UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d)
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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 October 21, 2020, Landstar System, Inc. (“Landstar” or the “Company”) issued a press release announcing results for the third quarter of fiscal 2020. A copy of the press release is attached hereto as Exhibit 99.1.
In the press release attached hereto as Exhibit 99.1, the Company provided the following information that may be deemed to be a non-GAAP financial measure: 2020 fourth quarter diluted earnings per share guidance of $1.61 to $1.71, excluding the one-time anticipated cost of $0.29 per diluted share related to the buyout of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a BCO independent contractor recruitment and retention program formerly involving those agents.
Management believes that it is appropriate to present this financial information for the following reasons: (1) the anticipated cost relating to these buyout arrangements is a unique, non-recurring expense due to the Company’s complete discontinuation of a legacy program with a small number of its agents; (2) disclosure of these matters will allow investors to better understand the underlying trends in the Company’s financial condition and results of operations; (3) this information will facilitate comparisons by investors of the Company’s results as compared to the results of peer companies; and (4) management considers this financial information in its decision making.
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 October 21, 2020, 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 October 22, 2020 in connection with the Company’s release of results for the third quarter of fiscal 2020.
In the slide presentation attached hereto as Exhibit 99.2, the Company provided the following information that may be deemed a non-GAAP financial measure: excluding the impact of the $12.6 million of pandemic relief incentive payments from the 2020 year-to-date period, operating margin was 42.2% in the 2020 year-to-date period.
Management believes that it is appropriate to present this financial information for the following reasons: (1) disclosure of these matters will allow investors to better understand the underlying trends in the Company’s financial condition and results of operations; (2) this information will facilitate comparisons by investors of the Company’s results as compared to the results of peer companies; and (3) management considers this financial information in its decision making.
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 October 21, 2020 of Landstar System, Inc. | |
| 99.2 | Slide Presentation dated October 21, 2020 of Landstar System, Inc. | |
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K | |
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: October 21, 2020 | By: | /s/ L. Kevin Stout | ||||
| Name: | L. Kevin Stout | |||||
| Title: | Vice President and Chief Financial Officer | |||||
Exhibit 99.1
| For Immediate Release | Contact: Kevin Stout | |
| Landstar System, Inc. | ||
| www.landstar.com | ||
| October 21, 2020 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS THIRD QUARTER REVENUE OF $1.086 BILLION
AND DILUTED EARNINGS PER SHARE OF $1.61
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported revenue of $1.086 billion, an increase of approximately 7% over revenue of $1.012 billion reported in the 2019 third quarter. Diluted earnings per share of $1.61 in the 2020 third quarter represented an increase of approximately 19% over diluted earnings per share of $1.35 in the 2019 third quarter. 2020 third quarter diluted earnings per share was the second highest third quarter diluted earnings per share in the Company’s history, behind only the 2018 third quarter diluted earnings per share of $1.63. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $160.9 million in the 2020 third quarter, an increase of approximately 5% compared to $152.6 million in the 2019 third quarter. Operating margin, representing operating income divided by gross profit, was 51.2 percent in the 2020 third quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2020 third quarter was $1.006 billion, or 93 percent of revenue, compared to $932.2 million, or 92 percent of revenue, in the 2019 third quarter. Truckload transportation revenue hauled via van equipment in the 2020 third quarter was $666.6 million compared to $575.0 million in the 2019 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2020 third quarter was $314.5 million compared to $331.8 million in the 2019 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $62.2 million, or 6 percent of revenue, in the 2020 third quarter compared to $59.3 million, or 6 percent of revenue, in the 2019 third quarter.
