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Landstar System Reports Second Quarter Revenue of $824 Million and Diluted Earnings Per Share of $0.63

Nachrichtenquelle: globenewswire
22.07.2020, 22:15  |  129   |   |   

JACKSONVILLE, Fla., July 22, 2020 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $0.63 in the 2020 second quarter on revenue of $824 million. Included in the Company’s 2020 second quarter financial results were:

  • approximately $12.6 million, or $0.25 per diluted share, in payments made to the Company’s BCOs and agents in April and May under the Company’s previously disclosed pandemic relief incentive program;
  • a charge of approximately $2.6 million, or $0.05 per diluted share, due to the impairment of certain assets associated with Landstar’s Mexico operation relating to a decrease of business within Mexico; and  
  • approximately $2.3 million, or $0.05 per diluted share, due to higher third party insurance company premiums incurred in May and June for commercial trucking liability coverage following the Company’s May 1st annual insurance renewal.  The higher premiums incurred in the 2020 second quarter reflected a pro rata portion of an annual increase of $14.0 million in the fixed component of the Company’s insurance and claims expense for the period from May 1, 2020 to April 30, 2021, in connection with severe tightening of capacity in insurance markets offering coverage to the truck transportation industry. 

Landstar reported diluted earnings per share of $1.53 on revenue of $1.045 billion in the 2019 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $113.1 million in the 2020 second quarter, inclusive of the impact of the special pandemic relief payments made to the Company’s BCOs and agents in April and May of 2020. Gross profit was $158.0 million in the 2019 second quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2020 second quarter was $753.3 million, or 91 percent of revenue, compared to $968.2 million, or 93 percent of revenue, in the 2019 second quarter. Truckload transportation revenue hauled via van equipment in the 2020 second quarter was $483.0 million compared to $605.4 million in the 2019 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2020 second quarter was $247.4 million compared to $338.1 million in the 2019 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $53.8 million, or 7 percent of revenue, in the 2020 second quarter compared to $56.8 million, or 5 percent of revenue, in the 2019 second quarter.

During the 2020 second quarter, Landstar generated $99.2 million in operating cash flow and paid $7.1 million in dividends. Landstar did not purchase any shares of its common stock during the 2020 second quarter and currently is authorized to purchase up to 1,821,030 shares of the Company’s common stock under Landstar’s previously announced share purchase program. As of June 27, 2020, the Company had $282 million in cash and short term investments with undrawn revolver capacity under our senior credit facility of $216 million (with the ability to increase to $366 million with the accordion feature included in our senior credit facility). Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.21 per share payable on August 28, 2020, to stockholders of record as of the close of business on August 10, 2020. This quarterly dividend includes a $0.025 per share increase, or 13.5 percent, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters. The $0.025 per share increase is the largest increase in the Company’s regularly scheduled quarterly dividend in the Company’s history. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“Overall, the resiliency of Landstar’s variable cost business model performed as expected given the unprecedented economic decline caused by the coronavirus (COVID-19) pandemic,” said Landstar’s President and Chief Executive Officer, Jim Gattoni. “We entered the 2020 second quarter knowing we would face a very soft freight demand environment as a result of actions taken by governmental authorities and businesses to reduce the spread of COVID-19. As anticipated, demand for freight services slowed significantly and capacity became readily available during the Company’s 2020 second quarter, especially in the spot market where the Company primarily operates. The number of loads and revenue per load on loads hauled via truck in the 2020 second quarter decreased 16 percent and 7 percent, respectively, from the 2019 second quarter. The number of loads hauled via truck was below the prior year comparable period by 21 percent, 21 percent and 9 percent for April, May and June, respectively. Revenue per load on loads hauled via truck was below the prior year comparable period by 6 percent, 9 percent and 6 percent in April, May and June, respectively.”

Gattoni further commented, “The 2020 second quarter presented operating conditions and challenges unlike any other quarter in Landstar’s history. Nevertheless, Landstar did not take any drastic cost reduction measures that could have disrupted our ability to service Landstar’s customers, agents, BCOs or other third party capacity providers or slow the progress on our technology initiatives. Also, as previously disclosed, Landstar instituted a pandemic relief incentive program as of the beginning of April for BCOs and agents. Under the program, Landstar paid an extra $50 to each of the BCO hauling the load and the Landstar agent dispatching the load for each load delivered by a BCO with a confirmed delivery date in April. The pandemic relief program was subsequently extended through the month of May. The Company’s 2020 second quarter results included a total of approximately $12.6 million of these pandemic relief incentive payments to BCOs and agents. Revenue decreased 21 percent and gross profit decreased 28 percent in the Company’s 2020 second quarter compared to the 2019 second quarter. Exclusive of the impact of the pandemic relief program, gross profit decreased 20 percent in the 2020 second quarter compared to the prior year period.”

