UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d)
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Emerging growth company
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 19, 2022, Landstar System, Inc. (“Landstar” or the “Company”) issued a press release announcing results for the third quarter of fiscal 2022. A copy of the press release is attached hereto as Exhibit 99.1.
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 19, 2022, 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 20, 2022 in connection with the Company’s release of results for the third quarter of fiscal 2022.
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 | Press Release, dated October 19, 2022, of Landstar System, Inc. | |
| 99.2 | Slide Presentation, dated October 19, 2022, 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 19, 2022 | By: | /s/ James P. Todd | ||||
| Name: James P. Todd | ||||||
| Title: Vice President, Chief Financial Officer and Assistant Secretary | ||||||
Exhibit 99.1
| For Immediate Release | Contacts: Jim Gattoni (CEO) Jim Todd (CFO) Landstar System, Inc. www.landstar.com | |||
| October 19, 2022 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS
RECORD THIRD QUARTER REVENUE OF $1.816B AND
RECORD THIRD QUARTER DILUTED EARNINGS PER SHARE OF $2.76
Jacksonville, FL—Landstar System, Inc. (NASDAQ: LSTR) reported revenue of $1.816 billion in the 2022 third quarter, a 5 percent increase over revenue of $1.734 billion in the 2021 third quarter and quarterly diluted earnings per share (“DEPS”) of $2.76, an increase of 7 percent compared to $2.58 in the 2021 third quarter. 2022 third quarter revenue and DEPS each established new all-time third quarter records for Landstar.
Gross profit in the 2022 third quarter was $185.7 million, 2 percent below 2021 third quarter gross profit of $189.2 million. Variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2022 third quarter reached a third quarter record of $245.7 million, 1 percent above 2021 third quarter variable contribution of $242.3 million. A reconciliation of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2022 and 2021 third quarters and year-to-date periods is provided in the Company’s accompanying financial disclosures.
Trailing twelve month return on average shareholders’ equity was 52 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 46 percent. Landstar continues to return significant amounts of capital to stockholders through the Company’s stock purchase program and dividends. During the 2022 third quarter, Landstar purchased approximately 504,000 shares of its common stock at an aggregate cost of $73.3 million, bringing the total number of common shares
LANDSTAR SYSTEM/2
purchased during the thirty-nine weeks ended September 24, 2022 to 1,901,000 shares at an aggregate cost of approximately $286.0 million. The Company is currently authorized to purchase up to an additional 1,099,174 shares of the Company’s common stock under its previously announced share purchase program. Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.30 per share payable on December 2, 2022, to stockholders of record as of the close of business on November 8, 2022. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2022 third quarter was $1,598.8 million, or 88 percent of revenue, compared to $1,580.7 million, or 91 percent of revenue, in the 2021 third quarter. Truckload transportation revenue hauled via van equipment in the 2022 third quarter was $914.2 million, compared to $918.1 million in the 2021 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2022 third quarter was $453.9 million, compared to $423.0 million in the 2021 third quarter, an increase of 7 percent. Revenue from other truck transportation, which is largely related to power-only services, in the 2022 third quarter was $195.3 million, compared to $208.8 million in the 2021 third quarter, a decrease of 6 percent. Revenue hauled by rail, air and ocean cargo carriers was $191.9 million, or 11 percent of revenue, in the 2022 third quarter, compared to $128.6 million, or 7 percent of revenue, in the 2021 third quarter, an increase of 49 percent.
“Customer demand for our freight transportation services was solid in most sectors of our business during the 2022 third quarter,” said Landstar President and CEO Jim Gattoni. “Overall, the number of loads hauled via truck in the 2022 third quarter increased 1 percent over the 2021 third quarter, a good performance given a tough year-over-year comparison. In particular, demand for unsided/platform services was strong while demand for van services moderated compared to earlier in 2022. The increase in the number of truck loads hauled via unsided/platform equipment together with a modest increase in the number of loads hauled via van equipment more than offset a decrease in the number of loads hauled by other truck transportation services. The less robust growth in the number of truck loads hauled via van equipment and the decrease in loads
LANDSTAR SYSTEM/3
hauled by other truck transportation services was largely attributable to reduced demand from certain parcel and less-than-truckload carriers for our truckload services, as volumes from those customers have returned to more normalized levels since peaking in 2021 and early 2022. Revenue per truck load in the 2022 third quarter was essentially equal to that of the 2021 third quarter, with strength in revenue per load on truck loads hauled by unsided/platform equipment being offset by small decreases in revenue per load on truck loads hauled by van equipment and other truck transportation services.”
