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Landstar System Reports Third Quarter Revenue Of $788 Million And Diluted Earnings Per Share Of $0.86
10/19/16
04:15 PM EDT

JACKSONVILLE, Fla., Oct. 19, 2016 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported third quarter diluted earnings per share of $0.86 on revenue of $788 million in the 2016 third quarter.  Landstar reported diluted earnings per share of $0.90 on revenue of $842 million in the 2015 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $121.8 million in the 2016 third quarter compared to $126.8 million in the 2015 third quarter.  Operating margin, representing operating income divided by gross profit, was 48.0 percent in the 2016 third quarter.

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2016 third quarter was $732.9 million, or 93 percent of revenue, compared to $779.8 million, or 93 percent of revenue, in the 2015 third quarter.  Truckload transportation revenue hauled via van equipment in the 2016 third quarter was $465.8 million compared to $466.2 million in the 2015 third quarter.  Truckload transportation revenue hauled via unsided/platform equipment in the 2016 third quarter was $248.9 million compared to $293.3 million in the 2015 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $43.4 million, or 6 percent of revenue, in the 2016 third quarter compared to $50.5 million, or 6 percent of revenue, in the 2015 third quarter.

Trailing twelve-month return on average shareholders' equity was 28 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 22 percent. During the 2016 third quarter, Landstar purchased 350,000 shares of its common stock at an aggregate cost of $24.0 million bringing the total number of common shares purchased during the thirty-nine weeks ended September 24, 2016 to 773,000 shares at an aggregate cost of $50.5 million.  Currently, there are approximately 1,036,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.  As of September 24, 2016, the Company had $227 million in cash and short term investments and $214 million available for borrowings under the Company's senior credit facility.

In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.09 per share payable on December 2, 2016, to stockholders of record as of the close of business on November 8, 2016.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

Commenting on Landstar's 2016 third quarter, Landstar's President and CEO Jim Gattoni said, "Diluted earnings per share was $0.86 in the 2016 third quarter, the second highest third quarter diluted earnings per share in Landstar history, second only to 2015 third quarter record diluted earnings per share of $0.90. Revenue was $788 million with gross profit of $121.8 million in the 2016 third quarter, the second highest third quarter gross profit in Landstar history, second only to 2015 third quarter record gross profit of $126.8 million. 2015 third quarter revenue was a record $842 million and included $35 million of revenue from a project on behalf of a customer in the automotive sector. That project was completed at the end of 2015. Overall, we continued to have difficult year-over-year comparisons to 2015 driven mostly by tougher overall industry conditions in 2016 and revenue from the previously referenced automotive project in 2015."

Gattoni continued, "Landstar executed well when considering the softness in U.S. manufacturing and more readily available truck capacity in 2016. Given this environment, Landstar managed a 4 percent increase in the number of loads hauled via truck in the 2016 third quarter over the 2015 third quarter, when excluding approximately 20,000 truckloads hauled via unsided/platform equipment for the automotive project in the 2015 third quarter.

Overall, the number of loads hauled via truck in the 2016 third quarter decreased 1 percent from the 2015 third quarter.  This overall decrease in volume was driven by a 6 percent increase in the number of loads hauled via van equipment, offset by a 14 percent decrease in the number of loads hauled via unsided/platform equipment. Excluding the loadings related to the automotive project, Landstar experienced a 1 percent increase in the number of loads hauled via unsided/platform equipment. Landstar also achieved a 4 percent increase in the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers in the 2016 third quarter over the 2015 third quarter."

Gattoni further continued, "Revenue per load on loads hauled via truck in the 2016 third quarter was 5 percent below the 2015 third quarter. This represents a sequential improvement, however, as revenue per load on loads hauled via truck in the 2016 first quarter compared to the 2015 first quarter and in the 2016 second quarter compared to the 2015 second quarter decreased 10 percent and 9 percent, respectively. The reduction in the percentage shortfall in revenue per load on loads hauled via truck in the 2016 third quarter was due to an increase in revenue per load in the 2016 third quarter compared to the 2016 second quarter that was slightly ahead of recent second quarter to third quarter trends, coupled with weaker revenue per load in the 2015 third quarter as compared to the first half of 2015. Additionally, the average cost of a gallon of diesel fuel was approximately 10 percent lower during the 2016 third quarter compared to the 2015 third quarter putting additional pressure on pricing, especially as it related to loads hauled via truck brokerage carriers. The softer pricing environment contributed to the decline in the 2016 third quarter operating margin, which was 48.0 percent, compared to 50.4 percent in the 2015 third quarter."

