Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the interim consolidated financial statements and notes thereto included herein,
and with the Companys audited financial statements and notes thereto for the fiscal year ended December 26, 2015 and Managements Discussion and Analysis of Financial Condition and Results of Operations included in the 2015 Annual Report
on Form 10-K.
FORWARD-LOOKING STATEMENTS
The following is a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this
document that are not based on historical facts are forward-looking statements. This Managements Discussion and Analysis of
15
Financial Condition and Results of Operations and other sections of this Form 10-Q contain forward-looking statements, such as statements which relate to Landstars 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; substantial industry competition; disruptions or failures in the Companys computer systems; cyber and other information security incidents; dependence on key vendors; changes in fuel taxes; status
of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstars Form
10-K for the 2015 fiscal year, described in Item 1A Risk Factors, in this report or in Landstars other Securities and Exchange Commission 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.
Introduction
Landstar System, Inc.
and its subsidiary, Landstar System Holdings, Inc. (together, referred to herein as Landstar or the Company), is a worldwide asset-light provider of integrated transportation management solutions. The Company offers services
to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to enterprise-wide solutions to manage all of a customers transportation needs. Landstar provides services principally
throughout the United States and to a lesser extent in Canada, and between the United States and Canada, Mexico and other countries around the world. The Companys services emphasize safety, information coordination and customer service and are
delivered through a network of independent commission sales agents and third party capacity providers linked together by a series of technological applications which are provided and coordinated by the Company. The nature of the Companys
business is such that a significant portion of its operating costs varies directly with revenue.
Landstar markets its integrated
transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport customers freight. Landstars independent commission sales agents enter into
contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstars capacity providers and coordinating the transportation of the freight with customers and capacity providers. The
Companys third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the BCO Independent Contractors), unrelated trucking companies who provide
truck capacity to the Company under non-exclusive contractual arrangements (the Truck Brokerage Carriers), air cargo carriers, ocean cargo carriers and railroads. Through this network of agents and capacity providers linked together by
Landstars information technology systems, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $3.3 billion during the most recently completed fiscal year. The Company
reports the results of two operating segments: the transportation logistics segment and the insurance segment.
The transportation
logistics segment provides a wide range of integrated transportation management solutions. Transportation services offered by the Company include truckload and less-than-truckload transportation, rail intermodal, air cargo, ocean cargo, expedited
ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, project cargo and customs brokerage. Industries serviced by the transportation logistics segment include automotive products,
building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics, ammunition and explosives and military equipment. In addition, the transportation logistics segment provides transportation services to other transportation
companies, including third party logistics and less-than-truckload service providers. Each of the independent commission sales agents has the opportunity to market all of the services provided by the transportation logistics segment. Billings for
freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue. During the twenty-six weeks ended June 25, 2016, revenue hauled by
BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 48%, 45% and 4%, respectively, of the Companys consolidated revenue. Collectively, revenue hauled by air and ocean cargo carriers represented
approximately 3% of the Companys consolidated revenue in the twenty-six-week period ended June 25, 2016.
The insurance segment is
comprised of Signature Insurance Company, a wholly owned offshore insurance subsidiary (Signature), and Risk Management Claim Services, Inc. This segment provides risk and claims management services to certain of Landstars
operating subsidiaries. In addition, it reinsures certain risks of the Companys BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstars operating subsidiaries. Revenue at the
insurance segment represents reinsurance
16
premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk is ultimately borne by Signature. Revenue at the
insurance segment represented approximately 2% of the Companys consolidated revenue for the twenty-six-week period ended June 25, 2016.
Changes
in Financial Condition and Results of Operations
Management believes the Companys success principally depends on its ability to
generate freight through its network of independent commission sales agents and to safely and efficiently deliver that freight utilizing third party capacity providers. Management believes the most significant factors to the Companys success
include increasing revenue, sourcing capacity and controlling costs, including insurance and claims.
While customer demand, which is
subject to overall economic conditions, ultimately drives increases or decreases in revenue, the Company primarily relies on its independent commission sales agents to establish customer relationships and generate revenue opportunities.
Managements emphasis with respect to revenue growth is on revenue generated by independent commission sales agents who on an annual basis generate $1 million or more of Landstar revenue (Million Dollar Agents). Management believes
future revenue growth is primarily dependent on its ability to increase both the revenue generated by Million Dollar Agents and the number of Million Dollar Agents through a combination of recruiting new agents and increasing the revenue
opportunities generated by existing independent commission sales agents. During the 2015 fiscal year, 512 independent commission sales agents generated $1 million or more of Landstar revenue and thus qualified as Million Dollar Agents. During the
2015 fiscal year, the average revenue generated by a Million Dollar Agent was $5,998,000 and revenue generated by Million Dollar Agents in the aggregate represented 92% of consolidated revenue.
