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Exhibit 99.1

 

LOGO

 

Landstar System, Inc.

13410 Sutton Park Drive, South

Jacksonville, FL 32224

904 398 9400

  

 

For Immediate Release   Contact: Kevin Stout
  Landstar System, Inc.
  www.landstar.com
April 20, 2016   904-398-9400

LANDSTAR SYSTEM REPORTS FIRST QUARTER REVENUE OF $712 MILLION AND RECORD FIRST QUARTER DILUTED EARNINGS PER SHARE OF $0.69

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record first quarter diluted earnings per share of $0.69, on revenue of $712 million in the 2016 first quarter. Landstar reported diluted earnings per share of $0.67 on revenue of $762 million in the 2015 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $112.2 million in the 2016 first quarter compared to $115.4 million in the 2015 first quarter. Operating margin, representing operating income divided by gross profit, was 42.7 percent in the 2016 first quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2016 first quarter was $655.1 million, or 92 percent of revenue, compared to $708.9 million, or 93 percent of revenue, in the 2015 first quarter. Truckload transportation revenue hauled via van equipment in the 2016 first quarter was $428.2 million compared to $449.7 million in the 2015 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2016 first quarter was $209.4 million compared to $239.5 million in the 2015 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $44.9 million, or 6 percent of revenue, in the 2016 first quarter compared to $42.8 million, or 6 percent of revenue, in the 2015 first quarter.

Trailing twelve-month return on average shareholders’ equity was 31 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 25 percent. Landstar purchased 175,000 shares


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of its common stock during 2016 at an aggregate cost of $10.2 million. Currently, there are approximately 1,634,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program. As of March 26, 2016, the Company had $217 million in cash and short term investments and $192 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 $0.08 per share payable on May 27, 2016, to stockholders of record as of the close of business on May 5, 2016. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“During the 2016 first quarter, the number of loads hauled via truck was higher than any first quarter in Landstar history. Given the freight environment during the quarter, where demand was somewhat softer than during the 2015 first quarter, I am pleased with the continued execution of adding increased volumes,” said Landstar’s President and Chief Executive Officer, Jim Gattoni.

Gattoni continued, “Overall, however, 2016 first quarter revenue was 7 percent below the comparable prior year period entirely due to lower revenue per load, particularly on loads hauled via truck. The number of loads hauled via truck in the 2016 first quarter increased 3 percent over the 2015 first quarter, driven by a 4 percent increase in the number of loads hauled via van equipment, a 1 percent increase in the number of loads hauled via unsided/platform equipment and a 3 percent increase in less-than-truckload volume. The number of loads hauled via unsided/platform equipment was impacted by a 5 percent decrease in the number of heavy/specialized loads, which comprised approximately 28 percent of Landstar’s unsided/platform revenue in the 2016 first quarter. Landstar also achieved a 22 percent increase in the 2016 first quarter over the 2015 first quarter in the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers.”

Gattoni further commented, “As I mentioned earlier, our truckload services experienced pricing pressure throughout the 2016 first quarter, as industry-wide truck capacity was more readily available as compared to the 2015 first quarter. This pricing pressure was


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more apparent in the U.S. spot market, in which the Company mostly operates. Additionally, the average cost of a gallon of diesel fuel was over 25 percent lower during the 2016 first quarter compared to the 2015 first quarter putting additional pressure on pricing, especially as it relates to loads hauled via truck brokerage carriers. As such, revenue per load on loads hauled via truck was 10 percent lower in the 2016 first quarter compared to the 2015 first quarter. Despite the softer pricing environment, 2016 first quarter operating margin was 42.7 percent, in line with seasonal historical first quarter results, and diluted earnings per share in the 2016 first quarter increased 3 percent over the 2015 first quarter.”

Gattoni continued, “Through the first several weeks of April, the number of loads hauled via truck exceeded the prior year comparable period in a low single digit percentage, consistent with the growth rate Landstar experienced in the 2016 first quarter. In mid-April 2015, we began a project to haul a significant number of loads for a single account in the automotive industry. That project ended at the end of 2015. Excluding the 13,000 loads hauled via truck in the 2015 second quarter related to that project (representing approximately $27 million in revenue), I expect the number of loads hauled via truck in the 2016 second quarter to increase in a low single digit range over the 2015 second quarter. Although we have recently experienced the normal seasonal uptick in revenue per load as we moved into April, I anticipate truck revenue per load in the 2016 second quarter to be below the 2015 second quarter in a high single digit to low double digit percentage range. My expectation is that pricing conditions for truck services in the 2016 second quarter will continue to be impacted by more readily available truck capacity as compared to the prior year second quarter and a relatively low per gallon cost of diesel fuel. Assuming the current environment continues throughout the 2016 second quarter, I anticipate revenue for the 2016 second quarter to be in a range of $770 million to $820 million and, assuming that range of estimated revenue, I would anticipate 2016 second quarter diluted earnings per share to be in a range of $0.80 to $0.85 per share compared to $0.92 per diluted share in the 2015 second 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 First Quarter 2016 Earnings Release Conference Call.”