Commenting on Landstar's 2016 fourth quarter, Gattoni stated, "I expect the slow growth environment we have experienced during the first three quarters of 2016 to continue through the 2016 fourth quarter.  As was the case in our 2016 second and third quarters, fourth quarter 2016 over fourth quarter 2015 revenue comparisons will include the effects of revenue derived from the automotive project previously referenced. The Company's 2015 fourth quarter included approximately $38 million in revenue from approximately 19,000 loads hauled via truck related to that project. Through the first few weeks of October, we have experienced the normal seasonal pattern for revenue per load on loads hauled via truck and, therefore, I anticipate revenue per load on loads hauled via truck to be below prior year's fourth quarter in a mid-single digit range, consistent with the 2016 third quarter compared to the 2015 third quarter. Landstar's fiscal year ends on the last Saturday of the calendar year, which this year is December 31, 2016, resulting in fiscal year 2016 representing a 53 week period. As such, the Company's 2016 fourth quarter includes an extra week of operations. The number of loads hauled via truck during the first few weeks of October is trending slightly ahead of the historical third quarter to fourth quarter trend. Assuming that trend continues, and given the extra week in the 2016 fourth quarter, I would expect the number of loads hauled via truck in the 2016 fourth quarter to exceed the 2015 fourth quarter in a low-single digit range. As such, I expect 2016 fourth quarter revenue to be in a range of $800 million to $850 million. Assuming insurance and claims costs in the 2016 fourth quarter are approximately 3.2 percent of BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past 5 years, I would expect diluted earnings per share to be in a range of $0.85 to $0.90 in the 2016 fourth quarter."

Landstar will provide a live webcast of its quarterly earnings conference call tomorrow morning at 8:00 a.m. ET.  To access the webcast, visit the Company's website at www.landstar.com; click on "Investor Relations" and "Webcasts," then click on "Landstar's Third Quarter 2016 Earnings Release Conference Call."

This earnings announcement, as well as an accompanying slide presentation, is available through the Company's website at http://investor.landstar.com under "Presentations" and on a Form 8-K filed with the Securities and Exchange Commission.

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995.  Statements contained in this press release that are not based on historical facts are "forward-looking statements".  This press release contains forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies and expectations.  Terms such as "anticipates," "believes," "estimates," "intention," "expects," "plans," "predicts," "may," "should," "could," "will," the negative thereof and similar expressions are intended to identify forward-looking statements.  Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; substantial industry competition; disruptions or failures in the Company's computer systems; cyber and other information security incidents; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed property; regulations focused on diesel emissions and other air quality matters; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2015 fiscal year, described in Item 1A Risk Factors, and in other SEC filings from time to time.  These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated.  Investors should not place undue reliance on such forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar:
Landstar System, Inc. is a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation logistics services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees.  All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2013 environmental, health, safety and security management system standards.  Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

Landstar logo

 (Tables follow)

 

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,

  

September 26,

  

September 24,

  

September 26,
           

2016

  

2015

  

2016

  

2015
                         

Revenue

      

$        2,274,805

  

$         2,472,489

  

$          787,938

  

$       841,726

Investment income

    

1,100

  

1,043

  

357

  

350
                         

Costs and expenses:

                  
 

Purchased transportation

  

1,730,745

  

1,900,313

  

601,002

  

645,583
 

Commissions to agents

  

189,075

  

199,113

  

65,144

  

69,297
 

Other operating costs, net of gains on asset sales/dispositions

  

21,484

  

24,388

  

7,492

  

8,718
 

Insurance and claims

    