Management monitors business activity by tracking the number of loads (volume) and revenue per load by mode of transportation. Revenue per
load can be influenced by many factors other than a change in price. Those factors include the average length of haul, freight type, special handling and equipment requirements, fuel costs and delivery time requirements. For shipments involving
two or more modes of transportation, revenue is generally classified by the mode of transportation having the highest cost for the load. The following table summarizes this information by trailer type for truck transportation and by mode for
all others:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty Six Weeks Ended
|
|
|
Thirteen Weeks Ended
|
|
|
|
June 25,
2016
|
|
|
June 27,
2015
|
|
|
June 25,
2016
|
|
|
June 27,
2015
|
|
Revenue generated through (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truckload:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van equipment
|
|
$
|
886,195
|
|
|
$
|
946,598
|
|
|
$
|
458,002
|
|
|
$
|
496,910
|
|
Unsided/platform equipment
|
|
|
451,430
|
|
|
|
530,515
|
|
|
|
242,008
|
|
|
|
291,032
|
|
Less-than-truckload
|
|
|
35,927
|
|
|
|
40,956
|
|
|
|
18,450
|
|
|
|
21,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total truck transportation
|
|
|
1,373,552
|
|
|
|
1,518,069
|
|
|
|
718,460
|
|
|
|
809,200
|
|
Rail intermodal
|
|
|
52,337
|
|
|
|
49,522
|
|
|
|
26,229
|
|
|
|
26,341
|
|
Ocean and air cargo carriers
|
|
|
37,710
|
|
|
|
41,410
|
|
|
|
18,902
|
|
|
|
21,778
|
|
Other (1)
|
|
|
23,268
|
|
|
|
21,762
|
|
|
|
11,632
|
|
|
|
11,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,486,867
|
|
|
$
|
1,630,763
|
|
|
$
|
775,223
|
|
|
$
|
868,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue on loads hauled via BCO Independent Contractors included in total truck
transportation
|
|
$
|
707,652
|
|
|
$
|
752,030
|
|
|
$
|
373,374
|
|
|
$
|
401,705
|
|
|
|
|
|
|
Number of loads:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truckload:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van equipment
|
|
|
556,119
|
|
|
|
544,714
|
|
|
|
287,079
|
|
|
|
285,762
|
|
Unsided/platform equipment
|
|
|
219,034
|
|
|
|
229,452
|
|
|
|
116,292
|
|
|
|
127,286
|
|
Less-than-truckload
|
|
|
55,727
|
|
|
|
54,904
|
|
|
|
28,829
|
|
|
|
28,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total truck transportation
|
|
|
830,880
|
|
|
|
829,070
|
|
|
|
432,200
|
|
|
|
441,960
|
|
Rail intermodal
|
|
|
24,180
|
|
|
|
20,680
|
|
|
|
12,150
|
|
|
|
11,200
|
|
Ocean and air cargo carriers
|
|
|
9,780
|
|
|
|
8,620
|
|
|
|
5,220
|
|
|
|
4,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
864,840
|
|
|
|
858,370
|
|
|
|
449,570
|
|
|
|
457,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loads hauled via BCO Independent Contractors included in total truck transportation
|
|
|
414,660
|
|
|
|
406,230
|
|
|
|
216,990
|
|
|
|
214,930
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per load:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truckload:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van equipment
|
|
$
|
1,594
|
|
|
$
|
1,738
|
|
|
$
|
1,595
|
|
|
$
|
1,739
|
|
Unsided/platform equipment
|
|
|
2,061
|
|
|
|
2,312
|
|
|
|
2,081
|
|
|
|
2,286
|
|
Less-than-truckload
|
|
|
645
|
|
|
|
746
|
|
|
|
640
|
|
|
|
735
|
|
Total truck transportation
|
|
|
1,653
|
|
|
|
1,831
|
|
|
|
1,662
|
|
|
|
1,831
|
|
Rail intermodal
|
|
|
2,164
|
|
|
|
2,395
|
|
|
|
2,159
|
|
|
|
2,352
|
|
Ocean and air cargo carriers
|
|
|
3,856
|
|
|
|
4,804
|
|
|
|
3,621
|
|
|
|
4,850
|
|
|
|
|
|
|
Revenue per load on loads hauled via BCO Independent Contractors
|
|
$
|
1,707
|
|
|
$
|
1,851
|
|
|
$
|
1,721
|
|
|
$
|
1,869
|
|
|
|
|
|
|
Revenue by capacity type (as a % of total revenue):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck capacity providers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCO Independent Contractors
|
|
|
48
|
%
|
|
|
46
|
%
|
|
|
48
|
%
|
|
|
46
|
%
|
Truck Brokerage Carriers
|
|
|
45
|
%
|
|
|
47
|
%
|
|
|
45
|
%
|
|
|
47
|
%
|
Rail intermodal
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
Ocean and air cargo carriers
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
Other
|
|
|
2
|
%
|
|
|
1
|
%
|
|
|
2
|
%
|
|
|
1
|
%
|
(1)
|
Includes primarily reinsurance premium revenue generated by the insurance segment.
|
Also
critical to the Companys success is its ability to secure capacity, particularly truck capacity, at rates that allow the Company to profitably transport customers freight. The following table summarizes the number of available truck
capacity providers on the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
June 25, 2016
|
|
|
June 27, 2015
|
|
|
|
|
BCO Independent Contractors
|
|
|
8,856
|
|
|
|
8,726
|
|
Truck Brokerage Carriers:
|
|
|
|
|
|
|
|
|
Approved and active
(1)
|
|
|
30,137
|
|
|
|
28,387
|
|
Other approved
|
|
|
15,594
|
|
|
|
13,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,731
|
|
|
|
41,513
|
|
|
|
|
|
|
|
|
|
|
Total available truck capacity providers
|
|
|
54,587
|
|
|
|
50,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trucks provided by BCO Independent Contractors
|
|
|
9,462
|
|
|
|
9,308
|
|
(1)
|
Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end.
|
The Company incurs costs that are directly related to the transportation of freight that include purchased transportation and commissions to
agents. The Company incurs indirect costs associated with the transportation of freight that include other operating costs and insurance and claims. In addition, the Company incurs selling, general and administrative costs essential to administering
its business operations. Management continually monitors all components of the costs incurred by the Company and establishes annual cost budgets which, in general, are used to benchmark costs incurred on a monthly basis.
