Landstar System Reports Second Quarter Revenue of $1.225B and Earnings Per Share of $1.48 and Announces 9% Increase to Quarterly Dividend

07/30/24

04:15 PM EDT

2Q 2024 Presentation Slides 1.4 MB

JACKSONVILLE, Fla., July 30, 2024 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) (“Landstar” or the “Company”) today reported basic and diluted earnings per share (“EPS”) of $1.48 in the 2024 second quarter on revenue of $1.225 billion. “The Landstar network of independent business owners performed admirably in a challenging freight transportation environment,” said Landstar President and Chief Executive Officer Frank Lonegro. “During the second quarter, we were encouraged to see our first sequential quarter-to-quarter revenue increase since the 2022 second quarter. Revenue in the 2024 second quarter grew 5% sequentially following seven quarters of sequential revenue declines. As we look to build on that momentum, we continue to invest in leading-edge technology and new trailing equipment. We are particularly proud of the efforts of the thousands of BCOs, agents and employees in our network, who work each day to improve our safety performance and deliver great service to our customers.”

Landstar continues to return meaningful amounts of capital to stockholders through the Company’s stock purchase program and dividends. During the 2024 second quarter, Landstar purchased approximately 316,000 shares of its common stock at an aggregate cost of $57.0 million. The Company is currently authorized to purchase up to an additional 2,684,000 shares of the Company’s common stock under its longstanding share purchase program. Landstar also announced today that its Board of Directors declared a quarterly dividend of $0.36 per share payable on September 10, 2024, to stockholders of record as of the close of business on August 20, 2024. This quarterly dividend includes a $0.03 per share increase, or 9%, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters.

	2Q 2024		2Q 2023
Revenue	$	1,225,005	$	1,373,857
Gross profit	$	119,996	$	139,706
Variable contribution	$	175,131	$	198,182
Operating income	$	68,059	$	87,950
Basic and diluted earnings per share	$	1.48	$	1.85

(1) Dollars above in thousands, except per share amounts
(2) Please refer to the Consolidated Statements of Income and Reconciliation of Gross Profit to Variable Contribution included below

Total revenue was $1,225 million in the 2024 second quarter, compared to $1,374 million in the 2023 second quarter. Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2024 second quarter was $1,106 million, or 90% of revenue, compared to $1,247 million, or 91% of revenue, in the 2023 second quarter. Truckload transportation revenue hauled via van equipment in the 2024 second quarter was $619 million, compared to $703 million in the 2023 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2024 second quarter was $381 million, compared to $395 million in the 2023 second quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2024 second quarter was $78 million, compared to $118 million in the 2023 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $94 million, or 8% of revenue, in the 2024 second quarter, compared to $101 million, or 7% of revenue, in the 2023 second quarter.

The number of loads hauled via truck declined 8.9% in the 2024 second quarter as compared to the 2023 second quarter, at the low end of the Company’s guidance included in its 2024 first quarter earnings release slide presentation, dated April 25, 2024. Truck revenue per load declined 2.6% in the 2024 second quarter as compared to the 2023 second quarter, slightly below the mid-point of the Company’s previously provided guidance.

Gross profit in the 2024 second quarter was $120 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2024 second quarter was $175 million. Gross profit in the 2023 second quarter was $140 million and variable contribution in the 2023 second quarter was $198 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2024 and 2023 second quarters and year-to-date periods are provided in the Company’s accompanying financial disclosures.

The Company’s balance sheet continues to be very strong, with cash and short-term investments of approximately $504 million as of June 29, 2024. Trailing twelve-month return on average shareholders’ equity was 22%, and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 20%.

Landstar will provide a live webcast of its quarterly earnings conference call this evening at 5:00 p.m. ET. To access the webcast, visit www.investor.landstar.com; click on “Webcasts,” then click on “Landstar’s Second Quarter 2024 Earnings Release Conference Call.” A slide presentation to accompany the webcast presentation is also available on Landstar’s investor relations website at https://investor.landstar.com/.

