
     2017      2016      2017      2016  

Revenue

   $ 1,651,342      $ 1,486,867      $ 870,434      $ 775,223  

Investment income

     1,022        743        608        363  

Costs and expenses:

           

Purchased transportation

     1,263,111        1,129,743        667,588        589,415  

Commissions to agents

     134,080        123,931        70,282        64,839  

Other operating costs, net of gains on asset sales/dispositions

     14,400        13,992        7,503        6,585  

Insurance and claims

     28,406        30,307        13,893        16,094  

Selling, general and administrative

     79,184        71,519        40,861        36,905  

Depreciation and amortization

     19,831        17,093        9,897        8,655  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

     1,539,012        1,386,585        810,024        722,493  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     113,352        101,025        61,018        53,093  

Interest and debt expense

     1,902        1,777        819        888  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     111,450        99,248        60,199        52,205  

Income taxes

     41,557        37,750        22,689        19,891  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 69,893      $ 61,498      $ 37,510      $ 32,314  
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share

   $ 1.67      $ 1.45      $ 0.89      $ 0.77  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

   $ 1.66      $ 1.45      $ 0.89      $ 0.76  
  

 

 

    

 

 

    

 

 

    

 

 

 

Average number of shares outstanding:

           

Earnings per common share

     41,907,000        42,315,000        41,935,000        42,235,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

     42,004,000        42,424,000        42,010,000        42,357,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Dividends per common share

   $ 0.18      $ 0.16      $ 0.09      $ 0.08  
  

 

 

    

 

 

    

 

 

    

 

 

 


LANDSTAR SYSTEM/ 6

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     July 1,     December 31,  
     2017     2016  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 222,102     $ 178,897  

Short-term investments

     51,167       66,560  

Trade accounts receivable, less allowance of $5,311 and $5,161

     480,467       463,102  

Other receivables, including advances to independent contractors, less allowance of $6,049 and $5,523

     20,518       18,567  

Other current assets

     19,291       10,281  
  

 

 

   

 

 

 

Total current assets

     793,545       737,407  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $202,050 and $190,374

     259,346       272,843  

Goodwill

     31,134       31,134  

Other assets

     75,249       55,207  
  

 

 

   

 

 

 

Total assets

   $ 1,159,274     $ 1,096,591  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 34,145     $ 36,251  

Accounts payable

     224,928       219,409  

Current maturities of long-term debt

     41,356       45,047  

Insurance claims

     29,077       26,121  

Other current liabilities

     56,998       53,483  
  

 

 

   

 

 

 

Total current liabilities

     386,504       380,311  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     77,639       93,257  

Insurance claims

     30,402       26,883  

Deferred income taxes and other non-current liabilities

     55,239       53,583  

Shareholders’ equity:

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,696,487 and 67,585,675 shares

     677       676  

Additional paid-in capital

     203,410       199,414  

Retained earnings

     1,575,342       1,512,993  

Cost of 25,749,493 and 25,747,541 shares of common stock in treasury

     (1,167,600     (1,167,437

Accumulated other comprehensive loss

     (2,339     (3,089
  

 

 

   

 

 

 

Total shareholders’ equity

     609,490       542,557  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,159,274     $ 1,096,591  
  

 

 

   

 

 

 


LANDSTAR SYSTEM/ 7

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Twenty Six Weeks Ended     Thirteen Weeks Ended  
     July 1,     June 25,     July 1,     June 25,  
     2017     2016     2017     2016  

Revenue generated through (in thousands):

        

Truck transportation Truckload:

        

Van equipment

   $ 978,918     $ 886,195     $ 509,135     $ 458,002  

Unsided/platform equipment

     520,658       451,430       283,481       242,008  

Less-than-truckload

     42,799       35,927       22,942       18,450  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     1,542,375       1,373,552       815,558       718,460  

Rail intermodal

     44,357       52,337       21,515       26,229  

Ocean and air cargo carriers

     41,185       37,710       21,595       18,902  

Other (1)

     23,425       23,268       11,766       11,632  
  

 

 

   

 

 

   

 

 

   

 

 

 
     $1,651,342     $1,486,867     $870,434     $775,223  
  

 

 

   

 

 

   

 

 

   

 

 

 

Revenue on loads hauled via BCO Independent
Contractors (2) included in total truck transportation

   $ 776,085     $ 707,652     $ 411,177     $ 373,374  

Number of loads:

        

Truck transportation Truckload:

        

Van equipment

     613,565       556,119       315,499       287,079  

Unsided/platform equipment

     236,427       219,034       125,242       116,292  

Less-than-truckload

     64,508       55,727       34,589       28,829  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     914,500       830,880       475,330       432,200  