Purchased transportation represents the amount a BCO Independent Contractor or other third party capacity provider is paid to haul freight.
The amount of purchased transportation paid to a BCO Independent Contractor is primarily based on a contractually agreed-upon percentage of revenue generated by loads hauled by the BCO Independent Contractor. Purchased transportation paid to a Truck
Brokerage Carrier is based on either a negotiated rate for each load hauled or, to a lesser extent, a contractually agreed-upon fixed rate per load. Purchased transportation paid to railroads is based on either a negotiated rate for each load hauled
or a contractually agreed-upon fixed rate. Purchased transportation paid to air cargo carriers is generally based on a negotiated rate for each load hauled and purchased transportation paid to ocean cargo carriers is generally based on contractually
agreed-upon fixed rates. Purchased transportation as a percentage of revenue for truck brokerage, rail intermodal and ocean cargo services is normally higher than that of BCO Independent Contractor and air cargo services. Purchased
transportation is the largest component of costs and expenses and, on a consolidated basis, increases or decreases as a percentage of consolidated revenue in proportion to changes in the percentage of consolidated revenue generated through BCO
Independent Contractors and other third party capacity providers and external revenue from the insurance segment, consisting of reinsurance premiums. Purchased transportation as a percent of revenue also increases or decreases in relation to the
availability of truck brokerage capacity and with changes in the price of fuel on revenue hauled by Truck Brokerage Carriers. The Company passes 100% of fuel surcharges billed to customers for freight hauled by BCO Independent Contractors to its BCO
Independent Contractors. These fuel surcharges are excluded from revenue and the cost of purchased transportation. Purchased transportation costs are recognized upon the completion of freight delivery.
18
Commissions to agents are based on contractually agreed-upon percentages of revenue or net
revenue, defined as revenue less the cost of purchased transportation, or net revenue less a contractually agreed upon percentage of revenue retained by Landstar. Commissions to agents as a percentage of consolidated revenue will vary directly with
fluctuations in the percentage of consolidated revenue generated by the various modes of transportation and reinsurance premiums and with changes in net revenue margin, defined as net revenue divided by revenue, on services provided by Truck
Brokerage Carriers, railroads, air cargo carriers and ocean cargo carriers. Commissions to agents are recognized upon the completion of freight delivery.
The Company defines gross profit as revenue less the cost of purchased transportation and commissions to agents. Gross profit divided by
revenue is referred to as gross profit margin. The Companys operating margin is defined as operating income divided by gross profit.
In general, gross profit margin on revenue hauled by BCO Independent Contractors represents a fixed percentage of revenue due to the nature of
the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. For revenue hauled by Truck Brokerage Carriers, gross profit margin is either fixed or variable as a percent of
revenue, depending on the contract with each individual independent commission sales agent. Under certain contracts with independent commission sales agents, the Company retains a fixed percentage of revenue and the agent retains the amount
remaining less the cost of purchased transportation (the retention contracts). Gross profit margin on revenue hauled by railroads, air cargo carriers, ocean cargo carriers and Truck Brokerage Carriers, other than those under retention
contracts, is variable in nature as the Companys contracts with independent commission sales agents provide commissions to agents at a contractually agreed upon percentage of net revenue for these type of loads. Approximately 56% of the
Companys consolidated revenue in the twenty-six-week period ended June 25, 2016 was generated under contracts that have a fixed gross profit margin while 44% was under contracts that have a variable gross profit margin.
Maintenance costs for Company-provided trailing equipment and BCO Independent Contractor recruiting costs are the largest components of other
operating costs. Also included in other operating costs are trailer rental costs, the provision for uncollectible advances and other receivables due from BCO Independent Contractors and independent commission sales agents and gains/losses, if any,
on sales of Company-owned trailing equipment.
With respect to insurance and claims cost, potential liability associated with accidents in
the trucking industry is severe and occurrences are unpredictable. For commercial trucking claims, Landstar retains liability up to $5,000,000 per occurrence. The Company also retains liability of up to $1,000,000 for each general liability claim,
up to $250,000 for each workers compensation claim and up to $250,000 for each cargo claim. The Companys exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who
transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers
compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstars cost of insurance and claims and its results of operations.
During the twenty-six-week period ended June 25, 2016, employee compensation and benefits accounted for approximately sixty-five percent of
the Companys selling, general and administrative costs.
Depreciation and amortization primarily relate to depreciation of trailing
equipment and information technology hardware and software.
