JACKSONVILLE, Fla., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $1.35 in the 2019 third quarter on revenue of $1.012 billion. Landstar reported diluted earnings per share of $1.63 on revenue of $1.202 billion in the 2018 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $152.6 million in the 2019 third quarter compared to $171.3 million in the 2018 third quarter. Operating margin, representing operating income divided by gross profit, was 46.3 percent in the 2019 third quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2019 third quarter was $932.2 million, or 92 percent of revenue, compared to $1.118 billion, or 93 percent of revenue, in the 2018 third quarter. Truckload transportation revenue hauled via van equipment in the 2019 third quarter was $575.0 million compared to $717.0 million in the 2018 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2019 third quarter was $331.8 million compared to $375.7 million in the 2018 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $59.3 million, or 6 percent of revenue, in the 2019 third quarter compared to $65.7 million, or 5 percent of revenue, in the 2018 third quarter.

Trailing twelve-month return on average shareholders’ equity was 34 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 29 percent. Landstar purchased approximately 175,000 shares of its common stock during the 2019 third quarter at an aggregate cost of approximately $18.8 million. Currently, the Company is authorized to purchase up to approximately 1,151,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of September 28, 2019, the Company had $316 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility. Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.185 per share payable on December 6, 2019, to stockholders of record as of the close of business on November 12, 2019. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“The current macroeconomic environment made for challenging comparisons against our record 2018 third quarter performance,” said Landstar President and Chief Executive Officer Jim Gattoni. “Softer demand, driven by slowing production in the U.S. manufacturing sector, and more readily available capacity drove Landstar’s truck rates and volumes below prior year levels in the 2019 third quarter. Overall, 2019 third quarter revenue was 16 percent below revenue of the 2018 third quarter, mostly due to a 13 percent decrease in revenue per load on loads hauled via truck and a 5 percent decrease in truck loadings. While truck revenue per load has been below prior year levels throughout 2019, truck load volumes have more recently slowed with softening demand. Truck load volumes in the 2019 third quarter fell 5 percent as compared to the 2018 third quarter, a larger decrease than the low single digit decrease anticipated in the Company’s third quarter earnings guidance issued on July 24, 2019 as part of the Company’s 2019 second quarter earnings release.”

“In our second quarter earnings release, we provided third quarter revenue guidance of $1.01 billion to $1.06 billion and third quarter diluted earnings per share guidance of $1.48 to $1.54. On September 11, 2019, we disclosed in a Form 8-K and further explained at a webcast investor conference the next day that, based on overall market conditions and the adverse financial impact of a tragic vehicular accident involving Landstar that occurred during the 2019 third quarter, we would be near the bottom end of revenue guidance and would not achieve the bottom end of the range for earnings per diluted share provided on July 24, 2019. Revenue in the 2019 third quarter was at the low end of our previously issued guidance while diluted earnings per share fell far below our guidance, mostly due to higher insurance and claims costs than we anticipated in our initial estimate. Third quarter guidance included insurance and claims costs at 3.6 percent of BCO revenue, whereas actual insurance and claims costs were 5.1 percent of BCO revenue in the 2019 third quarter.”

Gattoni continued, “Through the first few weeks of October, the number of loads hauled via truck was below the corresponding period of 2018 in a high single-digit percentage range. I expect that trend to continue during the remainder of the 2019 fourth quarter. Accordingly, I expect the number of loads hauled via truck in the 2019 fourth quarter to be below the number of loads hauled by truck in the 2018 fourth quarter in a high single-digit percentage range. Pricing for our truck services was fairly stable on a sequential month-to-month basis during the 2019 third quarter, continuing a trend that began in the middle of the 2019 second quarter. I expect pricing to remain stable through the 2019 fourth quarter given current demand and assuming little change in the level of truck capacity available in the marketplace. Given the slowing pricing environment experienced in the 2018 fourth quarter, year-over-year comparisons should therefore ease a bit in the 2019 fourth quarter. Assuming the current macroeconomic environment continues throughout the remainder of the fourth quarter, I expect 2019 fourth quarter truck revenue per load to be lower than the 2018 fourth quarter in a high single-digit percentage range. I anticipate revenue for the 2019 fourth quarter to be in a range of $970 million to $1.02 billion. Assuming that estimated range of revenue and insurance and claims expense at 3.6 percent of BCO revenue, representing average insurance and claims costs as a percentage of BCO revenue over the past five years, I would anticipate 2019 fourth quarter diluted earnings per share to be in a range of $1.40 to $1.46 per share.”

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 2019 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 2018 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)
			Thirty Nine Weeks Ended								Thirteen Weeks Ended
			September 28,				September 29,				September 28,			September 29,
				2019				2018				2019			2018
Revenue			$	3,089,698			$	3,432,793			$	1,011,658		$	1,202,081
Investment income				3,736				2,754				1,315			1,002
Costs and expenses:
	Purchased transportation			2,365,646				2,658,710				774,520			931,473
	Commissions to agents			257,862				275,828				84,568			99,304
	Other operating costs, net of gains/losses on asset sales/dispositions			28,531				24,176				10,431			8,966
	Insurance and claims			55,248				57,718				23,969			18,819
	Selling, general and administrative			120,717				140,948				38,152			46,699
	Depreciation and amortization			33,045				32,520				10,695			10,754
	Total costs and expenses			2,861,049				3,189,900				942,335			1,116,015
Operating income				232,385				245,647				70,638			87,068
Interest and debt expense				2,278				2,455				764			816
Income before income taxes				230,107				243,192				69,874			86,252
Income taxes				52,452				56,279				16,619			19,304
Net income				177,655				186,913				53,255			66,948
Less: Net loss attributable to noncontrolling interest				(17	)			(112	)			-			(37	)
Net income attributable to Landstar System,
	Inc. and subsidiary		$	177,672			$	187,025			$	53,255		$	66,985
Earnings per common share attributable to
	Landstar System, Inc. and subsidiary		$	4.45			$	4.50			$	1.35		$	1.63
Diluted earnings per share attributable to
	Landstar System, Inc. and subsidiary		$	4.45			$	4.50			$	1.35		$	1.63
Average number of shares outstanding:
	Earnings per common share			39,891,000				41,530,000				39,566,000			41,101,000
	Diluted earnings per share			39,891,000				41,576,000				39,566,000			41,137,000
Dividends per common share			$	0.515			$	0.465			$	0.185		$	0.165

