UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 January 31, 2024, Landstar System, Inc. (“Landstar” or the “Company”) issued a press release announcing results for the fourth quarter of fiscal 2023. 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 January 31, 2024, 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 February 1, 2024 in connection with the Company’s release of results for the fourth quarter of fiscal 2023.
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 January 31, 2024, of Landstar System, Inc. | |
| 99.2 | Slide Presentation, dated January 31, 2024, 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: January 31, 2024 | By: | /s/ James P. Todd | ||||
| Name: | James P. Todd | |||||
| Title: | Vice President, Chief Financial Officer and Assistant Secretary | |||||
Exhibit 99.1
| For Immediate Release | Contact: Jim Todd (CFO) | |
| Landstar System, Inc. | ||
| www.landstar.com | ||
| January 31, 2024 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS
FOURTH QUARTER REVENUE OF $1.204B AND
EARNINGS PER SHARE OF $1.62
Jacksonville, FL - Landstar System, Inc. (NASDAQ: LSTR) (“Landstar” or the “Company”) reported basic and diluted earnings per share (“EPS”) of $1.62 in the 2023 thirteen-week fourth quarter on revenue of $1.204 billion. Landstar reported EPS of $2.60 on revenue of $1.675 billion in the 2022 fourteen-week fourth quarter.
The Company’s fiscal year ends each year on the last Saturday in December. As such, the Company’s 2022 fourth quarter ended on December 31st and included fourteen weeks of operations, whereas the 2023 fourth quarter ended on December 30th and included thirteen weeks of operations. We estimate the extra week in 2022 contributed revenue of approximately $65 million.
Gross profit in the 2023 fourth quarter was $124.6 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2023 fourth quarter was $178.1 million. Gross profit in the 2022 fourth quarter was $180.0 million and variable contribution in the 2022 fourth quarter was $234.0 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2023 and 2022 fourth quarters and full fiscal years are provided in the Company’s accompanying financial disclosures.
LANDSTAR SYSTEM/2
Trailing twelve month return on average shareholders’ equity was 27% and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 25%. The Company is currently authorized to purchase up to 3,000,000 shares of the Company’s common stock under its previously announced share purchase programs. Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.33 per share payable on March 8, 2024, to stockholders of record as of the close of business on February 12, 2024. 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 2023 fourth quarter was $1,085.1 million, or 90% of revenue, compared to $1,533.6 million, or 92% of revenue, in the 2022 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2023 fourth quarter was $618.6 million, compared to $869.8 million in the 2022 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2023 fourth quarter was $339.9 million, compared to $423.4 million in the 2022 fourth quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2023 fourth quarter was $99.7 million, compared to $204.0 million in the 2022 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $88.6 million, or 7% of revenue, in the 2023 fourth quarter, compared to $115.1 million, or 7% of revenue, in the 2022 fourth quarter.
“As expected, the soft macro-freight environment experienced throughout 2023 continued through the 2023 fourth quarter. The soft macro-freight environment, along with the additional operating week in the 2022 fourth quarter, made for challenging 2023 fourth quarter to 2022 fourth quarter comparisons,” said Landstar President and Chief Executive Officer Jim Gattoni. “The continuation of soft demand, driven by continued weakness in the U.S. manufacturing sector and a weaker than typical peak season, plus the continuation of a loose truck capacity market drove Landstar’s truck revenue per load and volumes in the 2023 fourth quarter below prior year levels. The number of loads hauled via truck declined 22% as compared to the 2022 fourth quarter, at the low end of the Company’s guidance included as part of the Company’s 2023 third quarter earnings release on October 25, 2023, while truck revenue per load declined 10% as compared to the 2022 fourth quarter, below the low end of the Company’s previously issued guidance.”
LANDSTAR SYSTEM/3
Gattoni continued, “Landstar’s financial performance in 2023, coming off back-to-back record setting years in 2022 and 2021 was admirable, considering the very difficult freight transportation backdrop. The Company’s performance during the downcycle in freight markets experienced in 2023 speaks to the strength and resiliency of the Landstar network and the power of our unique agent and capacity network. The Company’s balance sheet continues to be very strong, with cash and short term investments of approximately $541 million as of December 30, 2023. Cash flow from operations was $394 million during fiscal year 2023. The Company is well positioned to capitalize when freight market fundamentals improve.”
