Landstar System Reports Record Quarterly Revenue of $1.183 Billion and Record Second Quarter Diluted Earnings Per Share of $1.51
JACKSONVILLE, Fla., July 25, 2018 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $1.183 billion in the 2018 second quarter, a 36 percent increase over the $870 million revenue reported in the 2017 second quarter. Net income of $62.5 million and diluted earnings per share of $1.51 were each second quarter records and increased 67 percent and 70 percent, respectively, over net income and diluted earnings per share in the 2017 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 second quarter was $171.4 million, 29 percent above the 2017 second quarter, while 2018 second quarter operating income was $83.4 million, 37 percent above the 2017 second quarter. Gross profit and operating income in the 2018 second quarter were both all-time quarterly records.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 second quarter was $1.105 billion, or 93 percent of revenue, compared to $815.6 million, or 94 percent of revenue, in the 2017 second quarter. Truckload transportation revenue hauled via van equipment in the 2018 second quarter was $713.3 million compared to $509.1 million in the 2017 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 second quarter was $364.7 million compared to $283.5 million in the 2017 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $60.3 million, or 5 percent of revenue, in the 2018 second quarter compared to $43.1 million, or 5 percent of revenue, in the 2017 second quarter.
Landstar purchased approximately 986,000 shares of its common stock during the 2018 second quarter at an aggregate cost of approximately $104.0 million. Currently, the Company is authorized to purchase up to an additional 2,000,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of June 30, 2018, the Company had $189 million in cash and short term investments and $216 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 $0.165 per share payable on August 31, 2018, to stockholders of record as of the close of business on August 13, 2018. This quarterly dividend includes a 10 percent increase to the amount of the Company’s regular quarterly dividend declared following each of the prior two quarters. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
“I am extremely pleased with the financial performance of the Landstar model during the 2018 second quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 second quarter established all-time Landstar quarterly records for revenue, gross profit and operating income while diluted earnings per share was a second quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,155 as of the end of the quarter and net truck additions in a single quarter with the net addition of 287 trucks in the second quarter.”
Gattoni continued, “Demand for our services was strong throughout the 2018 first half. The number of loads hauled via truck in the 2018 second quarter was an all-time quarterly record and increased 11 percent over the 2017 second 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 an 8 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 23 percent higher in the 2018 second quarter compared to the 2017 second quarter, primarily due to a 32 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 second quarter, as industry-wide truck capacity continued to be very tight. Revenue per load on loads hauled via van equipment increased 25 percent over the 2017 second quarter and revenue per load on loads hauled via unsided/platform equipment increased 19 percent over the 2017 second quarter. As a result, revenue per load on loads hauled via truck was 22 percent higher than the 2017 second quarter.”
Gattoni continued, “Through the first few weeks of July our truck load volumes continue to reflect strong demand. I expect that demand to continue through the 2018 third quarter and, therefore, expect the number of loads hauled via truck in the 2018 third quarter to approximate the number of loads hauled in the 2018 second quarter. My expectation is that pricing conditions for truck services in the 2018 third quarter will continue to be very strong with little change in the level of demand or available truck capacity. Assuming those conditions remain, I expect 2018 third quarter truck revenue per load to be higher than the 2017 third quarter in a 19 to 22 percent range. I anticipate record revenue for the 2018 third quarter in a range of $1.175 billion to $1.225 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.5 percent of projected BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate record diluted earnings per share in the 2018 third quarter in a range of $1.58 to $1.64 per share compared to $1.01 per diluted share in the 2017 third 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 Second 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 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. 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.
