Landstar System Reports Record Quarterly Revenue of $1.202 Billion and Record Quarterly Diluted Earnings Per Share of $1.63
JACKSONVILLE, Fla., Oct. 24, 2018 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $1.202 billion in the 2018 third quarter, a 27 percent increase over revenue of $943 million reported in the 2017 third quarter. Net income of $67.0 million and diluted earnings per share of $1.63 were also quarterly records and increased 58 percent and 61 percent, respectively, over net income and diluted earnings per share in the 2017 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 third quarter was $171.3 million, 22 percent above the 2017 third quarter, while 2018 third quarter operating income was $87.1 million, 44 percent above the 2017 third quarter. Operating income in the 2018 third quarter was an all-time quarterly record, while gross profit was a third quarter record, second all-time only to the Company’s 2018 second quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 third quarter was $1.118 billion, or 93 percent of revenue, compared to $877.6 million, or 93 percent of revenue, in the 2017 third quarter. Truckload transportation revenue hauled via van equipment in the 2018 third quarter was $717.0 million compared to $550.5 million in the 2017 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 third quarter was $375.7 million compared to $304.5 million in the 2017 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $65.7 million, or 5 percent of revenue, in the 2018 third quarter compared to $53.7 million, or 6 percent of revenue, in the 2017 third quarter.
Landstar did not purchase any shares of its common stock during the 2018 third quarter. 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 September 29, 2018, the Company had $254 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 December 7, 2018, to stockholders of record as of the close of business on November 13, 2018. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
“I am extremely pleased with Landstar’s financial performance during the 2018 third quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 third quarter established all-time Landstar quarterly records for revenue, operating income and diluted earnings per share while gross profit was a third quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,443 as of the end of the quarter and net truck additions in a single quarter with the net addition of 288 trucks in the third quarter.”
Gattoni continued, “Demand for our services continued to be strong in the 2018 third quarter. The number of loads hauled via truck in the 2018 third quarter was a third quarter record and increased 7 percent over the 2017 third quarter, driven by a 7 percent increase in the number of loads hauled via van equipment, a 5 percent increase in the number of loads hauled via unsided/platform equipment and a 5 percent increase in less-than-truckload volume. Excluding the approximately 16,000 truckloads hauled by Landstar in September 2017 related to the storms that impacted the southeastern U.S. and Texas, truckload volumes increased 10 percent over the 2017 third quarter. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 25 percent higher in the 2018 third quarter compared to the 2017 third quarter, primarily due to a 21 percent increase in rail intermodal volume and a 46 percent increase in ocean volume.”
Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 third quarter, as industry-wide truck capacity continued to be tight. Revenue per load on loads hauled via van equipment increased 21 percent over the 2017 third quarter and revenue per load on loads hauled via unsided/platform equipment increased 17 percent over the 2017 third quarter. As a result, revenue per load on loads hauled via truck was 19 percent higher than the 2017 third quarter.”
Gattoni continued, “Revenue per load and the number of loads hauled via truck in the first few weeks of October continue to significantly exceed the rates and volume of the same period of 2017, however, at a more modest pace than experienced during the first three quarters of 2018. Accordingly, we expect truck revenue per load in the 2018 fourth quarter to exceed prior year fourth quarter in an upper single digit percentage range. The anticipated deceleration in the growth in truck revenue per load is the result of: 1) a more difficult quarter over prior year quarter comparison, as truck revenue per load in the 2017 fourth quarter experienced atypical significant increases on a sequential monthly basis during the quarter and 2) truck revenue per load in the first few weeks of October 2018 is trending slightly below normal seasonal patterns. The number of loads hauled via truck in the first few weeks of October is trending above the same period of 2017 in a high single digit percentage range. We expect that trend to continue and therefore expect the number of loads hauled via truck in the 2018 fourth quarter to exceed the 2017 fourth quarter in an eight to ten percent range. Assuming recent trends continue, I anticipate record revenue for the 2018 fourth quarter in a range of $1.180 billion to $1.230 billion, which would represent growth of 12 percent to 17 percent above our record 2017 fourth quarter. 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 fourth quarter in a range of $1.56 to $1.62. As a reminder, the 2017 fourth quarter diluted earnings per share of $1.54 included the effect of one-time tax benefits of $19.5 million, or $0.46 per diluted share, related to the Company’s reasonable estimate of the change in future tax rates on net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act in December 2017.”