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
				September 28,				December 29,
					2019				2018
ASSETS
Current assets:
	Cash and cash equivalents			$	284,434			$	199,736
	Short-term investments				31,596				40,058
	Trade accounts receivable, less allowance
		of $7,296 and $6,413			598,415				691,604
	Other receivables, including advances to independent
		contractors, less allowance of $8,593 and $6,216			25,384				23,744
	Other current assets				30,921				16,287
		Total current assets			970,750				971,429
Operating property, less accumulated depreciation
	and amortization of $274,000 and $250,153				270,430				284,032
Goodwill					38,232				38,232
Other assets					106,319				86,871
Total assets				$	1,385,731			$	1,380,564
LIABILITIES AND EQUITY
Current liabilities:
	Cash overdraft			$	44,625			$	55,339
	Accounts payable				285,442				314,134
	Current maturities of long-term debt				39,375				43,561
	Insurance claims				51,320				40,176
	Accrued compensation				10,477				29,489
	Contractor escrow				25,521				25,202
	Other current liabilities				26,996				27,917
		Total current liabilities			483,756				535,818
Long-term debt, excluding current maturities					61,390				84,864
Insurance claims					33,024				30,429
Deferred income taxes and other non-current liabilities					51,586				40,320
Equity
Landstar System, Inc. and subsidiary shareholders' equity
	Common stock, $0.01 par value, authorized 160,000,000
		shares, issued 68,072,834 and 67,870,962 shares			681				679
	Additional paid-in capital				225,937				226,852
	Retained earnings				1,998,362				1,841,279
	Cost of 28,609,926 and 27,755,001 shares of common
		stock in treasury			(1,465,284	)			(1,376,111	)
	Accumulated other comprehensive loss				(3,721	)			(5,875	)
		Total Landstar System, Inc. and subsidiary shareholders'
			equity		755,975				686,824
Noncontrolling interest					-				2,309
		Total equity			755,975				689,133
Total liabilities and equity				$	1,385,731			$	1,380,564

Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
					Thirty Nine Weeks Ended									Thirteen Weeks Ended
					September 28,				September 29,					September 28,				September 29,
						2019				2018					2019				2018
Revenue generated through (in thousands):
	Truck transportation
		Truckload:
			Van equipment		$	1,799,421			$	2,086,523				$	575,042			$	717,047
			Unsided/platform equipment			980,615				1,039,784					331,787				375,739
		Less-than-truckload				73,475				76,448					25,367				25,500
			Total truck transportation			2,853,511				3,202,755					932,196				1,118,286
	Rail intermodal					87,555				96,026					28,970				34,439
	Ocean and air cargo carriers					89,258				82,719					30,365				31,213
	Other (1)					59,374				51,293					20,127				18,143
					$	3,089,698			$	3,432,793				$	1,011,658			$	1,202,081
	Revenue on loads hauled via BCO Independent Contractors (2)
		included in total truck transportation			$	1,390,135			$	1,519,344				$	466,207			$	520,391
Number of loads:
	Truck transportation
		Truckload:
			Van equipment			1,014,572				1,045,322					327,671				353,456
			Unsided/platform equipment			391,112				388,759					130,192				133,425
		Less-than-truckload				115,616				106,639					41,067				35,969
			Total truck transportation			1,521,300				1,540,720					498,930				522,850
	Rail intermodal					35,370				40,260					11,490				13,420
	Ocean and air cargo carriers					22,150				21,250					7,340				8,220
						1,578,820				1,602,230					517,760				544,490
	Loads hauled via BCO Independent Contractors (2)
		included in total truck transportation				722,870				717,470					239,210				236,580
Revenue per load:
	Truck transportation
		Truckload:
			Van equipment		$	1,774			$	1,996				$	1,755			$	2,029
			Unsided/platform equipment			2,507				2,675					2,548				2,816
		Less-than-truckload				636				717					618				709
			Total truck transportation			1,876				2,079					1,868				2,139
	Rail intermodal					2,475				2,385					2,521				2,566
	Ocean and air cargo carriers					4,030				3,893					4,137				3,797
	Revenue per load on loads hauled via BCO Independent Contractors (2)				$	1,923			$	2,118				$	1,949			$	2,200
Revenue by capacity type (as a % of total revenue);
	Truck capacity providers:
		BCO Independent Contractors (2)				45	%			44	%				46	%			43	%
		Truck Brokerage Carriers				47	%			49	%				46	%			50	%
	Rail intermodal					3	%			3	%				3	%			3	%
	Ocean and air cargo carriers					3	%			2	%				3	%			3	%
	Other					2	%			1	%				2	%			2	%
														September 28,				September 29,
															2019				2018
Truck Capacity Providers
	BCO Independent Contractors (2)														9,738				9,751
	Truck Brokerage Carriers:
		Approved and active (3)													39,963				40,151
		Other approved													16,984				16,803
															56,947				56,954
	Total available truck capacity providers														66,685				66,705
	Trucks provided by BCO Independent Contractors (2)														10,441				10,443
(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

Source: Landstar System, Inc.

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