Gattoni further commented, “There continues to be a lot of unease regarding U.S. economic conditions as we head into the fourth quarter. On a macroeconomic level, continuing inflation concerns along with possible further action by the Federal Reserve to address these concerns at the risk of causing further recessionary pressure, as well as current geopolitical tensions and the corresponding volatility in the international energy markets, add significant uncertainty to the performance of the overall domestic freight environment. Moreover, high inventory levels being reported by large retailers corresponds with what we anticipate will be decreased seasonal demand for freight services in connection with the 2022 holiday shipping season. Additionally, comparisons to the 2021 fourth quarter results will be challenging for Landstar, given the unprecedented strength our business experienced during the 2021 fourth quarter.”
Gattoni continued, “Through the first several weeks of October, the number of loads hauled via truck was below the corresponding period of 2021 in a mid-single-digit percentage range; and overall truck revenue per load trended reasonably in-line with historical third to fourth quarter sequential patterns. However, with expectations of a more muted peak shipping season and, relatedly, a more challenging demand environment for loads hauled by van equipment and other truck transportation services, I expect truck revenue per load to underperform historical fourth quarter trends in the 2022 fourth quarter, and as such, to be below the 2021 fourth quarter by 5 to 7 percent. With respect to volumes, please note that Landstar’s fiscal year ends on the last Saturday of the calendar year, which this year is December 31, 2022, resulting in fiscal year 2022 representing a 53-week period. As such, the Company’s 2022 fourth quarter includes an extra week of operations, during which the Company anticipates it will haul approximately thirty to forty thousand truck loads. Taking into account the extra week of operations, I expect the number of loads hauled via truck to decrease compared to the 2021 fourth quarter by 2 to 4 percent. As such, I anticipate revenue for the 2022 fourth quarter to be in a range of $1.775 billion to $1.825 billion.”
LANDSTAR SYSTEM/4
Gattoni continued, “Based on the range of revenue estimated for the 2022 fourth quarter, I would anticipate DEPS to be in a range of $2.60 to $2.70. This range of DEPS includes insurance and claims expense estimated at 4.5 percent of BCO revenue.”
Gattoni concluded, “Landstar’s performance through the first three quarters of 2022 has been outstanding. The Company’s agent family has continued to execute regardless of a shifting macroeconomic backdrop. Given the exceptional performance by Landstar year-to-date plus the revenue and earnings estimates we have provided for the 2022 fourth quarter, we anticipate establishing new all-time fiscal year records in 2022 with annual revenue expected to be in excess of $7.5 billion and DEPS expected to be in excess of $11.75. Both of these figures would be well above Landstar’s existing record performance in any year in our history and would represent remarkable achievements to cap another tremendous year for the Company, its employees and the thousands of business owners who participate in the Landstar network.”
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 2022 Earnings Release Conference Call.”
About Landstar:
Landstar System, Inc., a Fortune 500 company, is a worldwide, technology-enabled, 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.
LANDSTAR SYSTEM/5
Non-GAAP Financial Measures:
In this earnings release and accompanying financial disclosures, the Company provides the following information that may be deemed a non-GAAP financial measure: variable contribution and variable contribution margin. The Company believes variable contribution and variable contribution margin are useful measures of the variable costs that we incur at a shipment-by-shipment level attributable to our transportation network of third-party capacity providers and independent agents in order to provide services to our customers. The Company also believes that it is appropriate to present each of the financial measures that may be deemed a non-GAAP financial measure, as referred to above, 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.