The following table sets forth the percentage relationship of purchased
transportation and commissions to agents, both being direct costs, to revenue and indirect costs as a percentage of gross profit for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty Six Weeks Ended
|
|
|
Thirteen Weeks Ended
|
|
|
|
June 25,
2016
|
|
|
June 27,
2015
|
|
|
June 25,
2016
|
|
|
June 27,
2015
|
|
|
|
|
|
|
Revenue
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Purchased transportation
|
|
|
76.0
|
|
|
|
76.9
|
|
|
|
76.0
|
|
|
|
76.9
|
|
Commissions to agents
|
|
|
8.3
|
|
|
|
8.0
|
|
|
|
8.4
|
|
|
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin
|
|
|
15.7
|
%
|
|
|
15.1
|
%
|
|
|
15.6
|
%
|
|
|
15.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Investment income
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.3
|
|
Indirect costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating costs, net of gains on asset sales/dispositions
|
|
|
6.0
|
|
|
|
6.4
|
|
|
|
5.4
|
|
|
|
6.1
|
|
Insurance and claims
|
|
|
13.0
|
|
|
|
11.0
|
|
|
|
13.3
|
|
|
|
9.4
|
|
Selling, general and administrative
|
|
|
30.7
|
|
|
|
30.5
|
|
|
|
30.5
|
|
|
|
28.9
|
|
Depreciation and amortization
|
|
|
7.3
|
|
|
|
5.7
|
|
|
|
7.2
|
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
57.0
|
|
|
|
53.5
|
|
|
|
56.4
|
|
|
|
49.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
43.3
|
%
|
|
|
46.7
|
%
|
|
|
43.9
|
%
|
|
|
50.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
Management believes that a discussion of indirect costs as a percentage of gross profit is useful
and meaningful to potential investors for the following principal reasons: (1) disclosure of these relative measures (i.e., each indirect operating cost line item as a percentage of gross profit) allows investors to better understand the underlying
trends in the Companys results of operations; (2) due to the generally fixed nature of these indirect costs (other than insurance and claims costs), these relative measures are meaningful to investors evaluations of the Companys
management of its indirect costs attributable to operations; (3) management considers this financial information in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs; and (4)
this information facilitates comparisons by investors of the Companys results to the results of other non-asset or asset-light companies in the transportation and logistics services industry who report net revenue in Management
Discussion and Analysis, which represents revenue less the cost of purchased transportation. The difference between the Companys use of the term gross profit and use of the term net revenue by other companies in the
transportation and logistics services industry is due to the direct cost of commissions to agents under the Landstar business model, whereas other companies in this industry generally have no commissions to agents.
Also, as previously mentioned, the Company reports two operating segments: the transportation logistics segment and the insurance segment.
External revenue at the insurance segment, representing reinsurance premiums, has historically been relatively consistent on a year-over-year basis at less than 2% of consolidated revenue and generally corresponds directly with the number of trucks
provided by BCO Independent Contractors. The discussion of indirect cost line items in Managements Discussion and Analysis of Financial Condition and Results of Operations considers the Companys costs on a consolidated basis rather than
on a segment basis. Management believes this presentation format is the most appropriate to assist users of the financial statements in understanding the Companys business for the following reasons: (1) the insurance segment has no other
operating costs; (2) discussion of insurance and claims at either segment without reference to the other may create confusion amongst investors and potential investors due to intercompany arrangements and specific deductible programs that affect
comparability of financial results by segment between various fiscal periods but that have no effect on the Company from a consolidated reporting perspective; (3) selling, general and administrative costs of the insurance segment comprise less than
10% of consolidated selling, general and administrative costs and have historically been relatively consistent on a year-over-year basis; and (4) the insurance segment has no depreciation and amortization.
TWENTY SIX WEEKS ENDED JUNE 25, 2016 COMPARED TO TWENTY SIX WEEKS ENDED JUNE 27, 2015
Revenue for the 2016 twenty-six-week period was $1,486,867,000, a decrease of $143,896,000, or 9%, compared to the 2015 twenty-six-week period.
Transportation revenue decreased $145,453,000, or 9%. The decrease in transportation revenue was attributable to decreased revenue per load of approximately 10%, partially offset by a 1% increase in the number of loads hauled. Reinsurance premiums
were $23,095,000 and $21,538,000 for the 2016 and 2015 twenty-six-week periods, respectively. The increase in revenue from reinsurance premiums was primarily attributable to the net increase in the number of BCO Independent Contractors in the 2016
twenty-six-week period compared to the 2015 twenty-six-week period.
Truck transportation revenue hauled by BCO Independent Contractors
and Truck Brokerage Carriers (together, the third party truck capacity providers) for the 2016 twenty-six-week period was $1,373,552,000, or 92% of total revenue, a decrease of $144,517,000, or 10%, compared to the 2015 twenty-six-week
period. Revenue per load on loads hauled by third party truck capacity providers decreased approximately 10% in the 2016 twenty-six-week period compared to the 2015 twenty-six-week period, while the number of loads hauled was approximately flat
compared to the 2015 twenty-six-week period. The decrease in revenue per load on loads hauled via truck was primarily attributable to the impact of lower diesel fuel costs on loads hauled via Truck Brokerage Carriers, a somewhat softer freight
environment as compared to the 2015 twenty-six-week period, which resulted in more readily available truck capacity, and a decrease in the number of loads hauled via heavy specialized equipment, which typically have a higher revenue per load, as a
percentage of total truck loads. The number of loads hauled via van equipment increased 2%, while the number of loads hauled via unsided/platform equipment
20
decreased 5% in the 2016 twenty-six-week period compared to the 2015 twenty-six-week period. Demand for van transportation services utilizing Company provided van trailers, primarily relating to
drop and hook services, drove the growth in the number of loads hauled via van trailing equipment during the period. The decrease in the number of loads hauled via unsided/platform equipment was entirely attributable to the impact of approximately
13,000 loads hauled in the 2015 twenty-six-week period related to a significant project for a single account in the automotive industry. That project was completed at the end of 2015. Excluding the impact of the project loads hauled during the 2015
period, the number of loads hauled via unsided/platform equipment increased 1% during the 2016 twenty-six-week period. Fuel surcharges billed to customers on revenue hauled by BCO Independent Contractors are excluded from revenue. Fuel surcharges on
Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $23,707,000 and $45,031,000 in the 2016 and 2015 twenty-six-week periods, respectively. It should be
noted that many customers of truck brokerage services require a single all-in rate that does not separately identify fuel surcharge. Accordingly, the overall impact of changes in fuel prices on revenue and revenue per load on loads hauled via
truck may be greater than that indicated.
