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Landstar System Reports Third Quarter Revenue of $1.086 Billion and Diluted Earnings Per Share of $1.61

Nachrichtenquelle: globenewswire
21.10.2020, 22:15  |  117   |   |   

JACKSONVILLE, Fla., Oct. 21, 2020 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported revenue of $1.086 billion, an increase of approximately 7% over revenue of $1.012 billion reported in the 2019 third quarter. Diluted earnings per share of $1.61 in the 2020 third quarter represented an increase of approximately 19% over diluted earnings per share of $1.35 in the 2019 third quarter. 2020 third quarter diluted earnings per share was the second highest third quarter diluted earnings per share in the Company’s history, behind only the 2018 third quarter diluted earnings per share of $1.63. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $160.9 million in the 2020 third quarter, an increase of approximately 5% compared to $152.6 million in the 2019 third quarter. Operating margin, representing operating income divided by gross profit, was 51.2 percent in the 2020 third quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2020 third quarter was $1.006 billion, or 93 percent of revenue, compared to $932.2 million, or 92 percent of revenue, in the 2019 third quarter. Truckload transportation revenue hauled via van equipment in the 2020 third quarter was $666.6 million compared to $575.0 million in the 2019 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2020 third quarter was $314.5 million compared to $331.8 million in the 2019 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $62.2 million, or 6 percent of revenue, in the 2020 third quarter compared to $59.3 million, or 6 percent of revenue, in the 2019 third quarter.

Trailing twelve-month return on average shareholders’ equity was 26 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 22 percent. Landstar did not purchase any shares of its common stock during the 2020 third 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 September 26, 2020, the Company had $258 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility, with the ability to increase that amount of borrowings to $366 million using the facility’s accordion feature. Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.21 per share payable on December 4, 2020, to stockholders of record as of the close of business on November 10, 2020. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“Landstar entered the third quarter of 2020 facing one of the most unpredictable and challenging freight environments in the Company’s history,” said Landstar President and Chief Executive Officer Jim Gattoni. “In our second quarter earnings release dated July 22, 2020, we provided third quarter guidance anticipating a decrease in a mid single-digit range on a year-over-year basis for both truck volume and price. Through the first few weeks of fiscal July, the number of loads and revenue per load on loads hauled via truck were each below the corresponding period of 2019 in a mid single-digit percentage range. We closed fiscal July with truckload volumes and revenue per load on loads hauled via truck down only 1% and 2%, respectively, compared to fiscal July 2019. In the first week of the Company’s fiscal August period, the number of loads and revenue per load on loads hauled via truck both turned positive on a weekly basis compared to the corresponding week of 2019. Landstar continued to experience gradual improvement in the number of loads and revenue per load on loads hauled via truck on a sequential basis through August 2020. Moreover, on a year-over-year basis, the number of loads and revenue per load on loads hauled via truck in fiscal August 2020 in comparison to fiscal August 2019 increased by 2% and 5%, respectively.”

Gattoni continued, “In our second quarter earnings release, we provided third quarter revenue guidance of $885 million to $935 million and third quarter diluted earnings per share guidance of $1.11 to $1.17. On September 9, 2020, we disclosed in a Form 8-K filed with the SEC and further explained at a webcast investor conference the next day that based on overall market conditions, we expected 2020 third quarter revenue to be in a range of $1.02 billion to $1.06 billion and diluted earnings per share for the 2020 third quarter to be in a range of $1.40 to $1.46. Our updated guidance provided on September 9, 2020, reflected our expectation that the number of loads and revenue per load on loads hauled via truck for the 2020 third quarter would be above the 2019 third quarter in a low single-digit range. The number of loads and revenue per load on loads hauled via truck for fiscal September 2020 continued to improve from August 2020 on a sequential basis beyond our expectations, particularly with respect to the demand for services provided by van equipment, and exceeded fiscal September 2019 amounts by 7% and 10%, respectively. Overall, truck load volumes increased in the 2020 third quarter by 3% as compared to the 2019 third quarter, and truck revenue per load increased by 5% as compared to the 2019 third quarter. Ultimately, revenue in the 2020 third quarter was $1.086 billion and diluted earnings per share for the 2020 third quarter was $1.61. The achievement of both revenue and diluted earnings per share in excess of our updated guidance was primarily the result of the further sequential increases in the number of loads and revenue per load on loads hauled via truck from September 9th through the end of the fiscal month.”

Gattoni continued, “The Company’s variable cost business model, highly diversified customer base and geographically dispersed network of independent agents and third-party truck capacity provides resiliency and flexibility in any demand environment. While U.S. manufacturing production continued to lag prior year levels, the agent network capitalized on opportunities with new customers and executed by sourcing truck capacity for shippers experiencing rapid volume growth and/or supply chain disruption. During the 2020 third quarter, approved and active third-party truck carrier count increased approximately 10 percent compared to the 2020 second quarter to over 41,000 carriers. Additionally, the Company net added 272 trucks provided by BCOs in the third quarter.”