LANDSTAR SYSTEM/2
Trailing twelve-month return on average shareholders’ equity was 26 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 22 percent. Landstar did not purchase any shares of its common stock during the 2020 third quarter and currently is authorized to purchase up to 1,821,030 shares of the Company’s common stock under Landstar’s previously announced share purchase program. As of September 26, 2020, the Company had $258 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility, with the ability to increase that amount of borrowings to $366 million using the facility’s accordion feature. Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.21 per share payable on December 4, 2020, to stockholders of record as of the close of business on November 10, 2020. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
“Landstar entered the third quarter of 2020 facing one of the most unpredictable and challenging freight environments in the Company’s history,” said Landstar President and Chief Executive Officer Jim Gattoni. “In our second quarter earnings release dated July 22, 2020, we provided third quarter guidance anticipating a decrease in a mid single-digit range on a year-over-year basis for both truck volume and price. Through the first few weeks of fiscal July, the number of loads and revenue per load on loads hauled via truck were each below the corresponding period of 2019 in a mid single-digit percentage range. We closed fiscal July with truckload volumes and revenue per load on loads hauled via truck down only 1% and 2%, respectively, compared to fiscal July 2019. In the first week of the Company’s fiscal August period, the number of loads and revenue per load on loads hauled via truck both turned positive on a weekly basis compared to the corresponding week of 2019. Landstar continued to experience gradual improvement in the number of loads and revenue per load on loads hauled via truck on a sequential basis through August 2020. Moreover, on a year-over-year basis, the number of loads and revenue per load on loads hauled via truck in fiscal August 2020 in comparison to fiscal August 2019 increased by 2% and 5%, respectively.”
LANDSTAR SYSTEM/3
Gattoni continued, “In our second quarter earnings release, we provided third quarter revenue guidance of $885 million to $935 million and third quarter diluted earnings per share guidance of $1.11 to $1.17. On September 9, 2020, we disclosed in a Form 8-K filed with the SEC and further explained at a webcast investor conference the next day that based on overall market conditions, we expected 2020 third quarter revenue to be in a range of $1.02 billion to $1.06 billion and diluted earnings per share for the 2020 third quarter to be in a range of $1.40 to $1.46. Our updated guidance provided on September 9, 2020, reflected our expectation that the number of loads and revenue per load on loads hauled via truck for the 2020 third quarter would be above the 2019 third quarter in a low single-digit range. The number of loads and revenue per load on loads hauled via truck for fiscal September 2020 continued to improve from August 2020 on a sequential basis beyond our expectations, particularly with respect to the demand for services provided by van equipment, and exceeded fiscal September 2019 amounts by 7% and 10%, respectively. Overall, truck load volumes increased in the 2020 third quarter by 3% as compared to the 2019 third quarter, and truck revenue per load increased by 5% as compared to the 2019 third quarter. Ultimately, revenue in the 2020 third quarter was $1.086 billion and diluted earnings per share for the 2020 third quarter was $1.61. The achievement of both revenue and diluted earnings per share in excess of our updated guidance was primarily the result of the further sequential increases in the number of loads and revenue per load on loads hauled via truck from September 9th through the end of the fiscal month.”
Gattoni continued, “The Company’s variable cost business model, highly diversified customer base and geographically dispersed network of independent agents and third-party truck capacity provides resiliency and flexibility in any demand environment. While U.S. manufacturing production continued to lag prior year levels, the agent network capitalized on opportunities with new customers and executed by sourcing truck capacity for shippers experiencing rapid volume growth and/or supply chain disruption. During the 2020 third quarter, approved and active third-party truck carrier count increased approximately 10 percent compared to the 2020 second quarter to over 41,000 carriers. Additionally, the Company net added 272 trucks provided by BCOs in the third quarter.”
LANDSTAR SYSTEM/4
Gattoni further stated, “Through the first few weeks of October 2020, the number of loads hauled via truck was above the corresponding period of 2019 in a high single-digit percentage range. I expect that trend to continue during the remainder of the 2020 fourth quarter. Accordingly, I expect the number of loads hauled via truck in the 2020 fourth quarter to be above the number of loads hauled by truck in the 2019 fourth quarter in a high single-digit percentage range. Based on our current macroeconomic outlook, I expect pricing to remain strong and relatively stable through the 2020 fourth quarter given current demand and assuming little change in the level of truck capacity available in the marketplace. Assuming the current macroeconomic environment continues throughout the remainder of the fourth quarter, I expect 2020 fourth quarter truck revenue per load to be higher than the 2019 fourth quarter in a low double-digit percentage range. I anticipate revenue for the 2020 fourth quarter to be in a range of $1.150 billion to $1.200 billion.”