Gattoni further commented, “Typically, revenue in the first quarter is expected to be lower than the revenue of the immediately preceding fourth quarter. Through the first several weeks of January, the number of loads hauled via truck and truck revenue per load have each trended reasonably in-line with historical, pre-pandemic end of fourth quarter to the beginning of first quarter sequential patterns. Assuming a continuation of these recent trends, I expect revenue per load on loads hauled via truck to be in a range of 8% to 10% below the 2023 first quarter and the number of loads hauled via truck to be in a range of 14% to 16% below the 2023 first quarter. As such, I anticipate revenue for the 2024 first quarter to be in a range of $1.10 billion to $1.15 billion.”
Gattoni concluded, “Based on the range of revenue estimated for the 2024 first quarter, I would anticipate EPS to be in a range of $1.25 to $1.35. The anticipated range of EPS for the 2024 first quarter includes estimated insurance and claims costs of approximately 5.5% of BCO revenue. These costs were 5.7% of BCO revenue during fiscal year 2023. The anticipated range of EPS for the 2024 first quarter also reflects an estimated effective income tax rate of 24.5%.”
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 Fourth Quarter 2023 Earnings Release Conference Call.”
LANDSTAR SYSTEM/4
About Landstar:
Landstar System, Inc., a Fortune 500 company, is a 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.
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
LANDSTAR SYSTEM/5
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 2023 fiscal year; 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 and other information security incidents; dependence on key vendors; potential changes in 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 2022 fiscal year, described in Item 1A Risk Factors, Landstar’s Form 10-Q for the 2023 first and third 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/6
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
| Fiscal Years Ended | Fiscal Quarters Ended | |||||||||||||||
| December 30, 2023 |
December 31, 2022 |
December 30, 2023 |
December 31, 2022 |
|||||||||||||
| Revenue |
$ | 5,303,322 | $ | 7,436,562 | $ | 1,204,445 | $ | 1,674,767 | ||||||||
| Investment income |
10,141 | 3,162 | 3,267 | 1,139 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
4,068,262 | 5,804,017 | 927,028 | 1,291,676 | ||||||||||||
| Commissions to agents |
462,668 | 614,865 | 99,271 | 149,106 | ||||||||||||
| Other operating costs, net of gains on asset sales/dispositions |
54,191 | 45,192 | 13,193 | 10,314 | ||||||||||||
| Insurance and claims |
114,241 | 125,835 | 27,270 | 29,570 | ||||||||||||
| Selling, general and administrative |
211,799 | 221,279 | 52,728 | 56,080 | ||||||||||||
| Depreciation and amortization |
58,153 | 57,453 | 13,655 | 14,826 | ||||||||||||
|
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|
|
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|
|||||||||
| Total costs and expenses |
4,969,314 | 6,868,641 | 1,133,145 | 1,551,572 | ||||||||||||
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|
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|
|||||||||
| Operating income |
344,149 | 571,083 | 74,567 | 124,334 | ||||||||||||
| Interest and debt (income) expense |
(3,946 | ) | 3,620 | (1,867 | ) | 345 | ||||||||||
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|
|||||||||
| Income before income taxes |
348,095 | 567,463 | 76,434 | 123,989 | ||||||||||||
| Income taxes |
83,701 | 136,549 | 18,447 | 30,687 | ||||||||||||
|
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|
|
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|
|||||||||
| Net income |
$ | 264,394 | $ | 430,914 | $ | 57,987 | $ | 93,302 | ||||||||
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|||||||||
| Basic and diluted earnings per share |
$ | 7.36 | $ | 11.76 | $ | 1.62 | $ | 2.60 | ||||||||
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|
