Landstar System Reports Record Quarterly Revenue of $893 Million and Record Quarterly Diluted Earnings Per Share From Continuing Operations of $0.94
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
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2016 fourth quarter was
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.
In addition,
Commenting on Landstar’s 2016 fourth quarter results, Landstar’s President and CEO
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,
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
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.”
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
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
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
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(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 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 | |||||
| Earnings per common share | $ | 3.26 | $ | 3.38 | $ | 0.95 | $ | 0.89 | |||||
| Diluted earnings per share | $ | 3.25 | $ | 3.37 | $ | 0.94 | $ | 0.88 | |||||
| Average number of shares outstanding: | |||||||||||||
| Earnings per common share | 42,112,000 | 43,664,000 | 41,805,000 | 42,729,000 | |||||||||
| Diluted earnings per share | 42,236,000 | 43,813,000 | 41,938,000 | 42,849,000 | |||||||||
| Dividends per common share | $ | 0.34 | $ | 0.30 | $ | 0.09 | $ | 0.08 | |||||
| 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 | ||||||
| Total current assets | 737,407 | 656,118 | ||||||
| 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 | ||||||
| Total assets | $ | 1,096,591 | $ | 991,518 | ||||
| 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 | ||||||
| Total current liabilities | 380,311 | 369,537 | ||||||
| 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 | ) | ||||
| Total shareholders' equity | 542,557 | 466,237 | ||||||
| Total liabilities and shareholders' equity | $ | 1,096,591 | $ | 991,518 | ||||
| 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 | |||||||||||||
| 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 | |||||||||||||
| $ | 3,167,634 | $ | 3,321,091 | $ | 892,829 | $ | 848,602 | ||||||||||
| 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 | |||||||||||||
| 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 | |||||||||||||
| 1,815,900 | 1,764,130 | 502,120 | 454,630 | ||||||||||||||
| 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 | |||||||||||||||
| Truck Brokerage Carriers: | |||||||||||||||||
| Approved and active (3) | 31,471 | 29,728 | |||||||||||||||
| Other approved | 15,982 | 14,715 | |||||||||||||||
| 47,453 | 44,443 | ||||||||||||||||
| Total available truck capacity providers | 56,277 | 53,350 | |||||||||||||||
| 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 preceding the fiscal quarter end. | |||||||||||||||||
Contact: Kevin StoutLandstar System, Inc. www.landstar.com 904-398-9400