Earlier this month, the Company announced a new initiative relating to the reorganization of its regional field operations centers throughout the United States in support of its BCO network. It is the intent of the Company that this network of field operations centers will further support the Company’s continual efforts in recruiting and retaining the best truck owner-operators in our industry. In connection with this initiative, the Company expects to record a liability of approximately $15.0 million in its 2020 fourth quarter relating to anticipated buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a BCO recruitment and retention program formerly involving those agents. This charge is expected to decrease 2020 fourth quarter diluted earnings per share by approximately $0.29. These incentive commission arrangements to agents to recruit and retain BCOs reduced gross profit by almost $10 million a year in recent years.
Gattoni concluded, “Assuming the estimated range of revenue for the 2020 fourth quarter described above, the anticipated charge for the expected buyouts of certain agent commission arrangements, and insurance and claims expense at 4.8 percent of BCO revenue, representing average insurance and claims costs as a percentage of BCO revenue over the past five years (adjusted to reflect the recent significant increase in insurance premiums covered in the Company’s second quarter earnings release), I would anticipate 2020 fourth quarter diluted earnings per share to be in a range of $1.32 to $1.42 per share. Excluding the one-time cost of $0.29 per diluted share related to the anticipated buyouts of the incentive commission arrangements, 2020 fourth quarter diluted earnings per share guidance would be $1.61 to $1.71.”
LANDSTAR SYSTEM/5
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 Third Quarter 2020 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: the impact of the coronavirus (COVID-19) pandemic; 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 2019 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.
LANDSTAR SYSTEM/6
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/7
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue |
$ | 2,836,626 | $ | 3,089,698 | $ | 1,085,546 | $ | 1,011,658 | ||||||||
| Investment income |
2,716 | 3,736 | 714 | 1,315 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
2,183,143 | 2,365,646 | 838,753 | 774,520 | ||||||||||||
| Commissions to agents |
236,490 | 257,862 | 85,848 | 84,568 | ||||||||||||
| Other operating costs, net of gains/losses on asset sales/dispositions |
23,035 | 28,531 | 7,361 | 10,431 | ||||||||||||
| Insurance and claims |
66,563 | 55,248 | 21,855 | 23,969 | ||||||||||||
| Selling, general and administrative |
124,779 | 120,717 | 38,851 | 38,152 | ||||||||||||
| Depreciation and amortization |
34,212 | 33,045 | 11,240 | 10,695 | ||||||||||||
| Impairment of intangible and other assets |
2,582 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total costs and expenses |
2,670,804 | 2,861,049 | 1,003,908 | 942,335 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income |
168,538 | 232,385 | 82,352 | 70,638 | ||||||||||||
| Interest and debt expense |
2,936 | 2,278 | 1,008 | 764 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before income taxes |
165,602 | 230,107 | 81,344 | 69,874 | ||||||||||||
| Income taxes |
38,567 | 52,452 | 19,458 | 16,619 | ||||||||||||
|
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|
|
|
|
|
|
|
|||||||||
| Net income |
127,035 | 177,655 | 61,886 | 53,255 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest |
— | (17 | ) | — | — | |||||||||||
|
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|
|
|
|
|
|
|||||||||
| Net income attributable to Landstar System, Inc. and subsidiary |
$ | 127,035 | $ | 177,672 | $ | 61,886 | $ | 53,255 | ||||||||
|
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|
|
|
|
|
|||||||||
| Earnings per common share attributable to Landstar System, Inc. and subsidiary |
$ | 3.28 | $ | 4.45 | $ | 1.61 | $ | 1.35 | ||||||||
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|
|
|
|||||||||