|||||||||
| Average basic and diluted shares outstanding |
35,920,000 | 36,633,000 | 35,804,000 | 35,930,000 | ||||||||||||
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| Dividends per common share |
$ | 3.26 | $ | 3.10 | $ | 2.33 | $ | 2.30 | ||||||||
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|||||||||
LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| December 30, 2023 |
December 31, 2022 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 481,043 | $ | 339,581 | ||||
| Short-term investments |
59,661 | 53,955 | ||||||
| Trade accounts receivable, less allowance of $11,738 and $12,121 |
743,762 | 967,793 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $14,010 and $10,579 |
43,339 | 56,235 | ||||||
| Other current assets |
24,936 | 21,826 | ||||||
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|
|
|
|||||
| Total current assets |
1,352,741 | 1,439,390 | ||||||
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|||||
| Operating property, less accumulated depreciation and amortization of $436,682 and $393,274 |
284,300 | 314,990 | ||||||
| Goodwill |
42,275 | 41,220 | ||||||
| Other assets |
122,530 | 136,279 | ||||||
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|
|||||
| Total assets |
$ | 1,801,846 | $ | 1,931,879 | ||||
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|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Cash overdraft |
$ | 61,541 | $ | 92,953 | ||||
| Accounts payable |
395,980 | 527,372 | ||||||
| Current maturities of long-term debt |
27,876 | 36,175 | ||||||
| Insurance claims |
41,825 | 50,836 | ||||||
| Dividends payable |
71,433 | 71,854 | ||||||
| Other current liabilities |
76,569 | 98,945 | ||||||
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|
|||||
| Total current liabilities |
675,224 | 878,135 | ||||||
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|
|||||
| Long-term debt, excluding current maturities |
43,264 | 67,225 | ||||||
| Insurance claims |
58,922 | 58,268 | ||||||
| Deferred income taxes and other non-current liabilities |
40,513 | 41,030 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,497,324 and 68,382,310 |
685 | 684 | ||||||
| Additional paid-in capital |
254,642 | 258,487 | ||||||
| Retained earnings |
2,783,645 | 2,635,960 | ||||||
| Cost of 32,780,651 and 32,455,300 shares of common stock in treasury |
(2,048,184 | ) | (1,992,886 | ) | ||||
| Accumulated other comprehensive loss |
(6,865 | ) | (15,024 | ) | ||||
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|||||
| Total shareholders’ equity |
983,923 | 887,221 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,801,846 | $ | 1,931,879 | ||||
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LANDSTAR SYSTEM/8
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Fiscal Years Ended | Fiscal Quarters Ended | |||||||||||||||
| December 30, | December 31, | December 30, | December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue generated through (in thousands): |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 2,742,281 | $ | 3,892,085 | $ | 618,588 | $ | 869,788 | ||||||||
| Unsided/platform equipment |
1,490,393 | 1,760,357 | 339,910 | 423,401 | ||||||||||||
| Less-than-truckload |
117,683 | 142,438 | 26,913 | 36,444 | ||||||||||||
| Other truck transportation (1) |
479,173 | 835,959 | 99,702 | 203,958 | ||||||||||||
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| Total truck transportation |
4,829,530 | 6,630,839 | 1,085,113 | 1,533,591 | ||||||||||||
| Rail intermodal |
98,297 | 145,017 | 24,344 | 31,255 | ||||||||||||
| Ocean and air cargo carriers |
266,638 | 558,986 | 64,280 | 83,830 | ||||||||||||
| Other (2) |
108,857 | 101,720 | 30,708 | 26,091 | ||||||||||||
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|||||||||
| $ | 5,303,322 | $ | 7,436,562 | $ | 1,204,445 | $ | 1,674,767 | |||||||||
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| Revenue on loads hauled via BCO Independent Contractors (3) |