42,795

  

37,610

  

12,488

  

10,502
 

Selling, general and administrative

  

106,211

  

111,797

  

34,692

  

36,811
 

Depreciation and amortization

  

26,109

  

21,253

  

9,016

  

7,185
                         
   

Total costs and expenses

  

2,116,419

  

2,294,474

  

729,834

  

778,096
                         

Operating income

    

159,486

  

179,058

  

58,461

  

63,980

Interest and debt expense

    

2,725

  

2,208

  

948

  

714
                         

Income before income taxes

  

156,761

  

176,850

  

57,513

  

63,266

Income taxes 

      

58,985

  

67,016

  

21,235

  

23,918
                         

Net income

      

$            97,776

  

$           109,834

  

$           36,278

  

$         39,348
                         
                         

Earnings per common share

  

$                2.32

  

$                 2.50

  

$               0.86

  

$             0.91
                         

Diluted earnings per share

    

$                2.31

  

$                 2.49

  

$               0.86

  

$             0.90
                         

Average number of shares outstanding:

                
 

Earnings per common share  

  

42,223,000

  

43,975,000

  

42,039,000

  

43,446,000
 

Diluted earnings per share

  

42,341,000

  

44,134,000

  

42,170,000

  

43,607,000
                         

Dividends per common share

  

$                0.25

  

$                 0.22

  

$               0.09

  

$             0.08

 

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)
                   
                   
             

September 24,

  

December 26,
             

2016

  

2015

ASSETS

            

Current assets:

            
 

Cash and cash equivalents

    

$      170,805

  

$      114,520
 

Short-term investments

    

56,679

  

48,823
 

Trade accounts receivable, less allowance

      
   

of $4,881 and $4,327

    

409,047

  

462,699
 

Other receivables, including advances to independent

      
   

contractors, less allowance of $4,871 and $4,143

17,091

  

18,472
 

Other current assets

    

15,188

  

11,604
   

Total current assets

    

668,810

  

656,118
                   

Operating property, less accumulated depreciation

      
     

and amortization of $187,566 and $182,591

261,943

  

225,927

Goodwill

        

31,134

  

31,134

Other assets

      

65,871

  

78,339

Total assets

      

$   1,027,758

  

$      991,518
                   

LIABILITIES AND SHAREHOLDERS' EQUITY

      

Current liabilities:

            
 

Cash overdraft

      

$        27,725

  

$        35,609
 

Accounts payable

    

201,872

  

223,709
 

Current maturities of long-term debt

  

44,784

  

42,499
 

Insurance claims

    

27,941

  

19,757
 

Other current liabilities

    

48,027

  

47,963
   

Total current liabilities

    

350,349

  

369,537
                   

Long-term debt, excluding current maturities

90,817

  

81,793

Insurance claims

      

23,765

  

21,477

Deferred income taxes and other non-current liabilities

56,097

  

52,474
                   

Shareholders' equity:

          
 

Common stock, $0.01 par value, authorized 160,000,000 

      
   

shares, issued 67,522,281 and 67,391,616 shares

675

  

674
 

Additional paid-in capital

    

198,736

  

195,841
 

Retained earnings

    

1,477,179

  

1,389,975
 

Cost of 25,747,002 and 24,972,079 shares of common

      
   

stock in treasury

    

(1,167,391)

  

(1,116,765)
 

Accumulated other comprehensive loss

(2,469)

  

(3,488)
   

Total shareholders' equity

    

506,730

  

466,237

Total liabilities and shareholders' equity 

$   1,027,758

  

$      991,518

 

 

 

 

 

Landstar System, Inc. and Subsidiary
 

Supplemental Information
 

(Unaudited)
                         
                         
         

Thirty Nine Weeks Ended

    

Thirteen Weeks Ended
         

September 24,

  

September 26,

    

September 24,

  

September 26,
         

2016

  

2015

    

2016

  

2015

Revenue generated through (in thousands):

                  
                         
 

Truck transportation

                  
   

Truckload:

                  
     

Van equipment

  

$  1,351,980

  

$  1,412,824

    