(Tables follow)
| 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 30, | July 1, | June 30, | July 1, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Revenue | $ | 2,230,712 | $ | 1,651,342 | $ | 1,182,786 | $ | 870,434 | |||||||||||
| Investment income | 1,752 | 1,022 | 891 | 608 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||
| Purchased transportation | 1,727,237 | 1,263,111 | 916,940 | 667,588 | |||||||||||||||
| Commissions to agents | 176,524 | 134,080 | 94,399 | 70,282 | |||||||||||||||
| Other operating costs, net of gains on asset sales/dispositions | 15,210 | 14,400 | 7,606 | 7,503 | |||||||||||||||
| Insurance and claims | 38,899 | 28,406 | 21,539 | 13,893 | |||||||||||||||
| Selling, general and administrative | 94,249 | 79,184 | 48,998 | 40,861 | |||||||||||||||
| Depreciation and amortization | 21,766 | 19,831 | 10,769 | 9,897 | |||||||||||||||
| Total costs and expenses | 2,073,885 | 1,539,012 | 1,100,251 | 810,024 | |||||||||||||||
| Operating income | 158,579 | 113,352 | 83,426 | 61,018 | |||||||||||||||
| Interest and debt expense | 1,639 | 1,902 | 839 | 819 | |||||||||||||||
| Income before income taxes | 156,940 | 111,450 | 82,587 | 60,199 | |||||||||||||||
| Income taxes | 36,975 | 41,557 | 20,095 | 22,689 | |||||||||||||||
| Net income | 119,965 | 69,893 | 62,492 | 37,510 | |||||||||||||||
| Less: Net loss attributable to noncontrolling interest | (75 | ) | - | (31 | ) | - | |||||||||||||
| Net income attributable to Landstar System, | |||||||||||||||||||
| Inc. and subsidiary | $ | 120,040 | $ | 69,893 | $ | 62,523 | $ | 37,510 | |||||||||||
| Earnings per common share attributable to | |||||||||||||||||||
| Landstar System, Inc. and subsidiary | $ | 2.88 | $ | 1.67 | $ | 1.51 | $ | 0.89 | |||||||||||
| Diluted earnings per share attributable to | |||||||||||||||||||
| Landstar System, Inc. and subsidiary | $ | 2.87 | $ | 1.66 | $ | 1.51 | $ | 0.89 | |||||||||||
| Average number of shares outstanding: | |||||||||||||||||||
| Earnings per common share | 41,744,000 | 41,907,000 | 41,450,000 | 41,935,000 | |||||||||||||||
| Diluted earnings per share | 41,795,000 | 42,004,000 | 41,491,000 | 42,010,000 | |||||||||||||||
| Dividends per common share | $ | 0.30 | $ | 0.18 | $ | 0.15 | $ | 0.09 | |||||||||||
| Landstar System, Inc. and Subsidiary | |||||||||||||
| Consolidated Balance Sheets | |||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||
| (Unaudited) | |||||||||||||
| June 30, | December 30, | ||||||||||||
| 2018 | 2017 | ||||||||||||
| ASSETS | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 148,641 | $ | 242,416 | |||||||||
| Short-term investments | 40,323 | 48,928 | |||||||||||
| Trade accounts receivable, less allowance | |||||||||||||
| of $6,549 and $6,131 | 688,961 | 631,164 | |||||||||||
| Other receivables, including advances to independent | |||||||||||||
| contractors, less allowance of $6,495 and $6,012 | 20,737 | 24,301 | |||||||||||
| Other current assets | 29,553 | 14,394 | |||||||||||
| Total current assets | 928,215 | 961,203 | |||||||||||
| Operating property, less accumulated depreciation | |||||||||||||
| and amortization of $232,760 and $218,700 | 256,096 | 276,011 | |||||||||||
| Goodwill | 38,704 | 39,065 | |||||||||||
| Other assets | 85,880 | 76,181 | |||||||||||
| Total assets | $ | 1,308,895 | $ | 1,352,460 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
| Cash overdraft | $ | 45,365 | $ | 42,242 | |||||||||
| Accounts payable | 311,768 | 285,132 | |||||||||||
| Current maturities of long-term debt | 38,869 | 42,051 | |||||||||||
| Insurance claims | 42,546 | 38,919 | |||||||||||
| Dividends payable | - | 62,985 | |||||||||||
| Accrued compensation | 19,041 | 30,103 | |||||||||||
| Other current liabilities | 51,285 | 47,211 | |||||||||||
| Total current liabilities | 508,874 | 548,643 | |||||||||||
| Long-term debt, excluding current maturities | 65,093 | 83,062 | |||||||||||
| Insurance claims | 30,205 | 30,141 | |||||||||||
| Deferred income taxes and other non-current liabilities | 43,790 | 36,737 | |||||||||||
| Equity | |||||||||||||
| Landstar System, Inc. and subsidiary shareholders' equity | |||||||||||||
| Common stock, $0.01 par value, authorized 160,000,000 | |||||||||||||
| shares, issued 67,847,692 and 67,740,380 shares | 678 | 677 | |||||||||||
| Additional paid-in capital | 216,328 | 209,599 | |||||||||||
| Retained earnings | 1,719,475 | 1,611,158 | |||||||||||
| Cost of 26,754,810 and 25,749,493 shares of common | |||||||||||||
| stock in treasury | (1,273,489 | ) | (1,167,600 | ) | |||||||||