$ | 1,998,408 | $ | 2,636,036 | $ | 454,774 | $ | 592,264 | ||||||||
| Number of loads: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
1,259,578 | 1,496,247 | 292,711 | 365,984 | ||||||||||||
| Unsided/platform equipment |
504,765 | 558,530 | 115,294 | 138,094 | ||||||||||||
| Less-than-truckload |
175,650 | 191,233 | 41,070 | 48,493 | ||||||||||||
| Other truck transportation (1) |
201,407 | 320,790 | 44,295 | 77,449 | ||||||||||||
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|||||||||
| Total truck transportation |
2,141,400 | 2,566,800 | 493,370 | 630,020 | ||||||||||||
| Rail intermodal |
29,620 | 40,710 | 7,470 | 8,770 | ||||||||||||
| Ocean and air cargo carriers |
32,820 | 41,850 | 7,440 | 7,440 | ||||||||||||
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|||||||||
| 2,203,840 | 2,649,360 | 508,280 | 646,230 | |||||||||||||
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| Loads hauled via BCO Independent Contractors (3)
|
898,610 | 1,027,480 | 209,350 | 250,230 | ||||||||||||
| Revenue per load: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 2,177 | $ | 2,601 | $ | 2,113 | $ | 2,377 | ||||||||
| Unsided/platform equipment |
2,953 | 3,152 | 2,948 | 3,066 | ||||||||||||
| Less-than-truckload |
670 | 745 | 655 | 752 | ||||||||||||
| Other truck transportation (1) |
2,379 | 2,606 | 2,251 | 2,633 | ||||||||||||
| Total truck transportation |
2,255 | 2,583 | 2,199 | 2,434 | ||||||||||||
| Rail intermodal |
3,319 | 3,562 | 3,259 | 3,564 | ||||||||||||
| Ocean and air cargo carriers |
8,124 | 13,357 | 8,640 | 11,267 | ||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (3) |
$ | 2,224 | $ | 2,566 | $ | 2,172 | $ | 2,367 | ||||||||
| Revenue by capacity type (as a % of total revenue): |
||||||||||||||||
| Truck capacity providers: |
||||||||||||||||
| BCO Independent Contractors (3) |
38 | % | 35 | % | 38 | % | 35 | % | ||||||||
| Truck Brokerage Carriers |
53 | % | 54 | % | 52 | % | 56 | % | ||||||||
| Rail intermodal |
2 | % | 2 | % | 2 | % | 2 | % | ||||||||
| Ocean and air cargo carriers |
5 | % | 8 | % | 5 | % | 5 | % | ||||||||
| Other |
2 | % | 1 | % | 3 | % | 2 | % | ||||||||
| December 30, | December 31, | |||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Truck Capacity Providers |
||||||||||||||||
| BCO Independent Contractors (3) |
9,024 | 10,393 | ||||||||||||||
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| Truck Brokerage Carriers: |
||||||||||||||||
| Approved and active (4) |
49,111 | 66,745 | ||||||||||||||
| Other approved |
27,524 | 30,999 | ||||||||||||||
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|||||||||||||
| 76,635 | 97,744 | |||||||||||||||
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| Total available truck capacity providers |
85,659 | 108,137 | ||||||||||||||
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|||||||||||||
| Trucks provided by BCO Independent Contractors (3) |
9,809 | 11,281 | ||||||||||||||
| (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/9
Landstar System, Inc. and Subsidiary
Reconciliation of Gross Profit to Variable Contribution
(Dollars in thousands)
(Unaudited)
| Fiscal Years Ended | Fiscal Quarters Ended | |||||||||||||||
| December 30, | December 31, | December 30, | December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 5,303,322 | $ | 7,436,562 | $ | 1,204,445 | $ | 1,674,767 | ||||||||
| Costs of revenue: | ||||||||||||||||
| Purchased transportation |
4,068,262 | 5,804,017 | 927,028 | 1,291,676 | ||||||||||||
| Commissions to agents |
462,668 | 614,865 | 99,271 | 149,106 | ||||||||||||
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| Variable costs of revenue |
4,530,930 | 6,418,882 | 1,026,299 | 1,440,782 | ||||||||||||
| Trailing equipment depreciation |
31,319 | 36,653 | 7,079 | 8,893 | ||||||||||||
| Information technology costs (1) |
25,486 | 19,834 | 5,695 | 5,966 | ||||||||||||
| Insurance-related costs (2) |
116,069 | 127,605 | 27,585 | 28,784 | ||||||||||||
| Other operating costs |