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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 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; 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


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System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

(Tables follow)


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Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Thirteen Weeks Ended  
     March 26,
2016
     March 28,
2015
 

Revenue

   $ 711,644       $ 762,380   

Investment income

     380         354   

Costs and expenses:

     

Purchased transportation

     540,328         587,153   

Commissions to agents

     59,092         59,784   

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

     7,407         7,689   

Insurance and claims

     14,213         14,796   

Selling, general and administrative

     34,614         37,248   

Depreciation and amortization

     8,438         7,019   
  

 

 

    

 

 

 

Total costs and expenses

     664,092         713,689   
  

 

 

    

 

 

 

Operating income

     47,932         49,045   

Interest and debt expense

     889         781   
  

 

 

    

 

 

 

Income before income taxes

     47,043         48,264   

Income taxes

     17,859         18,249   
  

 

 

    

 

 

 

Net income

   $ 29,184       $ 30,015   
  

 

 

    

 

 

 

Earnings per common share

   $ 0.69       $ 0.67   
  

 

 

    

 

 

 

Diluted earnings per share

   $ 0.69       $ 0.67   
  

 

 

    

 

 

 

Average number of shares outstanding:

     

Earnings per common share

     42,395,000         44,588,000   
  

 

 

    

 

 

 

Diluted earnings per share

     42,489,000         44,760,000   
  

 

 

    

 

 

 

Dividends per common share

   $ 0.08       $ 0.07   
  

 

 

    

 

 

 


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Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     March 26,
2016
    December 26,
2015
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 156,284      $ 114,520   

Short-term investments

     61,140        48,823   

Trade accounts receivable, less allowance of $4,777 and $4,327

     383,057        462,699   

Other receivables, including advances to independent contractors, less allowance of $4,373 and $4,143

     28,778        18,472   

Other current assets

     7,529        11,604   
  

 

 

   

 

 

 

Total current assets

     636,788        656,118   
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $185,236 and $182,591

     228,474        225,927   

Goodwill

     31,134        31,134   

Other assets

     61,096        78,339   
  

 

 

   

 

 

 

Total assets

   $ 957,492      $ 991,518   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 30,073      $ 35,609   

Accounts payable

     172,035        223,709   

Current maturities of long-term debt

     43,148        42,499   

Insurance claims

     22,026        19,757   

Other current liabilities

     54,786        47,963   
  

 

 

   

 

 

 

Total current liabilities

     322,068        369,537   
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     81,385        81,793   

Insurance claims

     21,493        21,477   

Deferred income taxes and other non-current liabilities

     50,157        52,474   

Shareholders’ equity:

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,473,450 and 67,391,616 shares

     675        674   

Additional paid-in capital

     195,667        195,841   

Retained earnings

     1,415,763        1,389,975   

Cost of 25,147,079 and 24,972,079 shares of common stock in treasury

     (1,126,993     (1,116,765

Accumulated other comprehensive loss

     (2,723     (3,488
  

 

 

   

 

 

 

Total shareholders’ equity

     482,389        466,237   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 957,492      $ 991,518   
  

 

 

   

 

 

 


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Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirteen Weeks Ended  
     March 26,
2016
    March 28,
2015
 

Revenue generated through (in thousands):

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 428,193      $ 449,688   

Unsided/platform equipment

     209,422        239,483   

Less-than-truckload

     17,477        19,698   
  

 

 

   

 

 

 

Total truck transportation

     655,092        708,869   

Rail intermodal

     26,108        23,181   

Ocean and air cargo carriers

     18,808        19,632   

Other (1)

     11,636        10,698   
  

 

 

   

 

 

 
   $ 711,644      $ 762,380   
  

 

 

   

 

 

 

Revenue on loads hauled via BCO Independent Contractors (2) included in total truck transportation

   $ 334,278      $ 350,325   

Number of loads:

    

Truck transportation

    

Truckload:

    

Van equipment

     269,040        258,952   

Unsided/platform equipment

     102,742        102,166   

Less-than-truckload

     26,898        25,992   
  

 

 

   

 

 

 

Total truck transportation

     398,680        387,110   

Rail intermodal

     12,030        9,480   

Ocean and air cargo carriers

     4,560        4,130   
  

 

 

   

 

 

 
     415,270        400,720   
  

 

 

   

 

 

 

Loads hauled via BCO Independent Contractors (2) included in total truck transportation

     197,670        191,300   

Revenue per load:

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 1,592      $ 1,737   

Unsided/platform equipment

     2,038        2,344   

Less-than-truckload

     650        758   

Total truck transportation

     1,643        1,831   

Rail intermodal

     2,170        2,445   

Ocean and air cargo carriers

     4,125        4,754   

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

   $ 1,691      $ 1,831   

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

    

Truck capacity providers:

    

BCO Independent Contractors (2)

     47     46

Truck Brokerage Carriers

     45     47

Rail intermodal

     4     3

Ocean and air cargo carriers

     3     3

Other

     2     1
     March 26,
2016
    March 28,
2015
 

Truck Capacity Providers

    

BCO Independent Contractors (2)

     8,889        8,478   
  

 

 

   

 

 

 

Truck Brokerage Carriers:

    

Approved and active (3)

     29,523        27,304   

Other approved

     15,748        13,016   
  

 

 

   

 

 

 
     45,271        40,320   
  

 

 

   

 

 

 

Total available truck capacity providers

     54,160        48,798   
  

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (2)

     9,497        9,046   

 

(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.