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 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.
| 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 29, | September 30, | September 29, | September 30, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Revenue | $ | 3,432,793 | $ | 2,594,772 | $ | 1,202,081 | $ | 943,430 | |||||||||||
| Investment income | 2,754 | 1,733 | 1,002 | 711 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||
| Purchased transportation | 2,658,710 | 1,989,938 | 931,473 | 726,827 | |||||||||||||||
| Commissions to agents | 275,828 | 210,678 | 99,304 | 76,598 | |||||||||||||||
| Other operating costs, net of gains on asset sales/dispositions | 24,176 | 22,497 | 8,966 | 8,097 | |||||||||||||||
| Insurance and claims | 57,718 | 46,333 | 18,819 | 17,927 | |||||||||||||||
| Selling, general and administrative | 140,948 | 123,179 | 46,699 | 43,995 | |||||||||||||||
| Depreciation and amortization | 32,520 | 29,961 | 10,754 | 10,130 | |||||||||||||||
| Total costs and expenses | 3,189,900 | 2,422,586 | 1,116,015 | 883,574 | |||||||||||||||
| Operating income | 245,647 | 173,919 | 87,068 | 60,567 | |||||||||||||||
| Interest and debt expense | 2,455 | 2,559 | 816 | 657 | |||||||||||||||
| Income before income taxes | 243,192 | 171,360 | 86,252 | 59,910 | |||||||||||||||
| Income taxes | 56,279 | 59,047 | 19,304 | 17,490 | |||||||||||||||
| Net income | 186,913 | 112,313 | 66,948 | 42,420 | |||||||||||||||
| Less: Net loss attributable to noncontrolling interest | (112 | ) | (23 | ) | (37 | ) | (23 | ) | |||||||||||
| Net income attributable to Landstar System, | |||||||||||||||||||
| Inc. and subsidiary | $ | 187,025 | $ | 112,336 | $ | 66,985 | $ | 42,443 | |||||||||||
| Earnings per common share attributable to | |||||||||||||||||||
| Landstar System, Inc. and subsidiary | $ | 4.50 | $ | 2.68 | $ | 1.63 | $ | 1.01 | |||||||||||
| Diluted earnings per share attributable to | |||||||||||||||||||
| Landstar System, Inc. and subsidiary | $ | 4.50 | $ | 2.67 | $ | 1.63 | $ | 1.01 | |||||||||||
| Average number of shares outstanding: | |||||||||||||||||||
| Earnings per common share | 41,530,000 | 41,924,000 | 41,101,000 | 41,957,000 | |||||||||||||||
| Diluted earnings per share | 41,576,000 | 42,013,000 | 41,137,000 | 42,028,000 | |||||||||||||||
| Dividends per common share | $ | 0.465 | $ | 0.280 | $ | 0.165 | $ | 0.100 | |||||||||||
| Landstar System, Inc. and Subsidiary | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||
| (Unaudited) | ||||||||||
| September 29, | December 30, | |||||||||
| 2018 | 2017 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 213,974 | $ | 242,416 | ||||||
| Short-term investments | 40,203 | 48,928 | ||||||||
| Trade accounts receivable, less allowance | ||||||||||
| of $6,173 and $6,131 | 702,183 | 631,164 | ||||||||
| Other receivables, including advances to independent | ||||||||||
| contractors, less allowance of $6,188 and $6,012 | 18,586 | 24,301 | ||||||||
| Other current assets | 24,191 | 14,394 | ||||||||
| Total current assets | 999,137 | 961,203 | ||||||||
| Operating property, less accumulated depreciation | ||||||||||
| and amortization of $241,321 and $218,700 | 268,011 | 276,011 | ||||||||
| Goodwill | 38,560 | 39,065 | ||||||||
| Other assets | 85,004 | 76,181 | ||||||||
| Total assets | $ | 1,390,712 | $ | 1,352,460 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Cash overdraft | $ | 39,759 | $ | 42,242 | ||||||
| Accounts payable | 313,728 | 285,132 | ||||||||
| Current maturities of long-term debt | 40,960 | 42,051 | ||||||||
| Insurance claims | 43,268 | 38,919 | ||||||||
| Dividends payable | - | 62,985 | ||||||||
| Accrued compensation | 23,908 | 30,103 | ||||||||
| Other current liabilities | 53,553 | 47,211 | ||||||||
| Total current liabilities | 515,176 | 548,643 | ||||||||
| Long-term debt, excluding current maturities | 72,887 | 83,062 | ||||||||
| Insurance claims | 30,775 | 30,141 | ||||||||
| Deferred income taxes and other non-current liabilities | 45,664 | 36,737 | ||||||||
| Equity | ||||||||||
| Landstar System, Inc. and subsidiary shareholders' equity | ||||||||||
| Common stock, $0.01 par value, authorized 160,000,000 | ||||||||||
| shares, issued 67,869,378 and 67,740,380 shares | 679 | 677 | ||||||||
| Additional paid-in capital | 221,563 | 209,599 | ||||||||
| Retained earnings | 1,779,680 | 1,611,158 | ||||||||
| Cost of 26,755,001 and 25,749,493 shares of common | ||||||||||
