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Exhibit 99.1

 

LOGO

 

For Immediate Release

 

April 25, 2018

  

Contact:    Kevin Stout

Landstar System, Inc.

www.landstar.com

904-398-9400

LANDSTAR SYSTEM REPORTS RECORD FIRST QUARTER

REVENUE OF $1.048 BILLION AND RECORD FIRST QUARTER DILUTED

EARNINGS PER SHARE OF $1.37

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record first quarter diluted earnings per share of $1.37 in the 2018 first quarter, on record first quarter revenue of $1.048 billion. Landstar reported diluted earnings per share of $0.77 on revenue of $781 million in the 2017 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $155.5 million, a record quarterly gross profit, in the 2018 first quarter compared to $121.6 million in the 2017 first quarter. Operating margin, representing operating income divided by gross profit, was 48.3 percent in the 2018 first quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 first quarter was $979.1 million, or 93 percent of revenue, compared to $726.8 million, or 93 percent of revenue, in the 2017 first quarter. Truckload transportation revenue hauled via van equipment in the 2018 first quarter was $656.1 million compared to $470.0 million in the 2017 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 first quarter was $299.4 million compared to $237.2 million in the 2017 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $52.8 million, or 5 percent of revenue, in the 2018 first quarter compared to $42.4 million, or 5 percent of revenue, in the 2017 first quarter.


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Trailing twelve-month return on average shareholders’ equity was 32 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 27 percent. Currently, the Company is authorized to purchase up to approximately 2,986,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of March 31, 2018, the Company had $260 million in cash and short term investments and $217 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 $0.15 per share payable on June 1, 2018, to stockholders of record as of the close of business on May 10, 2018. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“I am extremely pleased with the execution of the Landstar model during the 2018 first quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “Diluted earnings per share was $1.37 in the 2018 first quarter, the highest first quarter diluted earnings per share in Landstar history. Revenue and the number of loads hauled via truck each set new all-time Landstar first quarter records. All-time quarterly records were set for both gross profit and operating income and the Company also set a new all-time record for trucks provided by BCOs with 9,868 as of the end of the quarter.”

Gattoni continued, “The number of loads hauled via truck in the 2018 first quarter increased 12 percent over the 2017 first quarter, driven by a 13 percent increase in the number of loads hauled via van equipment, an 8 percent increase in the number of loads hauled via unsided/platform equipment and a 12 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 20 percent higher in the 2018 first quarter compared to the 2017 first quarter, primarily due to a 25 percent increase in rail intermodal volume.”

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 first quarter, as industry-wide truck capacity continued to be very tight. Revenue per load on loads hauled via van equipment increased 24 percent over the 2017 first quarter and revenue per load on loads hauled via unsided/platform equipment increased 17 percent over the 2017 first quarter. As a result, revenue per load on loads hauled via truck was 21 percent higher than the 2017 first quarter.”


LANDSTAR SYSTEM/ 3

 

Gattoni continued, “Through the first few weeks of April, load growth on a year-over-year basis in loads hauled via truck was consistent with the load growth experienced in the first quarter. I expect that trend to continue and, therefore, expect the number of loads hauled via truck in the 2018 second quarter to increase in a 10 to 12 percent range over the 2017 second quarter. My expectation is that pricing conditions for truck services in the 2018 second quarter will continue to be very strong with little change in the level of available truck capacity. Assuming those truck conditions remain, I expect 2018 second quarter truck revenue per load to be higher than the 2017 second quarter in a 19 to 22 percentage range. I anticipate revenue for the 2018 second quarter to be in a range of $1.115 billion to $1.165 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.5 percent of BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate 2018 second quarter diluted earnings per share to be in a range of $1.48 to $1.54 per share compared to $0.89 per diluted share in the 2017 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 2018 Earnings Release Conference Call.”

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


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services; U.S. foreign trade relationships; 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; regulations focused on diesel emissions and other air quality matters; 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 2017 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 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.

(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 31,     April 1,  
     2018     2017  

Revenue

   $ 1,047,926     $ 780,908  

Investment income

     861       414  

Costs and expenses:

    

Purchased transportation

     810,297       595,523  

Commissions to agents

     82,125       63,798  

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

     7,604       6,897  

Insurance and claims

     17,360       14,513  

Selling, general and administrative

     45,251       38,323  

Depreciation and amortization

     10,997       9,934  
  

 

 

   

 

 

 

Total costs and expenses

     973,634       728,988  
  

 

 

   

 

 

 

Operating income

     75,153       52,334  

Interest and debt expense

     800       1,083  
  

 

 

   

 

 

 

Income before income taxes

     74,353       51,251  

Income taxes

     16,880       18,868  
  

 

 

   

 

 

 

Net income

     57,473       32,383  

Less: Net loss attributable to noncontrolling interest

     (44     —    
  

 

 

   

 

 

 

Net income attributable to Landstar System, Inc. and subsidiary

   $ 57,517     $ 32,383  
  

 

 

   

 

 

 