Forward Looking Statements Disclaimer:
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 Russian conflict with Ukraine on the operations of certain independent commission sales agents, including the Company’s largest such agent by revenue in the 2021 fiscal year; 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. trade relationships; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber
LANDSTAR SYSTEM/6
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; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2021 fiscal year, described in Item 1A Risk Factors, Landstar’s Form 10Qs for the 2022 first and second fiscal quarters, 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/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 24, 2022 |
September 25, 2021 |
September 24, 2022 |
September 25, 2021 |
|||||||||||||
| Revenue |
$ | 5,761,795 | $ | 4,592,551 | $ | 1,816,132 | $ | 1,734,299 | ||||||||
| Investment income |
2,023 | 2,138 | 716 | 706 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
4,512,341 | 3,583,197 | 1,416,323 | 1,356,671 | ||||||||||||
| Commissions to agents |
465,759 | 356,997 | 154,125 | 135,295 | ||||||||||||
| Other operating costs, net of gains on asset sales/dispositions |
34,878 | 27,117 | 13,356 | 10,572 | ||||||||||||
| Insurance and claims |
96,265 | 75,198 | 31,445 | 29,569 | ||||||||||||
| Selling, general and administrative |
165,199 | 158,720 | 53,519 | 59,198 | ||||||||||||
| Depreciation and amortization |
42,627 | 36,532 | 14,582 | 12,288 | ||||||||||||
|
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|
|
|
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|
|
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| Total costs and expenses |
5,317,069 | 4,237,761 | 1,683,350 | 1,603,593 | ||||||||||||
|
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|
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|
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|
|||||||||
| Operating income |
446,749 | 356,928 | 133,498 | 131,412 | ||||||||||||
| Interest and debt expense |
3,275 | 2,974 | 1,047 | 965 | ||||||||||||
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|
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| Income before income taxes |
443,474 | 353,954 | 132,451 | 130,447 | ||||||||||||
| Income taxes |
105,862 | 85,745 | 32,233 | 31,772 | ||||||||||||
|
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|
|||||||||
| Net income |
$ | 337,612 | $ | 268,209 | $ | 100,218 | $ | 98,675 | ||||||||
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| Diluted earnings per share |
$ | 9.15 | $ | 7.00 | $ | 2.76 | $ | 2.58 | ||||||||
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|
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| Average diluted shares outstanding |
36,886,000 | 38,342,000 | 36,334,000 | 38,218,000 | ||||||||||||
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| Dividends per common share |
$ | 0.80 | $ | 0.67 | $ | 0.30 | $ | 0.25 | ||||||||
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LANDSTAR SYSTEM/8
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| September 24, 2022 |
December 25, 2021 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 177,796 | $ | 215,522 | ||||
| Short-term investments |
50,637 | 35,778 | ||||||
| Trade accounts receivable, less allowance of $10,464 and $7,074 |
1,133,681 | 1,154,314 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $9,877 and $8,125 |
87,241 | 101,124 | ||||||
| Other current assets |
35,493 | 16,162 | ||||||
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|
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|
|||||
| Total current assets |
1,484,848 | 1,522,900 | ||||||
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| Operating property, less accumulated depreciation and amortization of $383,458 and $344,099 |
321,585 | 317,386 | ||||||
| Goodwill |
41,004 | 40,768 | ||||||
| Other assets |
141,103 | 164,411 | ||||||
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| Total assets |