Gattoni further stated, “Through the first few weeks of October 2020, the number of loads hauled via truck was above the corresponding period of 2019 in a high single-digit percentage range. I expect that trend to continue during the remainder of the 2020 fourth quarter. Accordingly, I expect the number of loads hauled via truck in the 2020 fourth quarter to be above the number of loads hauled by truck in the 2019 fourth quarter in a high single-digit percentage range. Based on our current macroeconomic outlook, I expect pricing to remain strong and relatively stable through the 2020 fourth quarter given current demand and assuming little change in the level of truck capacity available in the marketplace. Assuming the current macroeconomic environment continues throughout the remainder of the fourth quarter, I expect 2020 fourth quarter truck revenue per load to be higher than the 2019 fourth quarter in a low double-digit percentage range. I anticipate revenue for the 2020 fourth quarter to be in a range of $1.150 billion to $1.200 billion.”

Earlier this month, the Company announced a new initiative relating to the reorganization of its regional field operations centers throughout the United States in support of its BCO network. It is the intent of the Company that this network of field operations centers will further support the Company’s continual efforts in recruiting and retaining the best truck owner-operators in our industry. In connection with this initiative, the Company expects to record a liability of approximately $15.0 million in its 2020 fourth quarter relating to anticipated buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a BCO recruitment and retention program formerly involving those agents. This charge is expected to decrease 2020 fourth quarter diluted earnings per share by approximately $0.29. These incentive commission arrangements to agents to recruit and retain BCOs reduced gross profit by almost $10 million a year in recent years.

Gattoni concluded, “Assuming the estimated range of revenue for the 2020 fourth quarter described above, the anticipated charge for the expected buyouts of certain agent commission arrangements, and insurance and claims expense at 4.8 percent of BCO revenue, representing average insurance and claims costs as a percentage of BCO revenue over the past five years (adjusted to reflect the recent significant increase in insurance premiums covered in the Company’s second quarter earnings release), I would anticipate 2020 fourth quarter diluted earnings per share to be in a range of $1.32 to $1.42 per share. Excluding the one-time cost of $0.29 per diluted share related to the anticipated buyouts of the incentive commission arrangements, 2020 fourth quarter diluted earnings per share guidance would be $1.61 to $1.71.”

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 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)
                         
                         
            Thirty Nine Weeks Ended   Thirteen Weeks Ended
            September 26,   September 28,   September 26,   September 28,
             2020    2019     2020    2019
                         
Revenue       $ 2,836,626   $ 3,089,698     $ 1,085,546   $ 1,011,658
Investment income       2,716     3,736       714     1,315
                         
Costs and expenses:                  
  Purchased transportation     2,183,143     2,365,646       838,753     774,520
  Commissions to agents     236,490     257,862       85,848     84,568
  Other operating costs, net of gains/losses on asset sales/dispositions     23,035     28,531       7,361     10,431
  Insurance and claims       66,563     55,248       21,855     23,969
  Selling, general and administrative     124,779     120,717       38,851     38,152
  Depreciation and amortization     34,212     33,045       11,240     10,695
  Impairment of intangible and other assets     2,582     -       -     -
                         
    Total costs and expenses     2,670,804     2,861,049       1,003,908     942,335
                         
Operating income       168,538     232,385       82,352     70,638
Interest and debt expense       2,936     2,278       1,008     764
                         
Income before income taxes     165,602     230,107       81,344     69,874
Income taxes         38,567     52,452       19,458     16,619
                         
Net income         127,035     177,655       61,886     53,255
Less: Net loss attributable to noncontrolling interest     -     (17 )     -     -
Net income attributable to Landstar System,                
  Inc. and subsidiary     $ 127,035   $ 177,672     $ 61,886   $ 53,255
                         
Earnings per common share attributable to                
  Landstar System, Inc. and subsidiary   $ 3.28   $ 4.45     $ 1.61   $ 1.35
                         
Diluted earnings per share attributable to                
  Landstar System, Inc. and subsidiary   $ 3.28   $ 4.45     $ 1.61   $ 1.35
                         
Average number of shares outstanding:                
  Earnings per common share     38,673,000     39,891,000       38,386,000     39,566,000
  Diluted earnings per share     38,673,000     39,891,000       38,386,000     39,566,000
                         
Dividends per common share   $ 0.580   $ 0.515     $ 0.210   $ 0.185
                         

        

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)   
(Unaudited)       
                   
                   
              September 26,   December 28,
               2020     2019 
ASSETS              
Current assets:            
  Cash and cash equivalents     $ 218,554     $ 319,515  
  Short-term investments       39,068       32,901  
  Trade accounts receivable, less allowance        
    of $8,120 and $7,284       637,908       588,549  
  Other receivables, including advances to independent      
    contractors, less allowance of $8,827 and $7,667   40,550       35,553  
  Other current assets       27,989       21,370  
    Total current assets       964,069       997,888  
                   
Operating property, less accumulated depreciation      
      and amortization of $291,159 and $280,849   279,495       285,855  
Goodwill           40,251       38,508  
Other assets         108,390       105,460  
Total assets       $ 1,392,205     $ 1,427,711  
                   