$     465,785

  

$      466,226
     

Unsided/platform equipment

  

700,369

  

823,767

    

248,939

  

293,252
   

Less-than-truckload

  

54,066

  

61,297

    

18,139

  

20,341
     

Total truck transportation

  

2,106,415

  

2,297,888

    

732,863

  

779,819
 

Rail intermodal

  

76,987

  

76,688

    

24,650

  

27,166
 

Ocean and air cargo carriers

  

56,500

  

64,725

    

18,790

  

23,315
 

Other (1)   

  

34,903

  

33,188

    

11,635

  

11,426
         

$  2,274,805

  

$  2,472,489

    

$     787,938

  

$      841,726
                         
 

Revenue on loads hauled via BCO Independent Contractors (2)

                  
   

included in total truck transportation

  

$  1,086,848

  

$  1,140,870

    

$     379,196

  

$      388,840
                         

Number of loads:

                  
                         
 

Truck transportation

                  
   

Truckload:

                  
     

Van equipment

  

847,208

  

820,223

    

291,089

  

275,509
     

Unsided/platform equipment

  

331,226

  

359,769

    

112,192

  

130,317
   

Less-than-truckload

  

84,316

  

83,838

    

28,589

  

28,934
     

Total truck transportation

  

1,262,750

  

1,263,830

    

431,870

  

434,760
 

Rail intermodal

  

36,120

  

32,350

    

11,940

  

11,670
 

Ocean and air cargo carriers

  

14,910

  

13,320

    

5,130

  

4,700
         

1,313,780

  

1,309,500

    

448,940

  

451,130
                         
 

Loads hauled via BCO Independent Contractors (2)

                  
   

included in total truck transportation

  

630,880

  

616,410

    

216,220

  

210,180
                         

Revenue per load:

                  
                         
 

Truck transportation

                  
   

Truckload:

                  
     

Van equipment

  

$          1,596

  

$          1,722

    

$         1,600

  

$          1,692
     

Unsided/platform equipment

  

2,114

  

2,290

    

2,219

  

2,250
   

Less-than-truckload

  

641

  

731

    

634

  

703
     

Total truck transportation

  

1,668

  

1,818

    

1,697

  

1,794
 

Rail intermodal

  

2,131

  

2,371

    

2,064

  

2,328
 

Ocean and air cargo carriers

  

3,789

  

4,859

    

3,663

  

4,961
                         
 

Revenue per load on loads hauled via BCO Independent Contractors (2)

  

$          1,723

  

$          1,851

    

$         1,754

  

$          1,850
                         

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

                  
                         
 

Truck capacity providers:

                  
   

BCO Independent Contractors (2)

  

48%

  

46%

    

48%

  

46%
   

Truck Brokerage Carriers

  

45%

  

47%

    

45%

  

46%
 

Rail intermodal

  

3%

  

3%

    

3%

  

3%
 

Ocean and air cargo carriers

  

2%

  

3%

    

2%

  

3%
 

Other

    

2%

  

1%

    

1%

  

1%
                         
                         
                   

September 24,

  

September 26,
                   

2016

  

2015

Truck Capacity Providers

                  
                         
 

BCO Independent Contractors (2)

            

8,889

  

8,869
 

Truck Brokerage Carriers:

                  
 

     Approved and active (3)

            

30,860

  

29,127
 

     Other approved

            

15,691

  

13,813
                   

46,551

  

42,940
 

Total available truck capacity providers

            

55,440

  

51,809
                         
 

Trucks provided by BCO Independent Contractors (2)

            

9,510

  

9,441
                         
                         

(1) Includes primarily premium revenue generated by the insurance segment.

            
                         

(2) BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.
                         

(3) Active refers to Truck Brokerage Carriers who have moved at least one load in the 180 days immediately preceeding the fiscal quarter end.

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/landstar-system-reports-third-quarter-revenue-of-788-million-and-diluted-earnings-per-share-of-086-300347695.html

SOURCE Landstar System, Inc.

Kevin Stout, Landstar System, Inc., www.landstar.com, 904-398-9400