| Accumulated other comprehensive loss | (5,284 | ) | (3,162 | ) | |||||||||
| Total Landstar System, Inc. and subsidiary shareholders' | |||||||||||||
| equity | 657,708 | 650,672 | |||||||||||
| Noncontrolling interest | 3,225 | 3,205 | |||||||||||
| Total equity | 660,933 | 653,877 | |||||||||||
| Total liabilities and equity | $ | 1,308,895 | $ | 1,352,460 | |||||||||
| Landstar System, Inc. and Subsidiary | |||||||||||||||||||||
| Supplemental Information | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Twenty Six Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||||||
| June 30, | July 1, | June 30, | July 1, | ||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
| Revenue generated through (in thousands): | |||||||||||||||||||||
| Truck transportation | |||||||||||||||||||||
| Truckload: | |||||||||||||||||||||
| Van equipment | $ | 1,369,476 | $ | 978,918 | $ | 713,341 | $ | 509,135 | |||||||||||||
| Unsided/platform equipment | 664,045 | 520,658 | 364,676 | 283,481 | |||||||||||||||||
| Less-than-truckload | 50,948 | 42,799 | 27,364 | 22,942 | |||||||||||||||||
| Total truck transportation | 2,084,469 | 1,542,375 | 1,105,381 | 815,558 | |||||||||||||||||
| Rail intermodal | 61,587 | 44,357 | 32,295 | 21,515 | |||||||||||||||||
| Ocean and air cargo carriers | 51,506 | 41,185 | 28,029 | 21,595 | |||||||||||||||||
| Other (1) | 33,150 | 23,425 | 17,081 | 11,766 | |||||||||||||||||
| $ | 2,230,712 | $ | 1,651,342 | $ | 1,182,786 | $ | 870,434 | ||||||||||||||
| Revenue on loads hauled via BCO Independent Contractors (2) | |||||||||||||||||||||
| included in total truck transportation | $ | 998,953 | $ | 776,085 | $ | 527,803 | $ | 411,177 | |||||||||||||
| Number of loads: | |||||||||||||||||||||
| Truck transportation | |||||||||||||||||||||
| Truckload: | |||||||||||||||||||||
| Van equipment | 691,866 | 613,565 | 354,947 | 315,499 | |||||||||||||||||
| Unsided/platform equipment | 255,334 | 236,427 | 135,543 | 125,242 | |||||||||||||||||
| Less-than-truckload | 70,670 | 64,508 | 37,250 | 34,589 | |||||||||||||||||
| Total truck transportation | 1,017,870 | 914,500 | 527,740 | 475,330 | |||||||||||||||||
| Rail intermodal | 26,840 | 20,960 | 13,560 | 10,310 | |||||||||||||||||
| Ocean and air cargo carriers | 13,030 | 11,940 | 6,700 | 6,210 | |||||||||||||||||
| 1,057,740 | 947,400 | 548,000 | 491,850 | ||||||||||||||||||
| Loads hauled via BCO Independent Contractors (2) | |||||||||||||||||||||
| included in total truck transportation | 480,890 | 453,860 | 247,710 | 235,630 | |||||||||||||||||
| Revenue per load: | |||||||||||||||||||||
| Truck transportation | |||||||||||||||||||||
| Truckload: | |||||||||||||||||||||
| Van equipment | $ | 1,979 | $ | 1,595 | $ | 2,010 | $ | 1,614 | |||||||||||||
| Unsided/platform equipment | 2,601 | 2,202 | 2,690 | 2,263 | |||||||||||||||||
| Less-than-truckload | 721 | 663 | 735 | 663 | |||||||||||||||||
| Total truck transportation | 2,048 | 1,687 | 2,095 | 1,716 | |||||||||||||||||
| Rail intermodal | 2,295 | 2,116 | 2,382 | 2,087 | |||||||||||||||||
| Ocean and air cargo carriers | 3,953 | 3,449 | 4,183 | 3,477 | |||||||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (2) | $ | 2,077 | $ | 1,710 | $ | 2,131 | $ | 1,745 | |||||||||||||
| Revenue by capacity type (as a % of total revenue); | |||||||||||||||||||||
| Truck capacity providers: | |||||||||||||||||||||
| BCO Independent Contractors (2) | 45 | % | 47 | % | 45 | % | 47 | % | |||||||||||||
| Truck Brokerage Carriers | 49 | % | 46 | % | 49 | % | 46 | % | |||||||||||||
| Rail intermodal | 3 | % | 3 | % | 3 | % | 2 | % | |||||||||||||
| Ocean and air cargo carriers | 2 | % | 2 | % | 2 | % | 2 | % | |||||||||||||
| Other | 1 | % | 1 | % | 1 | % | 1 | % | |||||||||||||
| June 30, | July 1, | ||||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||||
| Truck Capacity Providers | |||||||||||||||||||||
| BCO Independent Contractors (2) | 9,501 | 8,818 | |||||||||||||||||||
| Truck Brokerage Carriers: | |||||||||||||||||||||
| Approved and active (3) | 37,045 | 31,636 | |||||||||||||||||||
| Other approved | 15,406 | 15,381 | |||||||||||||||||||
| 52,451 | 47,017 | ||||||||||||||||||||
| Total available truck capacity providers | 61,952 | 55,835 | |||||||||||||||||||
| Trucks provided by BCO Independent Contractors (2) | 10,155 | 9,404 | |||||||||||||||||||
| (1) Includes primarily reinsurance premium revenue generated by the insurance segment and, during the 2018 fiscal year and 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. | |||||||||||||||||||||
Contact: Kevin StoutLandstar System, Inc.www.landstar.com904-398-9400