$ | 1,988,540 | $ | 2,045,465 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Cash overdraft |
$ | 97,686 | $ | 116,478 | ||||
| Accounts payable |
644,054 | 604,130 | ||||||
| Current maturities of long-term debt |
37,375 | 36,561 | ||||||
| Insurance claims |
58,131 | 46,896 | ||||||
| Dividends payable |
— | 75,387 | ||||||
| Other current liabilities |
104,272 | 130,531 | ||||||
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| Total current liabilities |
941,518 | 1,009,983 | ||||||
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| Long-term debt, excluding current maturities |
72,095 | 75,243 | ||||||
| Insurance claims |
55,765 | 49,509 | ||||||
| Deferred income taxes and other non-current liabilities |
45,989 | 48,720 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,380,565 and 68,232,975 |
684 | 682 | ||||||
| Additional paid-in capital |
255,486 | 255,148 | ||||||
| Retained earnings |
2,625,290 | 2,317,184 | ||||||
| Cost of 32,455,300 and 30,539,235 shares of common stock in treasury |
(1,992,886 | ) | (1,705,601 | ) | ||||
| Accumulated other comprehensive loss |
(15,401 | ) | (5,403 | ) | ||||
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| Total shareholders’ equity |
873,173 | 862,010 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,988,540 | $ | 2,045,465 | ||||
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LANDSTAR SYSTEM/9
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 24, | September 25, | September 24, | September 25, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue generated through (in thousands): |
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| Truck transportation |
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| Truckload: |
||||||||||||||||
| Van equipment |
$ | 3,022,297 | $ | 2,502,025 | $ | 914,154 | $ | 918,115 | ||||||||
| Unsided/platform equipment |
1,336,956 | 1,112,358 | 453,924 | 422,979 | ||||||||||||
| Less-than-truckload |
105,994 | 85,551 | 35,343 | 30,819 | ||||||||||||
| Other truck transportation (1) |
632,001 | 518,472 | 195,345 | 208,817 | ||||||||||||
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| Total truck transportation |
5,097,248 | 4,218,406 | 1,598,766 | 1,580,730 | ||||||||||||
| Rail intermodal |
113,762 | 120,540 | 27,652 | 44,472 | ||||||||||||
| Ocean and air cargo carriers |
475,156 | 191,951 | 164,252 | 84,111 | ||||||||||||
| Other (2) |
75,629 | 61,654 | 25,462 | 24,986 | ||||||||||||
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| $ | 5,761,795 | $ | 4,592,551 | $ | 1,816,132 | $ | 1,734,299 | |||||||||
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| Revenue on loads hauled via BCO Independent Contractors (3) included in total truck transportation |
$ | 2,043,772 | $ | 1,899,313 | $ | 627,809 | $ | 690,257 | ||||||||
| Number of loads: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
1,130,263 | 1,037,516 | 366,513 | 359,263 | ||||||||||||
| Unsided/platform equipment |
420,436 | 381,594 | 141,091 | 133,332 | ||||||||||||
| Less-than-truckload |
142,740 | 135,038 | 45,912 | 49,943 | ||||||||||||
| Other truck transportation (1) |
243,341 | 208,402 | 76,594 | 81,242 | ||||||||||||
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| Total truck transportation |
1,936,780 | 1,762,550 | 630,110 | 623,780 | ||||||||||||
| Rail intermodal |
31,940 | 40,420 | 7,720 | 13,620 | ||||||||||||
| Ocean and air cargo carriers |
34,410 | 29,650 | 11,520 | 10,190 | ||||||||||||
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|||||||||
| 2,003,130 | 1,832,620 | 649,350 | 647,590 | |||||||||||||
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| Loads hauled via BCO Independent Contractors (3) included in total truck transportation |
777,250 | 773,270 | 249,420 | 263,120 | ||||||||||||
| Revenue per load: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 2,674 | $ | 2,412 | $ | 2,494 | $ | 2,556 | ||||||||
| Unsided/platform equipment |
3,180 | 2,915 | 3,217 | 3,172 | ||||||||||||
| Less-than-truckload |
