Landstar System Reports Record First Quarter Revenue of $1.048 Billion and Record First Quarter Diluted Earnings Per Share of $1.37

04/25/18

04:15 PM EDT

1Q 2018 Presentation Slides 1.5 MB

JACKSONVILLE, Fla., April 25, 2018 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ:LSTR) reported record first quarter diluted earnings per share of $1.37 in the 2018 first quarter, on record first quarter revenue of $1.048 billion. Landstar reported diluted earnings per share of $0.77 on revenue of $781 million in the 2017 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $155.5 million, a record quarterly gross profit, in the 2018 first quarter compared to $121.6 million in the 2017 first quarter. Operating margin, representing operating income divided by gross profit, was 48.3 percent in the 2018 first quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 first quarter was $979.1 million, or 93 percent of revenue, compared to $726.8 million, or 93 percent of revenue, in the 2017 first quarter. Truckload transportation revenue hauled via van equipment in the 2018 first quarter was $656.1 million compared to $470.0 million in the 2017 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 first quarter was $299.4 million compared to $237.2 million in the 2017 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $52.8 million, or 5 percent of revenue, in the 2018 first quarter compared to $42.4 million, or 5 percent of revenue, in the 2017 first quarter.

Trailing twelve-month return on average shareholders’ equity was 32 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 27 percent. Currently, the Company is authorized to purchase up to approximately 2,986,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of March 31, 2018, the Company had $260 million in cash and short term investments and $217 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 $0.15 per share payable on June 1, 2018, to stockholders of record as of the close of business on May 10, 2018. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“I am extremely pleased with the execution of the Landstar model during the 2018 first quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “Diluted earnings per share was $1.37 in the 2018 first quarter, the highest first quarter diluted earnings per share in Landstar history. Revenue and the number of loads hauled via truck each set new all-time Landstar first quarter records. All-time quarterly records were set for both gross profit and operating income and the Company also set a new all-time record for trucks provided by BCOs with 9,868 as of the end of the quarter.”

Gattoni continued, “The number of loads hauled via truck in the 2018 first quarter increased 12 percent over the 2017 first quarter, driven by a 13 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 12 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 20 percent higher in the 2018 first quarter compared to the 2017 first quarter, primarily due to a 25 percent increase in rail intermodal volume.”

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 first quarter, as industry-wide truck capacity continued to be very tight. Revenue per load on loads hauled via van equipment increased 24 percent over the 2017 first quarter and revenue per load on loads hauled via unsided/platform equipment increased 17 percent over the 2017 first quarter. As a result, revenue per load on loads hauled via truck was 21 percent higher than the 2017 first quarter.”

Gattoni continued, “Through the first few weeks of April, load growth on a year-over-year basis in loads hauled via truck was consistent with the load growth experienced in the first quarter. I expect that trend to continue and, therefore, expect the number of loads hauled via truck in the 2018 second quarter to increase in a 10 to 12 percent range over the 2017 second quarter. My expectation is that pricing conditions for truck services in the 2018 second quarter will continue to be very strong with little change in the level of available truck capacity. Assuming those truck conditions remain, I expect 2018 second quarter truck revenue per load to be higher than the 2017 second quarter in a 19 to 22 percentage range. I anticipate revenue for the 2018 second quarter to be in a range of $1.115 billion to $1.165 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.5 percent of BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate 2018 second quarter diluted earnings per share to be in a range of $1.48 to $1.54 per share compared to $0.89 per diluted share in the 2017 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 2018 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 2017 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. 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)

			Thirteen Weeks Ended
			March 31,			April 1,
				2018			2017

Revenue			$	1,047,926		$	780,908
Investment income				861			414

Costs and expenses:
	Purchased transportation			810,297			595,523
	Commissions to agents			82,125			63,798
	Other operating costs, net of gains on asset sales/dispositions			7,604			6,897
	Insurance and claims			17,360			14,513
	Selling, general and administrative			45,251			38,323
	Depreciation and amortization			10,997			9,934

		Total costs and expenses		973,634			728,988

Operating income				75,153			52,334
Interest and debt expense				800			1,083

Income before income taxes				74,353			51,251
Income taxes				16,880			18,868

Net income				57,473			32,383
Less: Net loss attributable to noncontrolling interest				(44	)		-
Net income attributable to Landstar System,
	Inc. and subsidiary		$	57,517		$	32,383

Earnings per common share attributable to
	Landstar System, Inc. and subsidiary		$	1.37		$	0.77

Diluted earnings per share attributable to
	Landstar System, Inc. and subsidiary		$	1.37		$	0.77