Transportation revenue hauled by rail intermodal, air cargo and ocean cargo carriers
(collectively, the multimode capacity providers) for the twenty-six-week period ended June 25, 2016, was $90,047,000, or 6% of total revenue, a decrease of $885,000, or 1%, compared to the 2015 twenty-six-week period. The number of loads
hauled by multimode capacity providers in the 2016 twenty-six-week period increased approximately 16% compared to the 2015 twenty-six-week period, while revenue per load on revenue hauled by multimode capacity providers decreased approximately 15%
over the same period. The increase in loads hauled by multimode capacity providers was primarily due to increased rail intermodal loads, mostly attributable to increased loadings at one specific agency, and a 13% increase in loads hauled by air and
ocean cargo carriers. The decrease in revenue per load on loads hauled by multimode capacity providers was due to the increase in rail intermodal loads as a percentage of multimode loads, as rail intermodal loads generally generate a lower revenue
per load compared to loads hauled by ocean or air cargo carriers, and decreased revenue per load for all multimode modes. Also, revenue per load on revenue hauled by multimode capacity providers is influenced by many factors, including revenue mix
among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity.
Purchased transportation was 76.0% and 76.9% of revenue in the 2016 and 2015 twenty-six-week periods, respectively. The decrease in purchased
transportation as a percentage of revenue was primarily due to a decreased rate of purchased transportation paid to Truck Brokerage Carriers, primarily due to the impact of lower diesel fuel costs and more readily available capacity. Commissions to
agents were 8.3% and 8.0% of revenue in the 2016 and 2015 twenty-six-week periods, respectively. The increase in commissions to agents as a percentage of revenue was primarily attributable to an increased net revenue margin on revenue hauled by
Truck Brokerage Carriers.
Investment income was $743,000 and $693,000 in the 2016 and 2015 twenty-six-week periods, respectively.
Other operating costs decreased $1,678,000 in the 2016 twenty-six-week period compared to the 2015 twenty-six-week period and represented 6.0%
of gross profit in the 2016 period compared to 6.4% of gross profit in the 2015 period. The decrease in other operating costs compared to the prior year was primarily due to increased gains on sales of used trailing equipment and decreased trailing
equipment rental costs, partially offset by increased trailing equipment maintenance costs, as the Company increased its number of owned trailers in response to customer demand, and an increased provision for contractor bad debt. The decrease in
other operating costs as a percentage of gross profit was caused by the decrease in other operating costs, partially offset by the effect of decreased gross profit.
Insurance and claims increased $3,199,000 in the 2016 twenty-six-week period compared to the 2015 twenty-six-week period and represented 13.0%
of gross profit in the 2016 period compared to 11.0% of gross profit in the 2015 period. The increase in insurance and claims compared to prior year was due to increased severity of current year claims in the 2016 period, partially offset by
decreased net unfavorable development of prior years claims in the 2016 period as unfavorable development of prior year claims was $2,816,000 and $5,474,000 in the 2016 and 2015 twenty-six-week periods, respectively. The increase in insurance
and claims as a percent of gross profit was caused by the increase in insurance and claims costs related to the increased severity of current year claims in the 2016 period and the effect of decreased gross profit.
Selling, general and administrative costs decreased $3,467,000 in the 2016 twenty-six-week period compared to the 2015 twenty-six-week period
and represented 30.7% of gross profit in the 2016 period compared to 30.5% of gross profit in the 2015 period. The decrease in selling, general and administrative costs compared to prior year was attributable to decreased stock compensation expense,
a decreased provision for customer bad debt and a decreased provision for bonuses under the Companys incentive compensation plan in the 2016 period. The increase in selling, general and administrative costs as a percent of gross profit was due
primarily to the effect of decreased gross profit, partially offset by the decrease in selling, general and administrative costs.
21
Depreciation and amortization increased $3,025,000 in the 2016 twenty-six-week period compared to
the 2015 twenty-six-week period and represented 7.3% of gross profit in the 2016 period compared to 5.7% of gross profit in the 2015 period. The increase in depreciation and amortization costs was due to depreciation on new trailing equipment as the
Company increased its number of owned trailers in response to increased customer demand for the Companys drop and hook services using Company owned van trailers. The increase in depreciation and amortization as a percentage of gross profit was
primarily due to the increased depreciation costs discussed above and the effect of decreased gross profit.
Interest and debt expense in
the 2016 twenty-six-week period was $283,000 higher than the 2015 twenty-six-week period. The increase in interest and debt expense was solely attributable to increased interest on capital lease obligations as the Company increased its number of
owned trailers in response to customer demand.