| stock in treasury | (1,273,512 | ) | (1,167,600 | ) | ||||||
| Accumulated other comprehensive loss | (4,569 | ) | (3,162 | ) | ||||||
| Total Landstar System, Inc. and subsidiary shareholders' | ||||||||||
| equity | 723,841 | 650,672 | ||||||||
| Noncontrolling interest | 2,369 | 3,205 | ||||||||
| Total equity | 726,210 | 653,877 | ||||||||
| Total liabilities and equity | $ | 1,390,712 | $ | 1,352,460 | ||||||
| Landstar System, Inc. and Subsidiary | ||||||||||||||||||
| Supplemental Information | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||||
| September 29, | September 30, | September 29, | September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Revenue generated through (in thousands): | ||||||||||||||||||
| Truck transportation | ||||||||||||||||||
| Truckload: | ||||||||||||||||||
| Van equipment | $ | 2,086,523 | $ | 1,529,402 | $ | 717,047 | $ | 550,484 | ||||||||||
| Unsided/platform equipment | 1,039,784 | 825,194 | 375,739 | 304,536 | ||||||||||||||
| Less-than-truckload | 76,448 | 65,397 | 25,500 | 22,598 | ||||||||||||||
| Total truck transportation | 3,202,755 | 2,419,993 | 1,118,286 | 877,618 | ||||||||||||||
| Rail intermodal | 96,026 | 68,570 | 34,439 | 24,213 | ||||||||||||||
| Ocean and air cargo carriers | 82,719 | 70,708 | 31,213 | 29,523 | ||||||||||||||
| Other (1) | 51,293 | 35,501 | 18,143 | 12,076 | ||||||||||||||
| $ | 3,432,793 | $ | 2,594,772 | $ | 1,202,081 | $ | 943,430 | |||||||||||
| Revenue on loads hauled via BCO Independent Contractors (2) | ||||||||||||||||||
| included in total truck transportation | $ | 1,519,344 | $ | 1,211,564 | $ | 520,391 | $ | 435,479 | ||||||||||
| Number of loads: | ||||||||||||||||||
| Truck transportation | ||||||||||||||||||
| Truckload: | ||||||||||||||||||
| Van equipment | 1,045,322 | 942,894 | 353,456 | 329,329 | ||||||||||||||
| Unsided/platform equipment | 388,759 | 362,936 | 133,425 | 126,509 | ||||||||||||||
| Less-than-truckload | 106,639 | 98,740 | 35,969 | 34,232 | ||||||||||||||
| Total truck transportation | 1,540,720 | 1,404,570 | 522,850 | 490,070 | ||||||||||||||
| Rail intermodal | 40,260 | 32,040 | 13,420 | 11,080 | ||||||||||||||
| Ocean and air cargo carriers | 21,250 | 18,150 | 8,220 | 6,210 | ||||||||||||||
| 1,602,230 | 1,454,760 | 544,490 | 507,360 | |||||||||||||||
| Loads hauled via BCO Independent Contractors (2) | ||||||||||||||||||
| included in total truck transportation | 717,470 | 686,830 | 236,580 | 232,970 | ||||||||||||||
| Revenue per load: | ||||||||||||||||||
| Truck transportation | ||||||||||||||||||
| Truckload: | ||||||||||||||||||
| Van equipment | $ | 1,996 | $ | 1,622 | $ | 2,029 | $ | 1,672 | ||||||||||
| Unsided/platform equipment | 2,675 | 2,274 | 2,816 | 2,407 | ||||||||||||||
| Less-than-truckload | 717 | 662 | 709 | 660 | ||||||||||||||
| Total truck transportation | 2,079 | 1,723 | 2,139 | 1,791 | ||||||||||||||
| Rail intermodal | 2,385 | 2,140 | 2,566 | 2,185 | ||||||||||||||
| Ocean and air cargo carriers | 3,893 | 3,896 | 3,797 | 4,754 | ||||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (2) | $ | 2,118 | $ | 1,764 | $ | 2,200 | $ | 1,869 | ||||||||||
| Revenue by capacity type (as a % of total revenue): | ||||||||||||||||||
| Truck capacity providers: | ||||||||||||||||||
| BCO Independent Contractors (2) | 44 | % | 47 | % | 43 | % | 46 | % | ||||||||||
| Truck Brokerage Carriers | 49 | % | 47 | % | 50 | % | 47 | % | ||||||||||
| Rail intermodal | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||||
| Ocean and air cargo carriers | 2 | % | 3 | % | 3 | % | 3 | % | ||||||||||
| Other | 1 | % | 1 | % | 2 | % | 1 | % | ||||||||||
| September 29, | September 30, | |||||||||||||||||
| 2018 | 2017 | |||||||||||||||||
| Truck Capacity Providers | ||||||||||||||||||
| BCO Independent Contractors (2) | 9,751 | 8,939 | ||||||||||||||||
| Truck Brokerage Carriers: | ||||||||||||||||||
| Approved and active (3) | 40,151 | 32,925 | ||||||||||||||||
| Other approved | 16,803 | 15,138 | ||||||||||||||||
| 56,954 | 48,063 | |||||||||||||||||
| Total available truck capacity providers | 66,705 | 57,002 | ||||||||||||||||
| Trucks provided by BCO Independent Contractors (2) | 10,443 | 9,548 | ||||||||||||||||
| (1) Includes primarily reinsurance premium revenue generated by the insurance segment and 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 Stout Landstar System, Inc. www.landstar.com 904-398-9400