743 | 634 | 770 | 617 | ||||||||||||
| Other truck transportation (1) |
2,597 | 2,488 | 2,550 | 2,570 | ||||||||||||
| Total truck transportation |
2,632 | 2,393 | 2,537 | 2,534 | ||||||||||||
| Rail intermodal |
3,562 | 2,982 | 3,582 | 3,265 | ||||||||||||
| Ocean and air cargo carriers |
13,809 | 6,474 | 14,258 | 8,254 | ||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (3) |
$ | 2,629 | $ | 2,456 | $ | 2,517 | $ | 2,623 | ||||||||
| Revenue by capacity type (as a % of total revenue): |
||||||||||||||||
| Truck capacity providers: |
||||||||||||||||
| BCO Independent Contractors (3) |
35 | % | 41 | % | 35 | % | 40 | % | ||||||||
| Truck Brokerage Carriers |
53 | % | 50 | % | 53 | % | 51 | % | ||||||||
| Rail intermodal |
2 | % | 3 | % | 2 | % | 3 | % | ||||||||
| Ocean and air cargo carriers |
8 | % | 4 | % | 9 | % | 5 | % | ||||||||
| Other |
1 | % | 1 | % | 1 | % | 1 | % | ||||||||
| September 24, | September 25, | |||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Truck Capacity Providers |
||||||||||||||||
| BCO Independent Contractors (3) |
10,742 | 10,955 | ||||||||||||||
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| Truck Brokerage Carriers: |
||||||||||||||||
| Approved and active (4) |
71,207 | 58,676 | ||||||||||||||
| Other approved |
30,222 | 24,602 | ||||||||||||||
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| 101,429 | 83,278 | |||||||||||||||
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| Total available truck capacity providers |
112,171 | 94,233 | ||||||||||||||
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| Trucks provided by BCO Independent Contractors (3) |
11,644 | 11,746 | ||||||||||||||
| (1) | Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation logistics segment. Power-only refers to shipments where the Company furnishes a power unit and an operator but not trailing equipment, which is typically provided by the shipper or consignee. |
| (2) | Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro. |
| (3) | BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements. |
| (4) | Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end. |
LANDSTAR SYSTEM/10
Landstar System, Inc. and Subsidiary
Reconciliation of Gross Profit to Variable Contribution
(Dollars in thousands)
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 24, | September 25, | September 24, | September 25, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue |
$ | 5,761,795 | $ | 4,592,551 | $ | 1,816,132 | $ | 1,734,299 | ||||||||
| Costs of revenue: |
||||||||||||||||
| Purchased transportation |
4,512,341 | 3,583,197 | 1,416,323 | 1,356,671 | ||||||||||||
| Commissions to agents |
465,759 | 356,997 | 154,125 | 135,295 | ||||||||||||
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| Variable costs of revenue |
4,978,100 | 3,940,194 | 1,570,448 | 1,491,966 | ||||||||||||
| Trailing equipment depreciation |
27,760 | 26,362 | 9,397 | 8,615 | ||||||||||||
| Information technology costs (1) |
13,868 | 9,534 | 4,829 | 3,450 | ||||||||||||
| Insurance-related costs (2) |
98,821 | 78,175 | 32,380 | 30,502 | ||||||||||||
| Other operating costs |
34,878 | 27,117 | 13,356 | 10,572 | ||||||||||||
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| Other costs of revenue |
175,327 | 141,188 | 59,962 | 53,139 | ||||||||||||
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| Total costs of revenue |
5,153,427 | 4,081,382 | 1,630,410 | 1,545,105 | ||||||||||||
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| Gross profit |
$ | 608,368 | $ | 511,169 | $ | 185,722 | $ | 189,194 | ||||||||
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| Gross profit margin |
10.6 | % | 11.1 | % | 10.2 | % | 10.9 | % | ||||||||
| Plus: other costs of revenue |
175,327 | 141,188 | 59,962 | 53,139 | ||||||||||||
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| Variable contribution |
$ | 783,695 | $ | 652,357 | $ | 245,684 | $ | 242,333 | ||||||||
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| Variable contribution margin |