| Diluted earnings per share attributable to Landstar System, Inc. and subsidiary |
$ | 3.28 | $ | 4.45 | $ | 1.61 | $ | 1.35 | ||||||||
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|
|||||||||
| Average number of shares outstanding: |
||||||||||||||||
| Earnings per common share |
38,673,000 | 39,891,000 | 38,386,000 | 39,566,000 | ||||||||||||
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|
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| Diluted earnings per share |
38,673,000 | 39,891,000 | 38,386,000 | 39,566,000 | ||||||||||||
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|
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| Dividends per common share |
$ | 0.580 | $ | 0.515 | $ | 0.210 | $ | 0.185 | ||||||||
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|||||||||
LANDSTAR SYSTEM/8
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| September 26, | December 28, | |||||||
| 2020 | 2019 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 218,554 | $ | 319,515 | ||||
| Short-term investments |
39,068 | 32,901 | ||||||
| Trade accounts receivable, less allowance of $8,120 and $7,284 |
637,908 | 588,549 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $8,827 and $7,667 |
40,550 | 35,553 | ||||||
| Other current assets |
27,989 | 21,370 | ||||||
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|
|||||
| Total current assets |
964,069 | 997,888 | ||||||
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|||||
| Operating property, less accumulated depreciation and amortization of $291,159 and $280,849 |
279,495 | 285,855 | ||||||
| Goodwill |
40,251 | 38,508 | ||||||
| Other assets |
108,390 | 105,460 | ||||||
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|
|
|||||
| Total assets |
$ | 1,392,205 | $ | 1,427,711 | ||||
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|
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| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Cash overdraft |
$ | 47,459 | $ | 53,878 | ||||
| Accounts payable |
339,798 | 271,996 | ||||||
| Current maturities of long-term debt |
34,723 | 42,632 | ||||||
| Insurance claims |
46,019 | 44,532 | ||||||
| Dividends payable |
— | 78,947 | ||||||
| Contractor escrow |
28,345 | 24,902 | ||||||
| Other current liabilities |
47,206 | 36,017 | ||||||
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|
|||||
| Total current liabilities |
543,550 | 552,904 | ||||||
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|||||
| Long-term debt, excluding current maturities |
52,570 | 70,212 | ||||||
| Insurance claims |
36,344 | 33,575 | ||||||
| Deferred income taxes and other non-current liabilities |
54,107 | 49,551 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,181,418 and 68,083,419 shares |
682 | 681 | ||||||
| Additional paid-in capital |
226,878 | 226,123 | ||||||
| Retained earnings |
2,065,999 | 1,962,161 | ||||||
| Cost of 29,797,639 and 28,609,926 shares of common stock in treasury |
(1,581,961 | ) | (1,465,284 | ) | ||||
| Accumulated other comprehensive loss |
(5,964 | ) | (2,212 | ) | ||||
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|
|||||
| Total shareholders’ equity |
705,634 | 721,469 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,392,205 | $ | 1,427,711 | ||||
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LANDSTAR SYSTEM/9
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 26, | September 28, | September 26, | September 28, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue generated through (in thousands): |
||||||||||||||||
| Truck transportation Truckload: |
||||||||||||||||
| Van equipment |
$ | 1,694,916 | $ | 1,799,421 | $ | 666,582 | $ | 575,042 | ||||||||
| Unsided/platform equipment |
848,187 | 980,615 | 314,471 | 331,787 | ||||||||||||
| Less-than-truckload |
70,984 | 73,475 | 25,125 | 25,367 | ||||||||||||
|
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|||||||||
| Total truck transportation |
2,614,087 | 2,853,511 | 1,006,178 | 932,196 | ||||||||||||
| Rail intermodal |
81,747 | 87,555 | 30,432 | 28,970 | ||||||||||||
| Ocean and air cargo carriers |