Gattoni continued, “Although the ultimate impact that the coronavirus pandemic will have on the freight transportation industry continues to be unpredictable, we believe Landstar remains in a solid operational and financial position as we enter the third quarter. Through the first few weeks of July, the number of loads and revenue per load on loads hauled via truck have moved beyond the peak declines of April and May. Both the number of loads and revenue per load on loads hauled via truck in the first few weeks of July were below the corresponding period of 2019 in mid single-digit percentage ranges. Assuming current demand conditions persist, I expect the number of loads hauled via truck in the 2020 third quarter to be below the number of loads hauled by truck in the 2019 third quarter in a mid single-digit percentage range. My expectation is that pricing conditions for truck services in the 2020 third quarter will be slightly improved as compared to the 2020 second quarter with little change in the level of truck capacity available in the marketplace. Assuming those capacity market conditions continue throughout the rest of the third quarter, I expect 2020 third quarter truck revenue per load to be lower than the 2019 third quarter in a mid single-digit percentage range. Based on those expectations, I would anticipate revenue for the 2020 third quarter to be in a range of $885 million to $935 million. Assuming that range of estimated revenue and insurance and claims expense at 4.8 percent of BCO revenue (which reflects the significant increase in insurance premiums previously described), I would anticipate 2020 third quarter diluted earnings per share to be in a range of $1.11 to $1.17 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 Second Quarter 2020 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: the impact of the coronavirus (COVID-19) pandemic; 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 2019 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)
               
               
  Twenty Six Weeks Ended   Thirteen Weeks Ended
  June 27,   June 29,   June 27,   June 29,
  2020   2019   2020   2019
               
Revenue $ 1,751,080   $ 2,078,040     $ 823,514   $ 1,045,040
Investment income   2,002     2,421       835     1,283
               
Costs and expenses:              
Purchased transportation   1,344,390     1,591,126       635,133     799,371
Commissions to agents   150,642     173,294       75,266     87,623
Other operating costs, net of gains on asset sales/dispositions   15,674     18,100       7,368     9,861
Insurance and claims   44,708     31,279       19,751     16,286
Selling, general and administrative   85,928     82,565       40,601     41,297
Depreciation and amortization   22,972     22,350       11,467     11,034
Impairment of intangible and other assets   2,582     -       2,582     -
               
Total costs and expenses   1,666,896     1,918,714       792,168     965,472
               
Operating income   86,186     161,747       32,181     80,851
Interest and debt expense   1,928     1,514       976     709
               
Income before income taxes   84,258     160,233       31,205     80,142
Income taxes   19,109     35,833       6,951     19,042
               
Net income   65,149     124,400       24,254     61,100
Less: Net loss attributable to noncontrolling interest   -     (17 )     -     -
Net income attributable to Landstar System,Inc. and subsidiary $ 65,149   $ 124,417     $ 24,254   $ 61,100
               
Earnings per common share attributable to Landstar System, Inc. and subsidiary $ 1.68   $ 3.11     $ 0.63   $ 1.53
               
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary $ 1.68   $ 3.11     $ 0.63   $ 1.53
               
Average number of shares outstanding:              
Earnings per common share   38,816,000     40,053,000       38,379,000     39,945,000
Diluted earnings per share   38,816,000     40,053,000       38,379,000     39,945,000
               
Dividends per common share $ 0.370   $ 0.330     $ 0.185   $ 0.165
               

 

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
       
       
  June 27,   December 28,
  2020   2019
ASSETS      
Current assets:      
Cash and cash equivalents $ 245,471     $ 319,515  
Short-term investments   36,274       32,901  
Trade accounts receivable, less allowance of $8,580 and $7,284   489,182       588,549  
Other receivables, including advances to independent contractors, less allowance of $9,241 and $7,667   27,861       35,553  
Other current assets   41,564       21,370  
Total current assets   840,352       997,888  
       
Operating property, less accumulated depreciation and amortization of $288,055 and $280,849   284,794       285,855  
Goodwill   40,071       38,508  
Other assets   106,893       105,460  
Total assets $ 1,272,110     $ 1,427,711  
       