About Landstar:
Landstar System, Inc., 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 statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; 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; 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; regulations requiring the purchase and use of zero-emission vehicles; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2023 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, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)


			Twenty-Six Weeks Ended						Thirteen Weeks Ended
			June 29,			July 1,			June 29,			July 1,
			2024			2023			2024			2023

Revenue			$	2,396,048		$	2,809,532		$	1,225,005		$	1,373,857
Investment income				7,066			3,852			3,654			2,484

Costs and expenses:
	Purchased transportation			1,855,579			2,154,491			950,058			1,053,197
	Commissions to agents			197,098			248,153			99,816			122,478
	Other operating costs, net of gains on asset sales/dispositions			28,994			25,840			14,135			13,462
	Insurance and claims			53,432			57,431			27,164			29,784
	Selling, general and administrative			111,361			108,096			54,939			54,529
	Depreciation and amortization			28,630			30,139			14,488			14,941

		Total costs and expenses		2,275,094			2,624,150			1,160,600			1,288,391

Operating income				128,020			189,234			68,059			87,950
Interest and debt (income) expense				(3,286	)		(1,033	)		(1,675	)		(307	)

Income before income taxes				131,306			190,267			69,734			88,257
Income taxes				31,586			45,513			17,110			21,698

Net income			$	99,720		$	144,754		$	52,624		$	66,559

Basic and diluted earnings per share			$	2.79		$	4.03		$	1.48		$	1.85

Average basic and diluted shares outstanding				35,702,000			35,962,000			35,654,000			35,941,000

Dividends per common share			$	0.66		$	0.60		$	0.33		$	0.30


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


				June 29,			December 30,
				2024			2023
ASSETS
Current assets:
	Cash and cash equivalents			$	438,062		$	481,043
	Short-term investments				65,959			59,661
	Trade accounts receivable, less allowance
		of $11,697 and $11,738			724,479			743,762
	Other receivables, including advances to independent
		contractors, less allowance of $15,974 and $14,010			42,117			43,339
	Other current assets				44,568			24,936
		Total current assets			1,315,185			1,352,741

Operating property, less accumulated depreciation
			and amortization of $449,364 and $436,682		285,995			284,300
Goodwill					41,607			42,275
Other assets					112,417			122,530
Total assets				$	1,755,204		$	1,801,846

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Cash overdraft			$	58,358		$	61,541
	Accounts payable				401,535			395,980
	Current maturities of long-term debt				27,980			27,876
	Insurance claims				42,677			41,825
	Dividends payable				-			71,433
	Other current liabilities				75,168			76,569
		Total current liabilities			605,718			675,224

Long-term debt, excluding current maturities					45,397			43,264
Insurance claims					59,862			58,922
Deferred income taxes and other non-current liabilities					43,415			40,513

Shareholders' equity:
	Common stock, $0.01 par value, authorized 160,000,000
		shares, issued 68,553,927 and 68,497,324			686			685
	Additional paid-in capital				256,084			254,642
	Retained earnings				2,859,786			2,783,645
	Cost of 33,102,276 and 32,780,651 shares of common
		stock in treasury			(2,106,266	)		(2,048,184	)
	Accumulated other comprehensive loss				(9,478	)		(6,865	)
		Total shareholders' equity			1,000,812			983,923
Total liabilities and shareholders' equity				$	1,755,204		$	1,801,846


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


				Twenty-Six Weeks Ended						Thirteen Weeks Ended
				June 29,			July 1,			June 29,			July 1,
				2024			2023			2024			2023
Revenue generated through (in thousands):

	Truck transportation
		Truckload:
			Van equipment	$	1,247,244		$	1,458,124		$	618,940		$	703,041
			Unsided/platform equipment		723,995			772,336			380,950			394,772
		Less-than-truckload			53,707			62,673			28,090			31,115
		Other truck transportation⁽¹⁾			149,675			277,520			77,709			118,017
			Total truck transportation		2,174,621			2,570,653			1,105,689			1,246,945
	Rail intermodal				45,002			50,889			22,307			25,232
	Ocean and air cargo carriers				125,380			136,534			71,306			75,441
	Other⁽²⁾				51,045			51,456			25,703			26,239
				$	2,396,048		$	2,809,532		$	1,225,005		$	1,373,857