89,002 | 89,258 | 31,752 | 30,365 | ||||||||||||
| Other (1) |
51,790 | 59,374 | 17,184 | 20,127 | ||||||||||||
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| $ | 2,836,626 | $ | 3,089,698 | $ | 1,085,546 | $ | 1,011,658 | |||||||||
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| Revenue on loads hauled via BCO Independent Contractors (2) included in total truck transportation |
$ | 1,312,003 | $ | 1,390,135 | $ | 502,224 | $ | 466,207 | ||||||||
| Number of loads: |
||||||||||||||||
| Truck transportation Truckload: |
||||||||||||||||
| Van equipment |
946,117 | 1,014,572 | 345,598 | 327,671 | ||||||||||||
| Unsided/platform equipment |
356,670 | 391,112 | 125,548 | 130,192 | ||||||||||||
| Less-than-truckload |
119,533 | 115,616 | 41,454 | 41,067 | ||||||||||||
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|||||||||
| Total truck transportation |
1,422,320 | 1,521,300 | 512,600 | 498,930 | ||||||||||||
| Rail intermodal |
33,410 | 35,370 | 11,900 | 11,490 | ||||||||||||
| Ocean and air cargo carriers |
22,720 | 22,150 | 8,290 | 7,340 | ||||||||||||
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|||||||||
| 1,478,450 | 1,578,820 | 532,790 | 517,760 | |||||||||||||
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| Loads hauled via BCO Independent Contractors (2) included in total truck transportation |
693,860 | 722,870 | 250,030 | 239,210 | ||||||||||||
| Revenue per load: |
||||||||||||||||
| Truck transportation Truckload: |
||||||||||||||||
| Van equipment |
$ | 1,791 | $ | 1,774 | $ | 1,929 | $ | 1,755 | ||||||||
| Unsided/platform equipment |
2,378 | 2,507 | 2,505 | 2,548 | ||||||||||||
| Less-than-truckload |
594 | 636 | 606 | 618 | ||||||||||||
| Total truck transportation |
1,838 | 1,876 | 1,963 | 1,868 | ||||||||||||
| Rail intermodal |
2,447 | 2,475 | 2,557 | 2,521 | ||||||||||||
| Ocean and air cargo carriers |
3,917 | 4,030 | 3,830 | 4,137 | ||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (2) |
$ | 1,891 | $ | 1,923 | $ | 2,009 | $ | 1,949 | ||||||||
| Revenue by capacity type (as a % of total revenue); |
||||||||||||||||
| Truck capacity providers: |
||||||||||||||||
| BCO Independent Contractors (2) |
46 | % | 45 | % | 46 | % | 46 | % | ||||||||
| Truck Brokerage Carriers |
46 | % | 47 | % | 46 | % | 46 | % | ||||||||
| Rail intermodal |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Ocean and air cargo carriers |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Other |
2 | % | 2 | % | 2 | % | 2 | % | ||||||||
| September 26, | September 28, | |||||||||||||||
| 2020 | 2019 | |||||||||||||||
| Truck Capacity Providers |
||||||||||||||||
| BCO Independent Contractors (2) |
9,866 | 9,738 | ||||||||||||||
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| Truck Brokerage Carriers: |
||||||||||||||||
| Approved and active (3) |
41,246 | 39,963 | ||||||||||||||
| Other approved |
22,181 | 16,984 | ||||||||||||||
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|||||||||||||
| 63,427 | 56,947 | |||||||||||||||
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| Total available truck capacity providers |
73,293 | 66,685 | ||||||||||||||
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| Trucks provided by BCO Independent Contractors (2) |
10,571 | 10,441 | ||||||||||||||
| (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. |
October 21, 2020 Landstar System, Inc. Earnings Conference Call Third Quarter 2020 Date Published: 10/21/2020 Exhibit 99.2
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 impact of the coronavirus (COVID-19) pandemic and the operational, financial and legal risks detailed in Landstar’s Form 10-K for the 2019 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. In this slide presentation, the Company provides the following information that may be deemed a non-GAAP financial measure: operating margin in the 2020 year-to-date period, excluding the impact of pandemic relief incentive payments. Management believes that it is appropriate to present this financial information for the following reasons: (1) disclosure of these matters will allow investors to better understand the underlying trends in the Company’s financial condition and results of operations; (2) this information will facilitate comparisons by investors of the Company’s results as compared to the results of peer companies; and (3) management considers this financial information in its decision making. Date Published: 10/21/2020