Average number of shares outstanding:
	Earnings per common share			42,038,000			41,879,000
	Diluted earnings per share			42,098,000			41,998,000

Dividends per common share			$	0.15		$	0.09

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

				March 31,			December 30,
					2018			2017
ASSETS
Current assets:
	Cash and cash equivalents			$	220,605		$	242,416
	Short-term investments				39,014			48,928
	Trade accounts receivable, less allowance
		of $6,496 and $6,131			631,828			631,164
	Other receivables, including advances to independent
		contractors, less allowance of $6,796 and $6,012			27,880			24,301
	Other current assets				9,373			14,394
		Total current assets			928,700			961,203

Operating property, less accumulated depreciation
			and amortization of $224,042 and $218,700		265,540			276,011
Goodwill					39,363			39,065
Other assets					86,670			76,181
Total assets				$	1,320,273		$	1,352,460

LIABILITIES AND EQUITY
Current liabilities:
	Cash overdraft			$	36,320		$	42,242
	Accounts payable				282,480			285,132
	Current maturities of long-term debt				39,931			42,051
	Insurance claims				39,547			38,919
	Dividends payable				-			62,985
	Accrued compensation				12,459			30,103
	Other current liabilities				62,206			47,211
		Total current liabilities			472,943			548,643

Long-term debt, excluding current maturities					73,350			83,062
Insurance claims					30,252			30,141
Deferred income taxes and other non-current liabilities					37,448			36,737

Equity
Landstar System, Inc. and subsidiary shareholders' equity
	Common stock, $0.01 par value, authorized 160,000,000
		shares, issued 67,836,164 and 67,740,380 shares			678			677
	Additional paid-in capital				211,933			209,599
	Retained earnings				1,663,140			1,611,158
	Cost of 25,768,669 and 25,749,493 shares of common
		stock in treasury			(1,169,458	)		(1,167,600	)
	Accumulated other comprehensive loss				(3,551	)		(3,162	)
		Total Landstar System, Inc. and subsidiary shareholders'
			equity		702,742			650,672
Noncontrolling interest					3,538			3,205
		Total equity			706,280			653,877
Total liabilities and equity				$	1,320,273		$	1,352,460

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

				Thirteen Weeks Ended
				March 31,		April 1,
				2018		2017
Revenue generated through (in thousands):

	Truck transportation
		Truckload:
			Van equipment	$	656,135	$	469,783
			Unsided/platform equipment		299,369		237,177
		Less-than-truckload			23,584		19,857
			Total truck transportation		979,088		726,817
	Rail intermodal				29,292		22,842
	Ocean and air cargo carriers				23,477		19,590
	Other ⁽¹⁾				16,069		11,659
				$	1,047,926	$	780,908

	Revenue on loads hauled via BCO Independent Contractors ⁽²⁾
		included in total truck transportation		$	471,150	$	364,908

Number of loads:

	Truck transportation
		Truckload:
			Van equipment		336,919		298,066
			Unsided/platform equipment		119,791		111,185
		Less-than-truckload			33,420		29,919
			Total truck transportation		490,130		439,170
	Rail intermodal				13,280		10,650
	Ocean and air cargo carriers				6,330		5,730
					509,740		455,550

	Loads hauled via BCO Independent Contractors ⁽²⁾
		included in total truck transportation			233,180		218,230

Revenue per load:

	Truck transportation
		Truckload:
			Van equipment	$	1,947	$	1,576
			Unsided/platform equipment		2,499		2,133
		Less-than-truckload			706		664
			Total truck transportation		1,998		1,655
	Rail intermodal				2,206		2,145
	Ocean and air cargo carriers				3,709		3,419

	Revenue per load on loads hauled via BCO Independent Contractors ⁽²⁾			$	2,021	$	1,672

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

	Truck capacity providers:
		BCO Independent Contractors ⁽²⁾			45%		47%
		Truck Brokerage Carriers			48%		46%
	Rail intermodal				3%		3%
	Ocean and air cargo carriers				2%		3%
	Other				2%		1%


				March 31,		April 1,
				2018		2017
Truck Capacity Providers

	BCO Independent Contractors ⁽²⁾				9,243		8,772
	Truck Brokerage Carriers:
	Approved and active ⁽³⁾				34,659		31,566
	Other approved				15,687		15,889
					50,346		47,455
	Total available truck capacity providers				59,589		56,227

	Trucks provided by BCO Independent Contractors ⁽²⁾				9,868		9,370


(1) Includes primarily reinsurance premium revenue generated by the insurance segment and, during the 2018 fiscal quarter, 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 StoutLandstar System, Inc.www.landstar.com
904-398-9400

Source: Landstar System, Inc.