54,191 | 45,192 | 13,193 | 10,314 | ||||||||||||
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| Other costs of revenue |
227,065 | 229,284 | 53,552 | 53,957 | ||||||||||||
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|||||||||
| Total costs of revenue |
4,757,995 | 6,648,166 | 1,079,851 | 1,494,739 | ||||||||||||
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| Gross profit |
$ | 545,327 | $ | 788,396 | $ | 124,594 | $ | 180,028 | ||||||||
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| Gross profit margin |
10.3 | % | 10.6 | % | 10.3 | % | 10.7 | % | ||||||||
| Plus: other costs of revenue |
227,065 | 229,284 | 53,552 | 53,957 | ||||||||||||
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| Variable contribution |
$ | 772,392 | $ | 1,017,680 | $ | 178,146 | $ | 233,985 | ||||||||
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| Variable contribution margin |
14.6 | % | 13.7 | % | 14.8 | % | 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 Fourth Quarter 2023 January 31, 2024 Date Published: 01/31/2024
Forward Looking Statements Disclaimer: The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements made in this slide presentation that are not based on historical facts are “forward-looking statements.” This presentation 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 operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2022 fiscal year and Form 10-Qs for the 2023 first and third fiscal quarters, 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 the Company undertakes no obligation to publicly update or revise any forward-looking statements. 2 Date Published: 01/31/2024
Non-GAAP Financial Measures: In this slide presentation, the Company provides the following information that may be deemed a non-GAAP financial measure: variable contribution, variable contribution margin and operating income as a percentage of variable contribution. Management 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. Management believes that operating income as a percentage of variable contribution is a useful measure as: (i) variable costs of revenue for a significant portion of the Company’s business arehighlyinfluencedbyshort- term market-based trends in the freight transportation industry, whereas other costs, including other costs of revenue, are much less impacted by short-term freight market trends; and (ii) this measure is meaningful to investors’ evaluations of the Company’s management of costs attributable to operations other than the purely variable costs associated with purchased transportation and commissionsto agentsthat the Companyincurs to provide services to our customers. Management 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. A tabulation of the expenses identified as costs of revenue as well as a reconciliation of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2023 and 2022 fourth quarters and fiscal year periods is included in this slide presentation as Appendix A. 3 Date Published: 01/31/2024
Who We Are Landstar, a Fortune 500 company, is a 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: 01/31/2024
Our Network 2023 Results $5.30 billion in revenue Agents Approx. 2.20 million loadings 1,100 524 million dollar agents 9,809 BCO trucks (2023 year-end) 76,635 Carriers (2023 year-end) Lands Landst ta ar r Employees 18,000+ Trailers (2023 year-end) Approx. 1,500 Customers Capacity 25,000+ 85,000+ 5 Date Published: 01/31/2024
Transportation Management Services Percentage of Revenue 4Q22 4Q23 Truck Transportation Truckload Van equipment 52% 51% Unsided/platform equipment 25% 28% Less-than-truckload 2% 2% Other truck transportation 12% 8% Rail intermodal 2% 2% Ocean and air cargo 5% 5% 6 Date Published: 01/31/2024
