Landstar System, Inc. (NASDAQ:LSTR) reported diluted earnings per
share of $0.89 on record second quarter revenue of $870 million in
the 2017 second quarter. Landstar reported diluted earnings
per share of $0.76 on revenue of $775 million in the 2016 second
quarter. Gross profit (defined as revenue less the cost of
purchased transportation and commissions to agents) was a second
quarter record of $132.6 million in the 2017 second quarter
compared to $121.0 million in the 2016 second quarter.
Operating margin, representing operating income divided by gross
profit, was 46.0 percent in the 2017 second quarter.
Truck transportation revenue hauled by
independent business capacity owners (“BCOs”) and truck brokerage
carriers in the 2017 second quarter was $815.6 million, or 94
percent of revenue, compared to $718.5 million, or 93 percent of
revenue, in the 2016 second quarter. Truckload transportation
revenue hauled via van equipment in the 2017 second quarter was
$509.1 million compared to $458.0 million in the 2016 second
quarter. Truckload transportation revenue hauled via
unsided/platform equipment in the 2017 second quarter was $283.5
million compared to $242.0 million in the 2016 second quarter.
Revenue hauled by rail, air and ocean cargo carriers was $43.1
million, or 5 percent of revenue, in the 2017 second quarter
compared to $45.1 million, or 6 percent of revenue, in the 2016
second quarter.
Trailing twelve-month return on average
shareholders’ equity was 27 percent and trailing twelve-month
return on invested capital, net income divided by the sum of
average equity plus average debt, was 22 percent. Currently, there
are approximately 1,036,000 shares of the Company’s common stock
available for purchase under Landstar’s authorized share purchase
program. As of July 1, 2017, the Company had $273 million in cash
and short term investments and $214 million available for
borrowings under the Company’s senior credit facility.
In addition, Landstar announced today that its
Board of Directors has declared a quarterly dividend of $0.10 per
share payable on September 1, 2017, to stockholders of record as of
the close of business on August 14, 2017. This quarterly
dividend includes an 11 percent increase to the amount of the
Company’s quarterly dividend declared following each of the prior
four quarters. It is currently the intention of the Board to pay
dividends on a quarterly basis going forward.
Commenting on Landstar’s 2017 second quarter,
Landstar’s President and CEO Jim Gattoni said, “I am very pleased
with Landstar’s performance in the 2017 second quarter. On April
26th, we provided second quarter revenue guidance of $820 million
to $870 million and second quarter diluted earnings per share
guidance of $0.84 to $0.89. Revenue and diluted earnings per share
for the 2017 second quarter both came in at the top end of
guidance. Revenue of $870 million was a second quarter record and
represented growth of 12 percent over the 2016 second quarter.
Diluted earnings per share of $0.89 grew 17 percent over the 2016
second quarter.”
Gattoni continued, “The number of loads hauled
via truck in the 2017 second quarter increased 10 percent over the
2016 second quarter, driven by a 10 percent increase in the number
of loads hauled via van equipment, an 8 percent increase in the
number of loads hauled via unsided/platform equipment and a 20
percent increase in less-than-truckload volume. The number of loads
hauled via truck in the second quarter of 2017 was a second quarter
record. The number of loads hauled via railroads, ocean cargo
carriers and air cargo carriers was 5 percent lower in the 2017
second quarter compared to the 2016 second quarter, due to
continued softness in rail intermodal volume.”
Gattoni further commented, “As expected, the
pricing environment for our truckload services continued to show
slow improvement in the 2017 second quarter, as industry-wide truck
capacity is firming in certain regions, especially with respect to
flatbed loads. As a result, revenue per load on loads hauled via
truck was 3 percent higher in the 2017 second quarter compared to
the 2016 second quarter. The percentage change in year-over-year
revenue per load on loads hauled via truck was consistent each
month during the quarter. 2017 second quarter operating
margin was 46.0 percent, in line with our historical second quarter
operating margin.”
Gattoni continued, “Historically, revenue in the
Company’s third fiscal quarter has been relatively consistent with
revenue generated in the Company’s second fiscal quarter. We
typically have experienced revenue per load on loads hauled via
truck in the Company’s third quarter as slightly ahead of the
second quarter while the number of loads hauled via truck in the
third quarter as slightly below the second quarter. Through the
first few weeks of July, we have experienced the normal seasonal
uptick in revenue per load on loads hauled via truck. Also, the
number of loads hauled via truck during the first few weeks of July
is trending with the historical second quarter to third quarter
pattern. As such, I expect 2017 third quarter revenue to be similar
to the Company’s 2017 second quarter revenue. Assuming insurance
and claims costs in the 2017 third quarter are approximately 3.3
percent of BCO revenue, representing average insurance and claims
costs as a percent of BCO revenue over the past 5 years, I would
expect diluted earnings per share to be in a range of $0.88 to
$0.93 in the 2017 third quarter.”
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 2017 Earnings Release
Conference Call.”
This earnings announcement, as well as an
accompanying slide presentation, is available through the Company’s
website at http://investor.landstar.com under “Presentations” and
on a Form 8-K filed with the Securities and Exchange
Commission.