Rail intermodal

     20,960       24,180       10,310       12,150  

Ocean and air cargo carriers

     11,940       9,780       6,210       5,220  
  

 

 

   

 

 

   

 

 

   

 

 

 
     947,400       864,840       491,850       449,570  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loads hauled via BCO Independent Contractors (2) included in total truck transportation

     453,860       414,660       235,630       216,990  

Revenue per load:

        

Truck transportation Truckload:

        

Van equipment

   $ 1,595     $ 1,594     $ 1,614     $ 1,595  

Unsided/platform equipment

     2,202       2,061       2,263       2,081  

Less-than-truckload

     663       645       663       640  

Total truck transportation

     1,687       1,653       1,716       1,662  

Rail intermodal

     2,116       2,164       2,087       2,159  

Ocean and air cargo carriers

     3,449       3,856       3,477       3,621  

Revenue per load on loads hauled via BCO Independent Contractors (2)

   $ 1,710     $ 1,707     $ 1,745     $ 1,721  

Revenue by capacity type (as a % of total revenue);

        

Truck capacity providers:

        

BCO Independent Contractors (2)

     47     48     47     48

Truck Brokerage Carriers

     46     45     46     45

Rail intermodal

     3     4     2     3

Ocean and air cargo carriers

     2     3     2     2

Other

     1     2     1     2
                 July 1,     June 25,  
                 2017     2016  

Truck Capacity Providers

        

BCO Independent Contractors (2)

         8,818       8,856  
      

 

 

   

 

 

 

Truck Brokerage Carriers:

        

Approved and active (3)

         31,636       30,137  

Other approved

         15,381       15,594  
      

 

 

   

 

 

 
         47,017       45,731  
      

 

 

   

 

 

 

Total available truck capacity providers

         55,835       54,587  
      

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (2)

         9,404       9,462  

 

(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 preceding the fiscal quarter end.
EX-99.2

Slide 1

July 26, 2017 Landstar System, Inc. Earnings Conference Call Second Quarter 2017 Date Published: 07/26/2017 Exhibit 99.2


Slide 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 2016 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: 07/26/2017


Slide 3

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: 07/26/2017


Slide 4

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: 07/26/2017


Slide 5

Percentage of Revenue 2Q16 2Q17 Truck Transportation Truckload Van equipment 59% 58% Unsided/platform equipment 31% 33% Less-than-truckload 2% 3% Rail intermodal 3% 2% Ocean and air cargo 2% 2% Transportation Management Services Date Published: 07/26/2017


Slide 6

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: 07/26/2017 Quarter Year-to-Date


Slide 7

Van Equipment Unsided/Platform Equipment Truckload Loadings and Revenue per Load (Excludes LTL) Date Published: 07/26/2017


Slide 8

As a Percentage of Revenue 2Q16 2Q17 Quarter over Prior Year Quarter Growth Consumer Durables 20.4 21.1 16% Machinery 14.6 15.2 18% Automotive 9.1 8.2 1% Building Products 9.6 9.7 13% Metals 7.0 6.7 9% AA&E, Hazmat 8.0 9.0 26% Foodstuffs 5.1 4.7 3% Energy 3.0 3.7 36% Other 23.2 21.7 6% Transportation Revenue 100.0 100.0 12% Industries Served Date Published: 07/26/2017


Slide 9

15.6% 15.2% Gross profit equals revenue less the cost of purchased transportation and commissions to agents. Gross profit margin equals gross profit divided by revenue. Revenue on transactions with a fixed gross profit margin was 56% and 54% of revenue in the 2016 and 2017 year-to-date periods, respectively, and 55% and 54% of revenue in the 2016 and 2017 second quarters, respectively. Gross Profit (1) and Gross Profit Margin (2) ($’s in thousands) Date Published: 07/26/2017 Quarter Year-to-Date 15.7% 15.4%


Slide 10

50.5% 48.4% 4 Operating margin equals operating income divided by gross profit. Operating Income and Operating Margin (1) ($’s in thousands) Date Published: 07/26/2017 Quarter Year-to-Date 43.9% 46.0% 43.3% 10 44.6%


Slide 11

Date Published: 07/26/2017 Truck Capacity Data (All information is provided as of the end of the period)


Slide 12

(1) Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. Date Published: 07/26/2017 Key Balance Sheet and Cash Flow Statistics ($’s in thousands)


Slide 13

Free Cash Flow (1) / Share Purchases Date Published: 07/26/2017 (In Thousands) (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide.


Slide 14

Date Published: 07/26/2017