The provisions for income taxes for both the 2016 and 2015 twenty-six-week periods were
based on estimated annual effective income tax rates of approximately 38.2%, adjusted for discrete events, such as benefits resulting from disqualifying dispositions of the Companys common stock by employees who obtained the stock through
exercises of incentive stock options. The effective income tax rates for the 2016 and 2015 twenty-six-week periods were 38.0% and 37.9%, respectively, which were higher than the statutory federal income tax rate primarily as a result of state taxes,
the meals and entertainment exclusion and non-deductible stock compensation expense. The effective income tax rates in the 2016 and 2015 twenty-six-week periods were less than the 38.2% estimated annual effective income tax rate primarily due to
disqualifying dispositions of the Companys common stock by employees who obtained the stock through exercises of incentive stock options in each period.
Net income was $61,498,000, or $1.45 per common share ($1.45 per diluted share), in the 2016 twenty-six-week period. Net income was
$70,486,000, or $1.59 per common share ($1.59 per diluted share), in the 2015 twenty-six-week period.
THIRTEEN WEEKS ENDED JUNE 25, 2016 COMPARED TO
THIRTEEN WEEKS ENDED JUNE 27, 2015
Revenue for the 2016 thirteen-week period was $775,223,000, a decrease of $93,160,000, or 11%, compared
to the 2015 thirteen-week period. Transportation revenue decreased $93,757,000, or 11%. The decrease in transportation revenue was primarily attributable to decreased revenue per load of approximately 9% and a 2% decrease in the number of loads
hauled. Reinsurance premiums were $11,551,000 and $10,954,000 for the 2016 and 2015 thirteen-week periods, respectively. The increase in revenue from reinsurance premiums was primarily attributable to the net increase in the number of BCO
Independent Contractors in the 2016 thirteen-week period compared to the 2015 thirteen-week period.
Truck transportation revenue hauled
by third party truck capacity providers for the 2016 thirteen-week period was $718,460,000, or 93% of total revenue, a decrease of $90,740,000, or 11%, compared to the 2015 thirteen-week period. Revenue per load on loads hauled by third party truck
capacity providers decreased approximately 9% in the 2016 thirteen-week period compared to the 2015 thirteen-week period and the number of loads hauled decreased approximately 2% compared to the 2015 thirteen-week period. The decrease in revenue per
load on loads hauled via truck was primarily attributable to the impact of lower diesel fuel costs on loads hauled via Truck Brokerage Carriers and a somewhat softer freight environment as compared to the 2015 thirteen-week period, which resulted in
more readily available truck capacity. The decrease in the number of loads hauled via truck of 2% was entirely attributable to a 9% decrease in the number of loads hauled via unsided/platform equipment. The decrease in the number of loads hauled via
unsided/platform equipment of 9% was due to the impact of approximately 13,000 loads hauled in the 2015 thirteen-week period related to a significant project for a single account in the automotive industry. Excluding the impact of the project loads
hauled during the 2015 period, the number of loads hauled via truck increased 1% during the 2016 thirteen-week period, primarily driven by increased demand for drop and hook services, particularly those utilizing the Companys van trailers.
Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $11,719,000 and $22,048,000 in the 2016 and 2015 thirteen-week periods,
respectively.
Transportation revenue hauled by multimode capacity providers for the thirteen-week period ended June 25, 2016, was
$45,131,000, or 6% of total revenue, a decrease of $2,988,000, or 6%, compared to the 2015 thirteen-week period. The number of loads hauled by multimode capacity providers in the 2016 thirteen-week period increased approximately 11% compared to the
2015 thirteen-week period, while revenue per load on revenue hauled by multimode capacity providers decreased approximately 15% over the same period. The increase in loads hauled by multimode capacity providers was primarily due to increased rail
intermodal loads primarily attributable to increased loadings at one specific agency. Revenue per load on loads hauled by multimode capacity providers decreased for all modes, including rail intermodal, air and ocean. Revenue per load on revenue
hauled by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity.
22
Purchased transportation was 76.0% and 76.9% of revenue in the 2016 and 2015 thirteen-week
periods, respectively. The decrease in purchased transportation as a percentage of revenue was primarily due to a decreased rate of purchased transportation paid to Truck Brokerage Carriers, primarily due to the impact of lower diesel fuel costs and
more readily available truck capacity. Commissions to agents were 8.4% and 8.1% of revenue in the 2016 and 2015 thirteen-week periods, respectively. The increase in commissions to agents as a percentage of revenue was primarily attributable to an
increased net revenue margin on revenue hauled by Truck Brokerage Carriers.
Investment income was $363,000 and $339,000 in the 2016 and
2015 thirteen-week periods, respectively.
Other operating costs decreased $1,396,000 in the 2016 thirteen-week period compared to the
2015 thirteen-week period and represented 5.4% of gross profit in the 2016 period compared to 6.1% of gross profit in the 2015 period. The decrease in other operating costs compared to the prior year was primarily due to increased gains on sales of
used trailing equipment and decreased trailing equipment rental costs. The decrease in other operating costs as a percentage of gross profit was caused by the decrease in other operating costs, partially offset by and the effect of decreased gross
profit.
Insurance and claims increased $3,782,000 in the 2016 thirteen-week period compared to the 2015 thirteen-week period and
represented 13.3% of gross profit in the 2016 period compared to 9.4% of gross profit in the 2015 period. The increase in insurance and claims compared to prior year was due to increased severity of current year claims in the 2016 period, primarily
as a result of a severe accident that occurred at the end of the second quarter. The increase in insurance and claims as a percent of gross profit was caused by the increase in insurance and claims costs related to the increased severity of current
year claims in the 2016 period and the effect of decreased gross profit.
