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

04/24/19

04:15 PM EDT

1Q 2019 Presentation Slides 812 KB

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

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

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

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

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

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

Gattoni continued, “Through the first few weeks of April, the number of loads hauled via truck was consistent with the volumes experienced in the corresponding period of 2018. I expect that trend to continue during the remainder of the 2019 second quarter. Accordingly, I expect the number of loads hauled via truck in the 2019 second quarter to approximate the number of loads hauled by truck in the 2018 second quarter. My expectation is that pricing conditions for truck services in the 2019 second quarter will continue to come under pressure with little change in the level of truck capacity available in the marketplace. Assuming those capacity market conditions continue throughout the rest of the second quarter, I expect 2019 second quarter truck revenue per load to be lower than the 2018 second quarter in a high single-digit percentage range. I anticipate revenue for the 2019 second quarter to be in a range of $1.075 billion to $1.125 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.6 percent of BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate 2019 second quarter diluted earnings per share to be in a range of $1.56 to $1.62 per share compared to $1.51 per diluted share in the 2018 second quarter.”

Landstar will provide a live webcast of its quarterly earnings conference call tomorrow morning at 8:00 a.m. ET. To access the webcast, visit the Company’s website at www.landstar.com; click on “Investor Relations” and “Webcasts,” then click on “Landstar’s First Quarter 2019 Earnings Release Conference Call.”

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not based on historical facts are “forward-looking statements”. This press release contains forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “will,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; U.S. foreign trade relationships; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber and other information security incidents; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; regulations focused on diesel emissions and other air quality matters; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10K for the 2018 fiscal year, described in Item 1A Risk Factors, and in other SEC filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar:
Landstar System, Inc. is a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees. Landstar transportation services companies are certified to ISO 9001:2015 quality management system standards and RC14001:2015 environmental, health, safety and security management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

(Tables follow)

Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)


			Thirteen Weeks Ended
			March 30,			March 31,
				2019			2018

Revenue			$	1,033,000		$	1,047,926
Investment income				1,138			861

Costs and expenses:
	Purchased transportation			791,755			810,297
	Commissions to agents			85,671			82,125
	Other operating costs, net of gains on asset sales/dispositions			8,239			7,604
	Insurance and claims			14,993			17,360
	Selling, general and administrative			41,268			45,251
	Depreciation and amortization			11,316			10,997

		Total costs and expenses		953,242			973,634

Operating income				80,896			75,153
Interest and debt expense				805			800

Income before income taxes				80,091			74,353
Income taxes				16,791			16,880

Net income				63,300			57,473
Less: Net loss attributable to noncontrolling interest				(17	)		(44	)
Net income attributable to Landstar System,
	Inc. and subsidiary		$	63,317		$	57,517

Earnings per common share attributable to
	Landstar System, Inc. and subsidiary		$	1.58		$	1.37

Diluted earnings per share attributable to
	Landstar System, Inc. and subsidiary		$	1.58		$	1.37

Average number of shares outstanding:
	Earnings per common share			40,161,000			42,038,000
	Diluted earnings per share			40,166,000			42,098,000

Dividends per common share			$	0.165		$	0.150

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)


			March 30,			December 29,
				2019			2018
ASSETS
Current assets:
	Cash and cash equivalents		$	264,625		$	199,736
	Short-term investments			39,958			40,058
	Trade accounts receivable, less allowance
		of $7,144 and $6,413		601,128			691,604
	Other receivables, including advances to independent
		contractors, less allowance of $6,907 and $6,216		27,565			23,744
	Other current assets			10,919			16,287
		Total current assets		944,195			971,429

Operating property, less accumulated depreciation
		and amortization of $256,707 and $250,153		276,193			284,032
Goodwill				38,343			38,232
Other assets				92,208			86,871
Total assets			$	1,350,939		$	1,380,564

LIABILITIES AND EQUITY
Current liabilities:
	Cash overdraft		$	41,519		$	55,339
	Accounts payable			273,181			314,134
	Current maturities of long-term debt			41,184			43,561
	Insurance claims			40,270			40,176
	Accrued compensation			9,647			29,489
	Contractor escrow			25,383			25,202
	Other current liabilities			42,060			27,917
		Total current liabilities		473,244			535,818

Long-term debt, excluding current maturities				75,246			84,864
Insurance claims				29,776			30,429
Deferred income taxes and other non-current liabilities				44,413			40,320

Equity
Landstar System, Inc. and subsidiary shareholders' equity
	Common stock, $0.01 par value, authorized 160,000,000
		shares, issued 68,047,041 and 67,870,962 shares		680			679
	Additional paid-in capital			223,551			226,852
	Retained earnings			1,897,967			1,841,279
	Cost of 27,884,681 and 27,755,001 shares of common
		stock in treasury		(1,389,612	)		(1,376,111	)
	Accumulated other comprehensive loss			(4,326	)		(5,875	)
		Total Landstar System, Inc. and subsidiary shareholders'
		equity		728,260			686,824
Noncontrolling interest				-			2,309
		Total equity		728,260			689,133
Total liabilities and equity			$	1,350,939		$	1,380,564

	Landstar System, Inc. and Subsidiary
	Supplemental Information
	(Unaudited)


		Thirteen Weeks Ended
		March 30,			March 31,
			2019			2018
Revenue generated through (in thousands):

	Truck transportation
	Truckload:
	Van equipment	$	619,014		$	656,135
	Unsided/platform equipment		310,721			299,369
	Less-than-truckload		23,376			23,584
	Total truck transportation		953,111			979,088
	Rail intermodal		30,015			29,292
	Ocean and air cargo carriers		30,669			23,477
	Other ⁽¹⁾		19,205			16,069
		$	1,033,000		$	1,047,926

	Revenue on loads hauled via BCO Independent Contractors ⁽²⁾
	included in total truck transportation	$	449,308		$	471,150

Number of loads:

	Truck transportation
	Truckload:
	Van equipment		341,821			336,919
	Unsided/platform equipment		125,170			119,791
	Less-than-truckload		35,309			33,420
	Total truck transportation		502,300			490,130
	Rail intermodal		12,460			13,280
	Ocean and air cargo carriers		7,510			6,330
			522,270			509,740

	Loads hauled via BCO Independent Contractors ⁽²⁾
	included in total truck transportation		234,850			233,180

Revenue per load:

	Truck transportation
	Truckload:
	Van equipment	$	1,811		$	1,947
	Unsided/platform equipment		2,482			2,499
	Less-than-truckload		662			706
	Total truck transportation		1,897			1,998
	Rail intermodal		2,409			2,206
	Ocean and air cargo carriers		4,084			3,709

	Revenue per load on loads hauled via BCO Independent Contractors ⁽²⁾	$	1,913		$	2,021

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

	Truck capacity providers:
	BCO Independent Contractors ⁽²⁾		43	%		45	%
	Truck Brokerage Carriers		49	%		48	%
	Rail intermodal		3	%		3	%
	Ocean and air cargo carriers		3	%		2	%
	Other		2	%		2	%


		March 30,			March 31,
			2019			2018
Truck Capacity Providers

	BCO Independent Contractors ⁽²⁾		9,911			9,243
	Truck Brokerage Carriers:
	Approved and active ⁽³⁾		40,404			34,659
	Other approved		18,659			15,687
			59,063			50,346
	Total available truck capacity providers		68,974			59,589

	Trucks provided by BCO Independent Contractors ⁽²⁾		10,637			9,868


(1) Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro.

(2) BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.

(3) Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end.

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

Source: Landstar System, Inc.