Brand SiteLogin

Investor Relations

Financial News

Printer Friendly Version View printer-friendly version
Download PDF 4Q 2016 – Presentation Slides
Landstar System Reports Record Quarterly Revenue of $893 Million and Record Quarterly Diluted Earnings Per Share From Continuing Operations of $0.94

JACKSONVILLE, Fla., Feb. 01, 2017 (GLOBE NEWSWIRE) -- 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.

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.”

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.”

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 $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.

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, 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 Stout
Landstar System, Inc.
www.landstar.com
904-398-9400

Primary Logo

Landstar System