Revenue ($’s in thousands) Fiscal Year Quarter (2) (3) (2) (3) Year over Prior Year Rate Volume Change Qtr over Prior Year Qtr Rate Volume Change Truck Revenue - 12.7% - 16.6% - 27.2% Truck Revenue - 9.6% - 21.7% - 29.2% Rail Intermodal Revenue - 6.8% - 27.2% - 32.2% Rail Intermodal Revenue - 8.6% - 14.8% - 22.1% Ocean/Air Revenue - 39.2% - 21.6% - 52.3% Ocean/Air Revenue - 23.3% 0.0% - 23.3% Insurance Premiums NA NA - 7.7% Insurance Premiums NA NA - 11.6% Total Revenue - 28.7% Total Revenue - 28.1% (1) The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2022 fourth quarter included fourteen weeks of operations whereas the 2023 fourth quarter included thirteen weeks. Fiscal year 2022 included fifty-three weeks of operations whereas fiscal year 2023 included fifty-two. (2) Percentage change in rate is calculated on a revenue per load basis. (3) Percentage change in volume is calculated on the number of loads hauled. 7 Date Published: 01/31/2024
Truckload Loadings and Revenue per Truckload Trends Van Equipment Number of Loads Revenue per Load 400,000 $3,000 370,000 $2,800 $2,600 340,000 $2,400 310,000 $2,200 280,000 $2,000 250,000 $1,800 220,000 $1,600 Unsided/Platform Equipment Number of Loads Revenue per Load 150,000 $3,300 140,000 $3,100 130,000 $2,900 $2,700 120,000 $2,500 110,000 $2,300 $2,100 100,000 (1) The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2022 fourth quarter included fourteen weeks of operations whereas the 2023 fourth quarter included thirteen weeks. Fiscal year 2022 included fifty-three weeks of operations whereas fiscal year 2023 included fifty-two. 8 Date Published: 01/31/2024 4Q19 4Q19 1Q20 1Q20 2Q20 2Q20 3Q20 3Q20 4Q20 4Q20 1Q21 1Q21 2Q21 2Q21 3Q21 3Q21 4Q21 4Q21 1Q22 1Q22 2Q22 2Q22 3Q22 3Q22 4Q22 4Q22 1Q23 1Q23 2Q23 2Q23 3Q23 3Q23 4Q23 4Q23 4Q19 4Q19 1Q20 1Q20 2Q20 2Q20 3Q20 3Q20 4Q20 4Q20 1Q21 1Q21 2Q21 2Q21 3Q21 3Q21 4Q21 4Q21 1Q22 1Q22 2Q22 2Q22 3Q22 3Q22 4Q22 4Q22 1Q23 1Q23 2Q23 2Q23 3Q23 3Q23 4Q23 4Q23
Industries Served As a Percentage of Revenue Quarter over Prior Year Quarter 4Q22 4Q23 Change in Revenue Consumer Durables 28.9 27.8 -31% Machinery 12.5 13.7 -21% Automotive 10.9 11.6 -23% Building Products 7.7 8.1 -25% AA&E, Hazmat 7.8 7.6 -30% Metals 4.6 4.9 -24% Foodstuffs 3.3 2.7 -40% Substitute Line Haul 3.6 2.4 -53% Other 20.7 21.2 -27% Transportation Revenue 100.0 100.0 -28% 9 Date Published: 01/31/2024
(1) (2) Gross Profit and Gross Profit Margin ($’s in thousands) Fiscal Year Quarter 10.6% 10.3% 10.7% 10.3% (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. (3) The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2022 fourth quarter included fourteen weeks of operations whereas the 2023 fourth quarter included thirteen weeks. Fiscal year 2022 included fifty-three weeks of operations whereas fiscal year 2023 included fifty-two. 10 Date Published: 01/31/2024
(1) (2) Variable Contribution and Variable Contribution Margin ($’s in thousands) Fiscal Year Quarter 13.7% 14.0% 14.6% 14.8% (4) (4) 4th Qtr Fiscal Year Changes in variable contribution Changes in variable contribution margin % margin % 2022 Period 2022 Period 14.0 13.7 Revenue - fixed Revenue - fixed 0.4 -0.1 Revenue - variable Revenue - variable 0.0 0.6 Change in mix and other Change in mix and other 0.4 0.4 2023 Period 2023 Period 14.8 14.6 (1) Variable contribution equals revenue less the cost of purchased transportation and commissions to agents. (2) Variable contribution margin equals variable contribution divided by revenue. (3) The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2022 fourth quarter included fourteen weeks of operations whereas the 2023 fourth quarter included thirteen weeks. Fiscal year 2022 included fifty-three weeks of operations whereas fiscal year 2023 included fifty-two. (4) Revenue on transactions where the Company’s variable contribution margin was based on a contractually pre-determined percentage of revenue accounted for 40% and 43% of revenue in the 2022 and 2023 fiscal year periods, respectively, and 41% and 43% of revenue in the 2022 and 2023 fourth quarters, respectively. 11 Date Published: 01/31/2024