13.6 | % | 14.2 | % | 13.5 | % | 14.0 | % | ||||||||
| (1) | Includes costs of revenue incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support the Company’s independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income. |
| (2) | Primarily includes (i) insurance premiums paid for commercial auto liability, general liability, cargo and other lines of coverage related to the transportation of freight; (ii) the related cost of claims incurred under those programs; and (iii) brokerage commissions and other fees incurred relating to the administration of insurance programs available to BCO Independent Contractors that are reinsured by the Company, which are included in selling, general and administrative in the Company’s Consolidated Statements of Income. |
Exhibit 99.2
DESIGNED TO RESPOND BUILT TO DELIVER Landstar System, Inc. Earnings Conference Call Third Quarter 2022 September 24, 2022 Date Published: 10/19/2022
Forward Looking Statements Disclaimer : The following is a “safe harbor” statement under the Private Securities Litigation ReformActof1995. Statements made in this slide presentation that are not based on historical fact sare “forward looking statements. ”This presentation may make certain statements containing forward -looking statements, suchas statements which relate to Landstar’s business objectives, plans, strategies and expectations. Such statements arebynaturesubjectto uncertainties andrisks, including but not limited to: the operational, financial andlegalrisks detailed in Landstar’s Form10-Kforthe2021fiscalyearandForm 10-Qsforthe 2022firstandsecondfiscalquarters, described inthe section Risk Factors, and other SEC filingsfromtimetotime.Theserisksand uncertainties couldcauseactualresultsoreventstodiffer materially from historical resultsorthose anticipated. Investors should not place undue reliance on such forward -looking statements, and Landstar undertakes no obligation to publicly updateorrevise anyforward -lookingstatements. 2 Date Published: 10/19/2022
Non-GAAP Financial Measures : In this slide presentation, the Company provides the following information thatmaybe deemed anon-GAAP financial measure: variable contribution, variable contribution marginand operating incomeasa percentage ofvariablecontribution. Management believes variable contribution and variable contribution marginareuseful measures of the variable coststhatweincurata shipment -by-shipment level attributable toour transportation network of third-party capacity providers and independent agentsinorderto provideservicesto our customers. Management believes that operating incomeasa percentage of variable contribution isauseful measure as: (i)variablecostsofrevenueforasignificantportionoftheCompany’sbusinessarehighly influencedbyshort -termmarket-basedtrendsinthefreight transportation industry, whereas othercosts, including othercostsof revenue, aremuchless impacted byshort-termfreightmarkettrends;and(ii)this measure is meaningful to investors’evaluationsoftheCompany’smanagementofcostsattributabletooperationsotherthanthepurely variable costs associated with purchased transportation and commissions toagentsthatthe Company incurs toprovideservicestoourcustomers. Management also believes thatitis appropriate to present eachofthe financial measures thatmaybe deemedanon -GAAPfinancialmeasure,asreferredtoabove,forthefollowingreasons:(1)disclosureofthese matters willallow investors tobetter understand the underlying trendsinthe Company’s financial condition andresultsofoperations;(2)thisinformationwillfacilitatecomparisonsbyinvestorsoftheCompany’sresults as compared totheresultsofpeer companies; and(3) management considers this financial information inits decisionmaking. Atabulationoftheexpensesidentifiedascostsofrevenueaswellasareconciliationofgrossprofittovariable contributionandgross profit marginto variable contributionmargin for the2022 and2021 third quarters and year-to-dateperiodsisincludedinthisslidepresentationasAppendixA. 3 Date Published: 10/19/2022