	Revenue on loads hauled via BCO Independent Contractors⁽³⁾
		included in total truck transportation		$	918,071		$	1,034,881		$	465,510		$	515,355

Number of loads:

	Truck transportation
		Truckload:
			Van equipment		599,973			655,036			300,959			323,082
			Unsided/platform equipment		244,407			263,185			126,460			135,613
		Less-than-truckload			82,850			93,066			42,617			46,874
		Other truck transportation⁽¹⁾			71,440			110,373			37,914			52,311
			Total truck transportation		998,670			1,121,660			507,950			557,880
	Rail intermodal				14,380			15,390			7,230			7,630
	Ocean and air cargo carriers				17,240			16,750			8,520			8,310
					1,030,290			1,153,800			523,700			573,820

	Loads hauled via BCO Independent Contractors⁽³⁾
		included in total truck transportation			422,300			463,910			213,560			231,360

Revenue per load:

	Truck transportation
		Truckload:
			Van equipment	$	2,079		$	2,226		$	2,057		$	2,176
			Unsided/platform equipment		2,962			2,935			3,012			2,911
		Less-than-truckload			648			673			659			664
		Other truck transportation⁽¹⁾			2,095			2,514			2,050			2,256
			Total truck transportation		2,178			2,292			2,177			2,235
	Rail intermodal				3,129			3,307			3,085			3,307
	Ocean and air cargo carriers				7,273			8,151			8,369			9,078

	Revenue per load on loads hauled via BCO Independent Contractors⁽³⁾			$	2,174		$	2,231		$	2,180		$	2,228

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

	Truck capacity providers:
		BCO Independent Contractors⁽³⁾			38	%		37	%		38	%		38	%
		Truck Brokerage Carriers			52	%		55	%		52	%		53	%
	Rail intermodal				2	%		2	%		2	%		2	%
	Ocean and air cargo carriers				5	%		5	%		6	%		5	%
	Other				2	%		2	%		2	%		2	%


										June 29,			July 1,
										2024			2023
Truck Capacity Providers

	BCO Independent Contractors⁽³⁾										8,385			9,748
	Truck Brokerage Carriers:
		Approved and active⁽⁴⁾									45,382			58,303
		Other approved									25,450			29,503
											70,832			87,806
	Total available truck capacity providers										79,217			97,554

	Trucks provided by BCO Independent Contractors⁽³⁾										9,180			10,548


(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, Inc. and Subsidiary
Reconciliation of Gross Profit to Variable Contribution
(Dollars in thousands)
(Unaudited)


			Twenty-Six Weeks Ended						Thirteen Weeks Ended
			June 29,			July 1,			June 29,			July 1,
			2024			2023			2024			2023

Revenue			$	2,396,048		$	2,809,532		$	1,225,005		$	1,373,857

Costs of revenue:
		Purchased transportation		1,855,579			2,154,491			950,058			1,053,197
		Commissions to agents		197,098			248,153			99,816			122,478

	Variable costs of revenue			2,052,677			2,402,644			1,049,874			1,175,675

		Trailing equipment depreciation		13,834			16,519			6,937			8,150
		Information technology costs (1)		11,986			13,493			6,182			6,742
		Insurance-related costs (2)		54,659			58,382			27,881			30,122
		Other operating costs		28,994			25,840			14,135			13,462

	Other costs of revenue			109,473			114,234			55,135			58,476

	Total costs of revenue			2,162,150			2,516,878			1,105,009			1,234,151

Gross profit			$	233,898		$	292,654		$	119,996		$	139,706

Gross profit margin				9.8	%		10.4	%		9.8	%		10.2	%

	Plus: other costs of revenue			109,473			114,234			55,135			58,476

Variable contribution			$	343,371		$	406,888		$	175,131		$	198,182

Variable contribution margin				14.3	%		14.5	%		14.3	%		14.4	%

(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.

Contact:
Jim Todd
Chief Financial Officer
904-398-9400

Source: Landstar System, Inc.