Operating Income as a % of Gross Profit ($’s in thousands) Fiscal Year Quarter 72.4% 63.1% 69.1% 59.8% (1) The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2022 fourth quarter included fourteen weeks of operations whereas the 2023 fourth quarter included thirteen weeks. Fiscal year 2022 included fifty-three weeks of operations whereas fiscal year 2023 included fifty-two. 12 Date Published: 01/31/2024
Operating Income as a % of Variable Contribution ($’s in thousands) Fiscal Year Quarter 56.1% 44.6% 41.9% 53.1% Fiscal Year 4th Qtr Changes in operating income as a % of variable Changes in operating income as a % of variable contribution contribution % % 2022 Period 2022 Period 56.1 53.1 Other operating costs Other operating costs -2.5 -3.0 Insurance and claims Insurance and claims -1.4 -1.3 SG&A SG&A -5.7 -5.6 Depreciation and amortization Depreciation and amortization -1.9 -1.3 2023 Period 2023 Period 44.6 41.9 (1) The Company’s fiscal year ends each year on the last Saturday in December and, as such, the Company’s 2022 fourth quarter included fourteen weeks of operations whereas the 2023 fourth quarter included thirteen weeks. Fiscal year 2022 included fifty-three weeks of operations whereas fiscal year 2023 included fifty-two. 13 Date Published: 01/31/2024
Truck Capacity Data (All information is provided as of the end of the applicable period) Dec 31, Dec 30, (2) (2) 2022 2023 BCO Independent Contractors 10,393 9,024 Truck Brokerage Carriers: (1) Approved and Active 66,745 49,111 Other Approved 30,999 27,524 97,744 76,635 Total Available Truck Capacity Providers 108,137 85,659 Trucks Provided by BCO Independent Contractors 11,281 9,809 (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 $324.4 million and $445.0 million in the 2023 and 2022 fiscal year periods, respectively, and $79.5 million and $114.8 million in the 2023 and 2022 fourth quarters, respectively. 14 Date Published: 01/31/2024
Key Balance Sheet and Cash Flow Statistics ($’s in thousands) Dec 31, Dec 30, 2022 2023 Balance sheet (period end amounts): Debt to Capital 10% 7% Net Cash (1) $ 290,136 $ 469,564 Cash flow: Cash flow from operations $ 622,659 $ 393,648 Capital expenditures $ 26,005 $ 25,688 Share repurchases $ 285,983 $ 53,919 Dividends paid $ 115,671 $ 117,130 Returns (trailing 12 months): Return on Equity 50% 27% Return on Invested Capital 44% 25% Return on Assets 21% 14% (1) Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. 15 Date Published: 01/31/2024
(1) Free Cash Flow , Stock Purchases and Dividends (In Thousands) $700,000 40,000 39,500 $600,000 39,000 $500,000 38,500 38,000 $400,000 37,500 $300,000 37,000 36,500 $200,000 36,000 $100,000 35,500 $0 35,000 2019 2020 2021 2022 2023 Free Cash Flow Share Purchases Dividends Paid Common Share Count 2023 (000's ) Free cash flow (1) $ 367,960 Share purchases $ 53,919 Dividends paid $ 117,130 Ending common share count 35,717 (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide. 16 Date Published: 01/31/2024
Appendix A Reconciliation of Gross Profit to Variable Contribution ($’s in thousands) Fiscal Years Ended Fiscal Quarters Ended December 30, December 31, December 30, December 31, 2023 2022 2023 2022 Revenue $ 5,303,322 $ 7,436,562 $ 1,204,445 $ 1,674,767 Costs of revenue: Purchased transportation 4,068,262 5,804,017 927,028 1,291,676 Commissions to agents 462,668 614,865 99,271 149,106 Variable costs of revenue 4,530,930 6,418,882 1,026,299 1,440,782 Trailing equipment depreciation 31,319 36,653 7,079 8,893 Information technology costs (1) 25,486 19,834 5,695 5,966 Insurance-related costs (2) 116,069 127,605 27,585 28,784 Other operating costs 54,191 45,192 13,193 10,314 Other costs of revenue 227,065 229,284 53,552 53,957 Total costs of revenue 4,757,995 6,648,166 1,079,851 1,494,739 Gross profit $ 545,327 $ 788,396 $ 124,594 $ 180,028 Gross profit margin 10.3% 10.6% 10.3% 10.7% Plus: other costs of revenue 227,065 229,284 53,552 53,957 Variable contribution $ 772,392 $ 1,017,680 $ 178,146 $ 233,985 Variable contribution margin 14.6% 13.7% 14.8% 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: 01/31/2024
DESIGNED TO RESPOND BUILT TO DELIVER 18 Date Published: 01/31/2024