Selling, general and administrative costs decreased $833,000 in
the 2016 thirteen-week period compared to the 2015 thirteen-week period and represented 30.5% of gross profit in the 2016 period compared to 28.9% of gross profit in the 2015 period. The decrease in selling, general and administrative costs compared
to prior year was attributable to a decreased provision for customer bad debt, a decreased provision for bonuses under the Companys incentive compensation plan and a decrease in stock compensation expense in the 2016 period, partially offset
by costs associated with the Companys annual agent convention, which was held in the second quarter in 2016 versus the first quarter in 2015. The increase in selling, general and administrative costs as a percent of gross profit was due
primarily to the effect of decreased gross profit, partially offset by the decrease in selling, general and administrative costs.
Depreciation and amortization increased $1,606,000 in the 2016 thirteen-week period compared to the 2015 thirteen-week period and represented
7.2% of gross profit in the 2016 period compared to 5.4% of gross profit in the 2015 period. The increase in depreciation and amortization costs was due to depreciation on new trailing equipment as the Company increased its number of owned trailers
in response to increased customer demand for the Companys drop and hook services using the Companys van trailers. The increase in depreciation and amortization as a percentage of gross profit was primarily due to the increased
depreciation costs discussed above and the effect of decreased gross profit.
Interest and debt expense in the 2016 thirteen-week period
was $175,000 higher than the 2015 thirteen-week period. The increase in interest and debt expense was solely attributable to increased interest on capital lease obligations as the Company increased its number of owned trailers in response to
customer demand for the Companys drop and hook services using Company owned van trailers.
The provisions for income taxes for both
the 2016 and 2015 thirteen-week periods were based on estimated annual effective income tax rates of approximately 38.2%, adjusted for discrete events, such as benefits resulting from disqualifying dispositions of the Companys common stock by
employees who obtained the stock through exercises of incentive stock options. The effective income tax rates for the 2016 and 2015 thirteen-week periods were 38.1% and 38.0%, respectively, which were higher than the statutory federal income tax
rate primarily as a result of state taxes, the meals and entertainment exclusion and non-deductible stock compensation expense. The effective income tax rates in the 2016 and 2015 thirteen-week periods were less than the 38.2% estimated annual
effective income tax rate primarily due to disqualifying dispositions of the Companys common stock by employees who obtained the stock through exercises of incentive stock options in each period.
Net income was $32,314,000, or $0.77 per common share ($0.76 per diluted share), in the 2016 thirteen-week period. Net income was $40,471,000,
or $0.92 per common share ($0.92 per diluted share), in the 2015 thirteen-week period.
23
CAPITAL RESOURCES AND LIQUIDITY
Working capital and the ratio of current assets to current liabilities were $321,864,000 and 2.0 to 1, respectively, at June 25, 2016, compared
with $286,581,000 and 1.8 to 1, respectively, at December 26, 2015. Landstar has historically operated with current ratios within the range of 1.5 to 1 to 2.0 to 1. Cash provided by operating activities was $105,135,000 in the 2016 twenty-six-week
period compared with $82,017,000 in the 2015 twenty-six-week period. The increase in cash flow provided by operating activities was primarily attributable to the timing of collections of trade receivables.
The Company declared and paid $0.16 per share, or $6,782,000 in the aggregate, in cash dividends during the twenty-six-week period ended June
25, 2016. The Company declared and paid $0.14 per share, or $6,186,000 in the aggregate, in cash dividends during the twenty-six-week period ended June 27, 2015 and, during such period, also paid $44,794,000 of dividends payable which were declared
during fiscal year 2014 and included in current liabilities in the consolidated balance sheet at December 27, 2014. During the twenty-six-week period ended June 25, 2016, the Company purchased 423,281 shares of its common stock at a total cost of
$26,485,000. As of June 25, 2016, the Company may purchase up to an additional 1,386,125 shares of its common stock under its authorized stock purchase program. Long-term debt, including current maturities, was $118,933,000 at June 25, 2016,
$5,359,000 lower than at December 26, 2015.
Shareholders equity was $497,255,000, or 81% of total capitalization (defined as
long-term debt including current maturities plus equity), at June 25, 2016, compared to $466,237,000, or 79% of total capitalization, at December 26, 2015. The increase in equity was primarily a result of net income, partially offset by the
purchases of shares of the Companys common stock and dividends declared by the Company in the 2016 twenty-six-week period.
On June
2, 2016, Landstar entered into a credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the Credit Agreement). The Credit Agreement, which matures on June 2, 2021, provides $250,000,000 of
borrowing capacity in the form of a revolving credit facility, $50,000,000 of which may be utilized in the form of letter of credit guarantees. The Credit Agreement includes an accordion feature providing for a possible increase up to an
aggregate borrowing amount of $400,000,000. The Companys prior credit agreement has been terminated.
The Credit Agreement contains
a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio, as defined in the Credit Agreement, and maintain a
Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Companys capital stock to the extent there is a
default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect
such cash dividend or other distribution, the Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Companys most recently completed fiscal quarter. The Credit Agreement provides for an event of default in the event
that, among other things, a person or group acquires 35% or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Companys directors or the directors cease to consist of a majority of Continuing
Directors, as defined in the Credit Agreement. None of these covenants are presently considered by management to be materially restrictive to the Companys operations, capital resources or liquidity. The Company is currently in compliance with
all of the debt covenants under the Credit Agreement.