The following is a “safe harbor” statement under
the Private Securities Litigation Reform Act of 1995.
Statements contained in this press release that are not based on
historical facts are “forward-looking statements”. This press
release contains forward-looking statements, such as statements
which relate to Landstar’s business objectives, plans, strategies
and expectations. Terms such as “anticipates,” “believes,”
“estimates,” “intention,” “expects,” “plans,” “predicts,” “may,”
“should,” “could,” “will,” the negative thereof and similar
expressions are intended to identify forward-looking
statements. Such statements are by nature subject to
uncertainties and risks, including but not limited to: an increase
in the frequency or severity of accidents or other claims;
unfavorable development of existing accident claims; dependence on
third party insurance companies; dependence on independent
commission sales agents; dependence on third party capacity
providers; decreased demand for transportation services; U.S.
foreign trade relationships; substantial industry competition;
disruptions or failures in the Company’s computer systems; cyber
and other information security incidents; dependence on key
vendors; changes in fuel taxes; status of independent contractors;
regulatory and legislative changes; regulations focused on diesel
emissions and other air quality matters; catastrophic loss of a
Company facility; intellectual property; unclaimed property; and
other operational, financial or legal risks or uncertainties
detailed in Landstar’s Form 10K for the 2016 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 logistics services to a broad range of customers
utilizing a network of agents, third-party capacity providers and
employees. All Landstar transportation services companies are
certified to ISO 9001:2008 quality management system standards and
RC14001:2013 environmental, health, safety and security management
system standards. Landstar System, Inc. is headquartered in
Jacksonville, Florida. Its common stock trades on The NASDAQ Stock
Market® under the symbol LSTR.
(Tables follow)
|
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Landstar System, Inc. and
Subsidiary |
Consolidated Statements of
Income |
(Dollars in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Twenty Six Weeks Ended |
|
Thirteen Weeks Ended |
|
|
July 1, |
|
June 25, |
|
July 1, |
|
June 25, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
1,651,342 |
|
$ |
1,486,867 |
|
$ |
870,434 |
|
$ |
775,223 |
Investment income |
|
1,022 |
|
743 |
|
608 |
|
363 |
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Purchased
transportation |
|
1,263,111 |
|
1,129,743 |
|
667,588 |
|
589,415 |
Commissions to agents |
|
134,080 |
|
123,931 |
|
70,282 |
|
64,839 |
Other
operating costs, net of gains on asset sales/dispositions |
|
14,400 |
|
13,992 |
|
7,503 |
|
6,585 |
Insurance
and claims |
|
28,406 |
|
30,307 |
|
13,893 |
|
16,094 |
Selling,
general and administrative |
|
79,184 |
|
71,519 |
|
40,861 |
|
36,905 |
Depreciation and amortization |
|
19,831 |
|
17,093 |
|
9,897 |
|
8,655 |
|
|
|
|
|
|
|
|
|
Total
costs and expenses |
|
1,539,012 |
|
1,386,585 |
|
810,024 |
|
722,493 |
|
|
|
|
|
|
|
|
|
Operating income |
|
113,352 |
|
101,025 |
|
61,018 |
|
53,093 |
Interest and debt
expense |
|
1,902 |
|
1,777 |
|
819 |
|
888 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
111,450 |
|
99,248 |
|
60,199 |
|
52,205 |
Income taxes |
|
41,557 |
|
37,750 |
|
22,689 |
|
19,891 |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
69,893 |
|
$ |
61,498 |
|
$ |
37,510 |
|
32,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share |
|
$ |
1.67 |
|
$ |
1.45 |
|
$ |
0.89 |
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
|
$ |
1.66 |
|
$ |
1.45 |
|
$ |
0.89 |
|
$ |
0.76 |
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding: |
|
|
|
|
|
|
|
|
Earnings
per common share |
|
41,907,000 |
|
42,315,000 |
|
41,935,000 |
|
42,235,000 |
Diluted
earnings per share |
|
42,004,000 |
|
42,424,000 |
|
42,010,000 |
|
42,357,000 |
|
|
|
|
|
|
|
|
|
Dividends per common
share |
|
$ |
0.18 |
|
$ |
0.16 |
|
$ |
0.09 |
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landstar System, Inc. and
Subsidiary |
Consolidated Balance Sheets |