LIABILITIES AND EQUITY      
Current liabilities:      
Cash overdraft $ 35,534     $ 53,878  
Accounts payable   273,324       271,996  
Current maturities of long-term debt   38,219       42,632  
Insurance claims   53,764       44,532  
Dividends payable   -       78,947  
Contractor escrow   25,774       24,902  
Other current liabilities   46,845       36,017  
Total current liabilities   473,460       552,904  
       
Long-term debt, excluding current maturities   60,152       70,212  
Insurance claims   34,762       33,575  
Deferred income taxes and other non-current liabilities   54,615       49,551  
       
Shareholders' equity:      
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,176,787 and 68,083,419 shares   682       681  
Additional paid-in capital   225,332       226,123  
Retained earnings   2,012,173       1,962,161  
Cost of 29,797,328 and 28,609,926 shares of common stock in treasury   (1,581,921     (1,465,284 )
Accumulated other comprehensive loss   (7,145 )     (2,212 )
Total shareholders' equity   649,121       721,469  
Total liabilities and shareholders' equity $ 1,272,110     $ 1,427,711  
       

 

Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
               
  Twenty Six Weeks Ended   Thirteen Weeks Ended
  June 27,   June 29,   June 27,   June 29,
  2020   2019   2020   2019
Revenue generated through (in thousands):              
               
Truck transportation              
Truckload:              
Van equipment $ 1,028,334     $ 1,224,379     $ 483,027     $ 605,365  
Unsided/platform equipment   533,716       648,828       247,388       338,107  
Less-than-truckload   45,859       48,108       22,918       24,732  
Total truck transportation   1,607,909       1,921,315       753,333       968,204  
Rail intermodal   51,315       58,585       23,186       28,570  
Ocean and air cargo carriers   57,250       58,893       30,663       28,224  
Other (1)   34,606       39,247       16,332       20,042  
  $ 1,751,080     $ 2,078,040     $ 823,514     $ 1,045,040  
               
Revenue on loads hauled via BCO Independent Contractors(2) included in total truck transportation $ 809,779     $ 923,928     $ 378,500     $ 474,620  
               
Number of loads:              
               
Truck transportation              
Truckload:              
Van equipment   600,519       686,901       285,174       345,080  
Unsided/platform equipment   231,122       260,920       110,533       135,750  
Less-than-truckload   78,079       74,549       39,723       39,240  
Total truck transportation   909,720       1,022,370       435,430       520,070  
Rail intermodal   21,510       23,880       9,970       11,420  
Ocean and air cargo carriers   14,430       14,810       7,360       7,300  
    945,660       1,061,060       452,760       538,790  
               
Loads hauled via BCO Independent Contractors(2) included in total truck transportation   443,830       483,660       210,430       248,810  
               
Revenue per load:              
               
Truck transportation              
Truckload:              
Van equipment $ 1,712     $ 1,782     $ 1,694     $ 1,754  
Unsided/platform equipment   2,309       2,487       2,238       2,491  
Less-than-truckload   587       645       577       630  
Total truck transportation   1,767       1,879       1,730       1,862  
Rail intermodal   2,386       2,453       2,326       2,502  
Ocean and air cargo carriers   3,967       3,977       4,166       3,866  
               
Revenue per load on loads hauled via BCO Independent Contractors(2) $ 1,825     $ 1,910     $ 1,799     $ 1,908  
               
Revenue by capacity type (as a % of total revenue);            
               
Truck capacity providers:              
BCO Independent Contractors(2)   46 %     44 %     46 %     45 %
Truck Brokerage Carriers   46 %     48 %     46 %     47 %
Rail intermodal   3 %     3 %     3 %     3 %
Ocean and air cargo carriers   3 %     3 %     4 %     3 %
Other   2 %     2 %     2 %     2 %
               
          June 27,   June 29,
          2020   2019
Truck Capacity Providers              
               
BCO Independent Contractors(2)           9,632       9,879  
Truck Brokerage Carriers:              
Approved and active (3)           37,600       40,097  
Other approved           16,365       17,790  
            53,965       57,887  
Total available truck capacity providers           63,597       67,766  
               
Trucks provided by BCO Independent Contractors(2)       10,299       10,587  
               
(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: Contact:  Kevin Stout
Landstar System, Inc.
www.landstar.com
904-398-9400

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Landstar System Reports Second Quarter Revenue of $824 Million and Diluted Earnings Per Share of $0.63 JACKSONVILLE, Fla., July 22, 2020 (GLOBE NEWSWIRE) - Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $0.63 in the 2020 second quarter on revenue of $824 million. Included in the Company’s 2020 second quarter financial …

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