At June 25, 2016, the Company had no borrowings outstanding and $35,600,000 of
letters of credit outstanding under the Credit Agreement. At June 25, 2016, there was $214,400,000 available for future borrowings under the Credit Agreement. In addition, the Company has $61,110,000 in letters of credit outstanding as collateral
for insurance claims that are secured by investments totaling $67,900,000 at June 25, 2016. Investments, all of which are carried at fair value, include primarily investment-grade bonds and U.S. Treasury obligations having maturities of up to
five years. Fair value of investments is based primarily on quoted market prices. See Notes to Consolidated Financial Statements included herein for further discussion on measurement of fair value of investments.
Historically, the Company has generated sufficient operating cash flow to meet its debt service requirements, fund continued growth, both
organic and through acquisitions, complete or execute share purchases of its common stock under authorized share purchase programs, pay dividends and meet working capital needs. As an asset-light provider of integrated transportation management
solutions, the Companys annual capital requirements for operating property are generally for trailing equipment and information technology hardware and software. In addition, a significant portion of the trailing equipment used by the Company
is provided by third party capacity providers, thereby reducing the Companys capital requirements. During the 2016 twenty-six-week period, the Company purchased $8,955,000 of operating property, including $2,400,000 paid for a parcel of land
in Laredo, Texas for the purposes of building a new freight staging and transload facility, and $4,094,000 paid related to development of this parcel. Landstar also acquired $3,776,000 of
24
operating property relating to the development of the Laredo parcel for which the Company accrued a corresponding liability in accounts payable as of June 25, 2016. During the 2016
twenty-six-week period, the Company also acquired $17,642,000 of trailing equipment by entering into capital leases. Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2016 approximately
$56,000,000 in operating property, consisting primarily of new trailing equipment to replace older trailing equipment, information technology equipment and approximately $14,200,000 in additional capital requirements to complete the Laredo
facility.
Management believes that cash flow from operations combined with the Companys borrowing capacity under the Credit
Agreement will be adequate to meet Landstars debt service requirements, fund continued growth, both internal and through acquisitions, pay dividends, complete the authorized share purchase program and meet working capital needs.
LEGAL MATTERS
The Company is involved in
certain claims and pending litigation arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management
believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the
financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.
CRITICAL ACCOUNTING
POLICIES AND ESTIMATES
The allowance for doubtful accounts for both trade and other receivables represents managements estimate of
the amount of outstanding receivables that will not be collected. Historically, managements estimates for uncollectible receivables have been materially correct. Although management believes the amount of the allowance for both trade and other
receivables at June 25, 2016 is appropriate, a prolonged period of low or no economic growth may adversely affect the collection of these receivables. In addition, liquidity concerns and/or unanticipated bankruptcy proceedings at any of the
Companys larger customers in which the Company is carrying a significant receivable could result in an increase in the provision for uncollectible receivables and have a significant impact on the Companys results of operations in a given
quarter or year. However, it is not expected that an uncollectible accounts receivable resulting from an individual customer would have a significant impact on the Companys financial condition. Conversely, a more robust economic environment or
the recovery of a previously provided for uncollectible receivable from an individual customer may result in the realization of some portion of the estimated uncollectible receivables.
Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated
liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by management. The Company
continually revises its existing claim estimates as new or revised information becomes available on the status of each claim. Historically, the Company has experienced both favorable and unfavorable development of prior years claims estimates.
During the 2016 and 2015 twenty-six-week periods, insurance and claims costs included $2,816,000 and $5,474,000 of net unfavorable adjustments to prior years claims estimates, respectively. The unfavorable development of prior years
claims in the 2015 fiscal period primarily related to a single claim for which the Company incurred a pre-tax charge of $4,500,000. It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the
estimated claims reserve at June 25, 2016.
The Company utilizes certain income tax planning strategies to reduce its overall cost of
income taxes. If the Company were to be subject to an audit, it is possible that certain strategies might be disallowed resulting in an increased liability for income taxes. Certain of these tax planning strategies result in a level of uncertainty
as to whether the related tax positions taken by the Company would result in a recognizable benefit. The Company has provided for its estimated exposure attributable to such tax positions due to the corresponding level of uncertainty with respect to
the amount of income tax benefit that may ultimately be realized. Management believes that the provision for liabilities resulting from the uncertainty in certain income tax positions is appropriate. To date, the Company has not experienced an
examination by governmental revenue authorities that would lead management to believe that the Companys past provisions for exposures related to the uncertainty of such income tax positions are not appropriate.
Significant variances from managements estimates for the amount of uncollectible receivables, the ultimate resolution of self-insured
claims and the provision for uncertainty in income tax positions could each be expected to positively or negatively affect Landstars earnings in a given quarter or year. However, management believes that the ultimate resolution of these items,
given a range of reasonably likely outcomes, will not significantly affect the long-term financial condition of Landstar or its ability to fund its continuing operations.
25
EFFECTS OF INFLATION
Management does not believe inflation has had a material impact on the results of operations or financial condition of Landstar in the past
five years. However, inflation in excess of historic trends might have an adverse effect on the Companys results of operations in the future.
SEASONALITY
Landstars operations are
subject to seasonal trends common to the trucking industry. Results of operations for the quarter ending in March are typically lower than for the quarters ending June, September and December.