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: 10/21/2020
The Network Landstar Employees Approx. 1,300 Agents Approx. 1,200 Customers 25,000+ Capacity 65,000+ 2019 Results $4.1 billion in revenue 2.1 million loadings 555 million dollar agents 10,243 BCO trucks (2019 year-end) 56,317 Carriers (2019 year-end) 17,000+ Trailers (2019 year-end) Date Published: 10/21/2020
Percentage of Revenue 3Q19 3Q20 Truck Transportation Truckload Van equipment 57% 61% Unsided/platform equipment 33% 29% Less-than-truckload 3% 2% Rail intermodal 3% 3% Ocean and air cargo 3% 3% Transportation Management Services Date Published: 10/21/2020
Percentage change in rate is calculated on a revenue per load basis. Percentage change in volume is calculated on the number of loads hauled. Revenue ($’s in thousands) Date Published: 10/21/2020 Quarter Year-to-Date
Van Equipment Unsided/Platform Equipment Truckload Loadings and Revenue per Load (Excludes LTL) Date Published: 10/21/2020
As a Percentage of Transportation Revenue 3Q19 3Q20 Quarter over Prior Year Quarter Growth Consumer Durables 24.6 25.5 11% Machinery 14.9 12.1 -12% Building Products 9.1 9.8 15% AA&E, Hazmat 8.9 9.0 9% Automotive 7.0 7.7 17% Foodstuffs 4.2 4.9 26% Metals 5.8 4.8 -12% Energy 3.9 2.7 -26% Other 21.6 23.5 17% Transportation Revenue 100.0 100.0 7% Industries Served Date Published: 10/21/2020
15.1% 14.8% 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 51% and 52% of revenue in the 2019 and 2020 year-to-date periods, respectively, and 52% and 51% of revenue in the 2019 and 2020 third quarters, respectively. Includes the impact of approximately $12.6 million related to BCO and agent pandemic relief incentive payments made in April and May 2020. The Company paid both the hauling BCO and agent dispatching the load an extra $50 for each BCO load delivered during these months. Gross Profit (1) and Gross Profit Margin (2) ($’s in thousands) Date Published: 10/21/2020 Quarter Year-to-Date (4) 15.1% 14.7%
Operating margin equals operating income divided by gross profit. Excluding the impact of the $12.6 million of pandemic relief incentive payments from the 2020 year-to-date period, operating margin was 42.2% in the 2020 year-to-date period. Operating Income and Operating Margin (1) ($’s in thousands) Date Published: 10/21/2020 Quarter Year-to-Date 46.3% 51.2% 49.8 % 10 40.4%
Date Published: 10/21/2020 Truck Capacity Data (All information is provided as of the end of the period) Sep 28, Dec 28, Sep 26, 2019 (2) 2019 2020 (2) BCO Independent Contractors 9,738 9,554 9,866 Truck Brokerage Carriers: Approved and Active (1) 39,963 39,497 41,246 Other Approved 16,984 16,820 22,181 56,947 56,317 63,247 Total Available Truck Capacity Providers 66,685 65,871 73,293 Trucks Provided by BCO Independent Contractors 10,441 10,243 10,571 (1) Active refers to truck brokerage carriers who hauled freight for Landstar in the 180 day period immediately preceding the period end. (2) Fuel surcharges billed to customers on freight hauled by BCO Independent Contractors, which are paid 100% to the BCO and excluded from revenue, and the cost of purchased transportation were $127.7 million and $170.1 million in the 2020 and 2019 year-to- date periods, respectively, and $40.1 million and $56.3 million in the 2020 and 2019 third quarters, respectively.
Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. Capital expenditures includes cash capital expenditures of $25.4 million and approximately $2.8 million for the acquisition of a business during the 2020 year-to-date period. Date Published: 10/21/2020 Key Balance Sheet and Cash Flow Statistics ($’s in thousands)
Free Cash Flow (1) , Stock Purchases and Dividends Date Published: 10/21/2020 (In Thousands) (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide.
Date Published: 10/21/2020