Who We Are Landstar, a Fortune 500 company, is a worldwide, technology -enabled, 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. 4 Date Published: 10/19/2022
Our Network September 24, 2022 YTD Results $5.76 billion in revenue Agents 2.00 million loadings Approx. 1,200 593 million dollar agents (based on 2021 fiscal year) 11,644 BCO trucks 101,429 Carriers Landstar Employees 18,000+ Trailers Approx. 1,300 Capacity Customers 112,000+ 25,000+ 5 Date Published: 10/19/2022
Transportation Management Services Percentage of Revenue 3Q21 3Q22 Truck Transportation Truckload Van equipment 53% 50% Unsided/platform equipment 24% 25% Less-than-truckload 2% 2% Other truck transportation 12% 11% Rail intermodal 3% 2% Ocean and air cargo 5% 9% 6 Date Published: 10/19/2022
Revenue ($’s in thousands) Year-to-Date Quarter Year over Prior Year Rate (1) Volume (2) Change Qtr over Prior Year Qtr Rate (1) Volume (2) Change Truck Revenue 10.0% 9.9% 20.8% Truck Revenue 0.1% 1.0% 1.1% Rail Intermodal Revenue 19.4% -21.0% -5.6% Rail Intermodal Revenue 9.7% -43.3% -37.8% Ocean/Air Revenue 113.3% 16.1% 147.5% Ocean/Air Revenue 72.7% 13.1% 95.3% Insurance Premiums NA NA 11.0% Insurance Premiums NA NA 7.8% Total Revenue 25.5% Total Revenue 4.7% (1) Percentage change in rate is calculated on a revenue per load basis. (2) Percentage change in volume is calculated on the number of loads hauled. 7 Date Published: 10/19/2022
Truckload Loadings and Revenue per Truckload Trends Van Equipment Revenue per Load Number of Loads 400,000 $3,000 370,000 $2,800 340,000 $2,600 $2,400 310,000 $2,200 280,000 $2,000 250,000 $1,800 220,000 $1,600 3Q194Q191Q202Q203Q204Q201Q212Q213Q214Q211Q222Q223Q22 3Q194Q191Q202Q203Q204Q201Q212Q213Q214Q211Q222Q223Q22 Unsided/Platform Equipment Revenue per Load Number of Loads 150,000 $3,600 $3,400 140,000 $3,200 130,000 $3,000 $2,800 120,000 $2,600 110,000 $2,400 100,000 $2,200 3Q194Q191Q202Q203Q204Q201Q212Q213Q214Q211Q222Q223Q22 3Q194Q191Q202Q203Q204Q201Q212Q213Q214Q211Q222Q223Q22 8 Date Published: 10/19/2022
Industries Served As a Percentage of Revenue Quarterover Prior Year Quarter 3Q21 3Q22 Changein Revenue Consumer Durables 30.3 28.6 -1% Machinery 11.1 12.1 14% Automotive 6.8 8.7 33% Building Products 8.2 8.5 8% AA&E, Hazmat 8.7 8.4 0% Metals 5.1 4.9 1% Foodstuffs 3.9 3.4 -10% Substitute Line Haul 5.4 3.3 -36% Other 20.5 22.1 14% Transportation Revenue 100.0 100.0 5% 9 Date Published: 10/19/2022
Gross Profit (1)and Gross Profit Margin (2) ($’s in thousands) Year-to-Date Quarter 11.1% 10.6% 10.9% 10.2% (1) Gross profit equals revenue less the cost of purchased transportation, commissions to agents and other costs of revenue. (2) Gross profit margin equals gross profit divided by revenue. 10 Date Published: 10/19/2022
Variable Contribution(1)and Variable Contribution Margin (2) ($’s in thousands) Year-to-Date Quarter 14.2% 13.6% 14.0% 13.5% (3) (3) 3rd Qtr YTD 3rd Qtr Changes in variable contribution Changes in variable contribution margin % margin % 2021 Period 14.2 2021 Period 14.0 Revenue - fixed 0.0 Revenue - fixed -0.1 Revenue - variable 0.3 Revenue - variable 0.3 Change in mix and other -0.9 Change in mix and other -0.7 2022 Period 13.6 2022 Period 13.5 (1) Variable contribution equals revenue less the cost of purchased transportation and commissions to agents. (2) Variable contribution margin equals variable contribution divided by revenue. (3) Revenue on transactions where the Company’s variable contribution margin was based on a contractually pre-determined percentage of revenue accounted for 46% and 40% of revenue in the 2021 and 2022 year-to-date periods, respectively, and 44% and 39% of revenue in the 2021 and 2022 third quarters, respectively. 11 Date Published: 10/19/2022
Operating Income as a % of Gross Profit ($’s in thousands) Year-to-Date Quarter 69.8% 73.4% 69.4% 71.9% 12 Date Published: 10/19/2022