Earnings per common share attributable to Landstar System, Inc. and subsidiary

   $ 1.37     $ 0.77  
  

 

 

   

 

 

 

Diluted earnings per share attributable to Landstar System, Inc. and subsidiary

   $ 1.37     $ 0.77  
  

 

 

   

 

 

 

Average number of shares outstanding:

    

Earnings per common share

     42,038,000       41,879,000  
  

 

 

   

 

 

 

Diluted earnings per share

     42,098,000       41,998,000  
  

 

 

   

 

 

 

Dividends per common share

   $ 0.15     $ 0.09  
  

 

 

   

 

 

 


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Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     March 31,     December 30,  
     2018     2017  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 220,605     $ 242,416  

Short-term investments

     39,014       48,928  

Trade accounts receivable, less allowance of $6,496 and $6,131

     631,828       631,164  

Other receivables, including advances to independent contractors, less allowance of $6,796 and $6,012

     27,880       24,301  

Other current assets

     9,373       14,394  
  

 

 

   

 

 

 

Total current assets

     928,700       961,203  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $224,042 and $218,700

     265,540       276,011  

Goodwill

     39,363       39,065  

Other assets

     86,670       76,181  
  

 

 

   

 

 

 

Total assets

   $ 1,320,273     $ 1,352,460  
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 36,320     $ 42,242  

Accounts payable

     282,480       285,132  

Current maturities of long-term debt

     39,931       42,051  

Insurance claims

     39,547       38,919  

Dividends payable

     —         62,985  

Accrued compensation

     12,459       30,103  

Other current liabilities

     62,206       47,211  
  

 

 

   

 

 

 

Total current liabilities

     472,943       548,643  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     73,350       83,062  

Insurance claims

     30,252       30,141  

Deferred income taxes and other non-current liabilities

     37,448       36,737  

Equity

    

Landstar System, Inc. and subsidiary shareholders’ equity Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,836,164 and 67,740,380 shares

     678       677  

Additional paid-in capital

     211,933       209,599  

Retained earnings

     1,663,140       1,611,158  

Cost of 25,768,669 and 25,749,493 shares of common stock in treasury

     (1,169,458     (1,167,600

Accumulated other comprehensive loss

     (3,551     (3,162
  

 

 

   

 

 

 

Total Landstar System, Inc. and subsidiary shareholders’ equity

     702,742       650,672  
  

 

 

   

 

 

 

Noncontrolling interest

     3,538       3,205  
  

 

 

   

 

 

 

Total equity

     706,280       653,877  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,320,273     $ 1,352,460  
  

 

 

   

 

 

 


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Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirteen Weeks Ended  
     March 31,     April 1,  
     2018     2017  

Revenue generated through (in thousands):

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 656,135     $ 469,783  

Unsided/platform equipment

     299,369       237,177  

Less-than-truckload

     23,584       19,857  
  

 

 

   

 

 

 

Total truck transportation

     979,088       726,817  

Rail intermodal

     29,292       22,842  

Ocean and air cargo carriers

     23,477       19,590  

Other (1)

     16,069       11,659  
  

 

 

   

 

 

 
   $ 1,047,926     $ 780,908  
  

 

 

   

 

 

 

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

   $ 471,150     $ 364,908  

Number of loads:

    

Truck transportation

    

Truckload:

    

Van equipment

     336,919       298,066  

Unsided/platform equipment

     119,791       111,185  

Less-than-truckload

     33,420       29,919  
  

 

 

   

 

 

 

Total truck transportation

     490,130       439,170  

Rail intermodal

     13,280       10,650  

Ocean and air cargo carriers

     6,330       5,730  
  

 

 

   

 

 

 
     509,740       455,550  
  

 

 

   

 

 

 

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

     233,180       218,230  

Revenue per load:

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 1,947     $ 1,576  

Unsided/platform equipment

     2,499       2,133  

Less-than-truckload

     706       664  

Total truck transportation

     1,998       1,655  

Rail intermodal

     2,206       2,145  

Ocean and air cargo carriers

     3,709       3,419  

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

   $ 2,021     $ 1,672  

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

    

Truck capacity providers:

    

BCO Independent Contractors (2)

     45     47

Truck Brokerage Carriers

     48     46

Rail intermodal

     3     3

Ocean and air cargo carriers

     2     3

Other

     2     1
     March 31,     April 1,  
     2018     2017  

Truck Capacity Providers

    

BCO Independent Contractors (2)

     9,243       8,772  
  

 

 

   

 

 

 

Truck Brokerage Carriers:

    

Approved and active (3)

     34,659       31,566  

Other approved

     15,687       15,889  
  

 

 

   

 

 

 
     50,346       47,455  
  

 

 

   

 

 

 

Total available truck capacity providers

     59,589       56,227  
  

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (2)

     9,868       9,370  

 

(1) Includes primarily reinsurance premium revenue generated by the insurance segment and, during the 2018 fiscal quarter, intra-Mexico transportation services revenue generated by Landstar Metro.
(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 moved at least one load in the 180 days immediately preceding the fiscal quarter end.