LIABILITIES AND EQUITY          
Current liabilities:            
  Cash overdraft       $ 47,459     $ 53,878  
  Accounts payable         339,798       271,996  
  Current maturities of long-term debt       34,723       42,632  
  Insurance claims         46,019       44,532  
  Dividends payable         -       78,947  
  Contractor escrow       28,345       24,902  
  Other current liabilities       47,206       36,017  
    Total current liabilities       543,550       552,904  
                   
Long-term debt, excluding current maturities       52,570       70,212  
Insurance claims         36,344       33,575  
Deferred income taxes and other non-current liabilities   54,107       49,551  
                   
Shareholders' equity:            
  Common stock, $0.01 par value, authorized 160,000,000      
    shares, issued 68,181,418 and 68,083,419 shares   682       681  
  Additional paid-in capital       226,878       226,123  
  Retained earnings         2,065,999       1,962,161  
  Cost of 29,797,639 and 28,609,926 shares of common      
    stock in treasury       (1,581,961 )     (1,465,284 )
  Accumulated other comprehensive loss       (5,964 )     (2,212 )
    Total shareholders' equity       705,634       721,469  
Total liabilities and shareholders' equity     $ 1,392,205     $ 1,427,711  
                   


  Landstar System, Inc. and Subsidiary
  Supplemental Information
  (Unaudited)
                         
          Thirty Nine Weeks Ended     Thirteen Weeks Ended
          September 26,   September 28,     September 26,   September 28,
           2020    2019      2020    2019
Revenue generated through (in thousands):                  
                         
  Truck transportation                  
    Truckload:                  
      Van equipment   $ 1,694,916     $ 1,799,421       $ 666,582     $ 575,042  
      Unsided/platform equipment     848,187       980,615         314,471       331,787  
    Less-than-truckload     70,984       73,475         25,125       25,367  
      Total truck transportation     2,614,087       2,853,511         1,006,178       932,196  
  Rail intermodal     81,747       87,555         30,432       28,970  
  Ocean and air cargo carriers     89,002       89,258         31,752       30,365  
  Other (1)     51,790       59,374         17,184       20,127  
          $ 2,836,626     $ 3,089,698       $ 1,085,546     $ 1,011,658  
                         
  Revenue on loads hauled via BCO Independent Contractors (2)                  
    included in total truck transportation   $ 1,312,003     $ 1,390,135       $ 502,224     $ 466,207  
                         
Number of loads:                  
                         
  Truck transportation                  
    Truckload:                  
      Van equipment     946,117       1,014,572         345,598       327,671  
      Unsided/platform equipment     356,670       391,112         125,548       130,192  
    Less-than-truckload     119,533       115,616         41,454       41,067  
      Total truck transportation     1,422,320       1,521,300         512,600       498,930  
  Rail intermodal     33,410       35,370         11,900       11,490  
  Ocean and air cargo carriers     22,720       22,150         8,290       7,340  
            1,478,450       1,578,820         532,790       517,760  
                         
  Loads hauled via BCO Independent Contractors (2)                  
    included in total truck transportation     693,860       722,870         250,030       239,210  
                         
Revenue per load:                  
                         
  Truck transportation                  
    Truckload:                  
      Van equipment   $ 1,791     $ 1,774       $ 1,929     $ 1,755  
      Unsided/platform equipment     2,378       2,507         2,505       2,548  
    Less-than-truckload     594       636         606       618  
      Total truck transportation     1,838       1,876         1,963       1,868  
  Rail intermodal     2,447       2,475         2,557       2,521  
  Ocean and air cargo carriers     3,917       4,030         3,830       4,137  
                         
  Revenue per load on loads hauled via BCO Independent Contractors (2)   $ 1,891     $ 1,923       $ 2,009     $ 1,949  
                         
Revenue by capacity type (as a % of total revenue);                  
                         
  Truck capacity providers:                  
    BCO Independent Contractors (2)     46 %     45 %       46 %     46 %
    Truck Brokerage Carriers     46 %     47 %       46 %     46 %
  Rail intermodal     3 %     3 %       3 %     3 %
  Ocean and air cargo carriers     3 %     3 %       3 %     3 %
  Other       2 %     2 %       2 %     2 %
                         
                    September 26,   September 28,
                      2020       2019  
Truck Capacity Providers                  
                         
  BCO Independent Contractors (2)               9,866       9,738  
  Truck Brokerage Carriers:                  
  Approved and active (3)               41,246       39,963  
  Other approved               22,181       16,984  
                      63,427       56,947  
  Total available truck capacity providers               73,293       66,685  
                         
  Trucks provided by BCO Independent Contractors (2)               10,571       10,441  
                         
(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 Third Quarter Revenue of $1.086 Billion and Diluted Earnings Per Share of $1.61 JACKSONVILLE, Fla., Oct. 21, 2020 (GLOBE NEWSWIRE) - Landstar System, Inc. (NASDAQ: LSTR) reported revenue of $1.086 billion, an increase of approximately 7% over revenue of $1.012 billion reported in the 2019 third quarter. Diluted earnings per …

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