Operating Income as a % of Variable Contribution ($’s in thousands) Year-to-Date Quarter 54.7% 57.0% 54.2% 54.3% 3rd Qtr YTD 3rd Qtr Changes in operating income as a % of variable Changes in operating income as a % of variable contribution % contribution % 2021 Period 54.7 2021 Period 54.2 Other operating costs -0.3 Other operating costs -1.1 Insurance and claims -0.8 Insurance and claims -0.6 SG&A 3.2 SG&A 2.7 Depreciation and amortization 0.2 Depreciation and amortization -0.9 2022 Period 57.0 2022 Period 54.3 13 Date Published: 10/19/2022
Truck Capacity Data (All information is provided as of the end of the applicable period) Sep 25, Dec 25, Sep 24, (2) (2) 2021 2021 2022 BCO Independent Contractors 10,955 11,057 10,742 Truck Brokerage Carriers: (1) Approved and Active 58,676 64,476 71,207 Other Approved 24,602 25,870 30,222 83,278 90,346 101,429 Total Available Truck Capacity Providers 94,233 101,403 112,171 Trucks Provided by BCO Independent Contractors 11,746 11,864 11,644 (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 $330.2 million and $182.7 million in the 2022 and 2021 year-to-date periods, respectively, and $120.4 million and $68.7 million in the 2022 and 2021 third quarters, respectively. 14 Date Published: 10/19/2022
Key Balance Sheet and Cash Flow Statistics ($’s in thousands) Sep 25, Sep 24, 2021 2022 Balance sheet (period end amounts): Debt to Capital 10% 11% Net Cash (1) $ 169,867 $ 118,963 Cash flow (year-to-date): Cash flow from operations $ 216,990 $ 436,381 Capital expenditures $ 18,561 $ 21,096 Share repurchases $ 50,230 $ 285,983 Dividends paid $ 102,463 $ 104,893 Returns (trailing 12 months): Return on Equity 43% 52% Return on Invested Capital 38% 46% Return on Assets 20% 23% (1)Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. 15 Date Published: 10/19/2022
Free Cash Flow (1) , Stock Purchases and Dividends (In Thousands) $350,000 43,000 $300,000 42,000 $250,000 41,000 $200,000 40,000 $150,000 39,000 $100,000 38,000 $50,000 $0 37,000 2017 2018 2019 2020 2021 Free Cash Flow Share Purchases Dividends Paid Common Share Count Third Quarter 2022 YTD (000’s) Free cash flow (1) $ 415,285 Share purchases $ 285,983 Dividends paid $ 104,893 Ending common share count 35,925 (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide. 16 Date Published: 10/19/2022
Appendix A Reconciliation of Gross Profit to Variable Contribution ($’s in thousands) Thirty Nine Weeks Ended Thirteen Weeks Ended September 24, September 25, September 24, September 25, 2022 2021 2022 2021 Revenue $5,761,795 $4,592,551 $ 1,816,132 $1,734,299 Costs of revenue: Purchased transportation 4,512,341 3,583,197 1,416,323 1,356,671 Commissions to agents 465,759 356,997 154,125 135,295 Variable costs of revenue 4,978,100 3,940,194 1,570,448 1,491,966 Trailing equipment depreciation 27,760 26,362 9,397 8,615 Information technology costs (1) 13,868 9,534 4,829 3,450 Insurance -related costs (2) 98,821 78,175 32,380 30,502 Other operating costs 34,878 27,117 13,356 10,572 Other costs of revenue 175,327 141,188 59,962 53,139 Total costs of revenue 5,153,427 4,081,382 1,630,410 1,545,105 Gross profit $608,368 $511,169 $185,722 $189,194 Gross profit margin 10.6% 11.1% 10.2% 10.9% Plus: other costs of revenue 175,327 141,188 59,962 53,139 Variable contribution $783,695 $652,357 $245,684 $242,333 Variable contribution margin 13.6% 14.2% 13.5% 14.0% (1) Includes costs of revenue incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support the Company’s independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income. (2) Primarily includes (i) insurance premiums paid for commercial auto liability, general liability, cargo and other lines of coverage related to the transportation of freight; (ii) the related cost of claims incurred under those programs; and (iii) brokerage commissions and other fees incurred relating to the administration of insurance programs available to BCO Independent Contractors that are reinsured by the Company, which are included in selling, general and administrative in the Company’s Consolidated Statements of Income. 17 Date Published: 10/19/2022
DESIGNED TO RESPOND BUILT TO DELIVER 18 Date Published: 10/19/2022