(Dollars in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 1, |
|
December 31, |
|
|
|
|
|
|
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
222,102 |
|
|
$ |
178,897 |
|
|
Short-term
investments |
|
|
51,167 |
|
|
66,560 |
|
|
Trade
accounts receivable, less allowance |
|
|
|
|
|
of $5,311
and $5,161 |
|
|
480,467 |
|
|
463,102 |
|
|
Other
receivables, including advances to independent |
|
|
|
|
|
contractors, less allowance of $6,049 and $5,523 |
20,518 |
|
|
18,567 |
|
|
Other
current assets |
|
|
19,291 |
|
|
10,281 |
|
|
|
Total
current assets |
|
|
793,545 |
|
|
737,407 |
|
|
|
|
|
|
|
|
|
|
|
Operating
property, less accumulated depreciation |
|
|
|
|
|
|
and
amortization of $202,050 and $190,374 |
259,346 |
|
|
272,843 |
|
Goodwill |
|
|
|
|
31,134 |
|
|
31,134 |
|
Other
assets |
|
|
|
75,249 |
|
|
55,207 |
|
Total
assets |
|
|
|
$ |
1,159,274 |
|
|
$ |
1,096,591 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Cash
overdraft |
|
|
|
$ |
34,145 |
|
|
$ |
36,251 |
|
|
Accounts
payable |
|
|
224,928 |
|
|
219,409 |
|
|
Current
maturities of long-term debt |
|
|
41,356 |
|
|
45,047 |
|
|
Insurance
claims |
|
|
29,077 |
|
|
26,121 |
|
|
Other
current liabilities |
|
|
56,998 |
|
|
53,483 |
|
|
|
Total
current liabilities |
|
|
386,504 |
|
|
380,311 |
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt, excluding current maturities |
77,639 |
|
|
93,257 |
|
Insurance
claims |
|
|
|
30,402 |
|
|
26,883 |
|
Deferred
income taxes and other non-current liabilities |
55,239 |
|
|
53,583 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
Common
stock, $0.01 par value, authorized 160,000,000 |
|
|
|
|
|
shares,
issued 67,696,487 and 67,585,675 shares |
677 |
|
|
676 |
|
|
Additional
paid-in capital |
|
|
203,410 |
|
|
199,414 |
|
|
Retained
earnings |
|
|
1,575,342 |
|
|
1,512,993 |
|
|
Cost of
25,749,493 and 25,747,541 shares of common |
|
|
|
|
|
stock in
treasury |
|
|
(1,167,600 |
) |
|
(1,167,437 |
) |
|
Accumulated
other comprehensive loss |
(2,339 |
) |
|
(3,089 |
) |
|
|
Total
shareholders' equity |
|
|
609,490 |
|
|
542,557 |
|
Total
liabilities and shareholders' equity |
$ |
1,159,274 |
|
|
$ |
1,096,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landstar System, Inc. and
Subsidiary |
|
Supplemental Information |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty Six Weeks Ended |
|
|
Thirteen Weeks Ended |
|
|
|
|
|
July 1, |
|
June 25, |
|
|
July 1, |
|
June 25, |
|
|
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
Revenue
generated through (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
transportation |
|
|
|
|
|
|
|
|
|
|
|
Truckload: |
|
|
|
|
|
|
|
|
|
|
|
|
Van equipment |
|
$ |
978,918 |
|
|
$ |
886,195 |
|
|
|
$ |
509,135 |
|
|
$ |
458,002 |
|
|
|
|
Unsided/platform
equipment |
|
|
520,658 |
|
|
|
451,430 |
|
|
|
|
283,481 |
|
|
|
242,008 |
|
|
|
Less-than-truckload |
|
|
42,799 |
|
|
|
35,927 |
|
|
|
|
22,942 |
|
|
|
18,450 |
|
|
|
|
Total truck
transportation |
|
|
1,542,375 |
|
|
|
1,373,552 |
|
|
|
|
815,558 |
|
|
|
718,460 |
|
|
Rail
intermodal |
|
|
44,357 |
|
|
|
52,337 |
|
|
|
|
21,515 |
|
|
|
26,229 |
|
|
Ocean and
air cargo carriers |
|
|
41,185 |
|
|
|
37,710 |
|
|
|
|
21,595 |
|
|
|
18,902 |
|
|
Other
(1) |
|
|
23,425 |
|
|
|
23,268 |
|
|
|
|
11,766 |
|
|
|
11,632 |
|
|
|
|
|
|
$ |
1,651,342 |
|
|
$ |
1,486,867 |
|
|
|
$ |
870,434 |
|
|
$ |
775,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue on
loads hauled via BCO Independent Contractors (2) |
|
|
|
|
|
|
|
|
|
|
|
included in
total truck transportation |
|
$ |
776,085 |
|
|
$ |
707,652 |
|
|
|
$ |
411,177 |
|
|
$ |
373,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
loads: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
transportation |
|
|
|
|
|
|
|
|
|
|
|
Truckload: |
|
|
|
|
|
|
|
|
|
|
|
|
Van equipment |
|
|
613,565 |
|
|
|
556,119 |
|
|
|
|
315,499 |
|
|
|
287,079 |
|
|
|
|
Unsided/platform
equipment |
|
|
236,427 |
|
|
|
219,034 |
|
|
|
|
125,242 |
|
|
|
116,292 |
|
|
|
Less-than-truckload |
|
|
64,508 |
|
|
|
55,727 |
|
|
|
|
34,589 |
|
|
|
28,829 |
|
|
|
|
Total truck
transportation |
|
|
914,500 |
|
|
|
830,880 |
|
|
|
|
475,330 |
|
|
|
432,200 |
|
|
Rail
intermodal |
|
|
20,960 |
|
|
|
24,180 |
|
|
|
|
10,310 |
|
|
|
12,150 |
|
|
Ocean and
air cargo carriers |
|
|
11,940 |
|
|
|
9,780 |
|
|
|
|
6,210 |
|
|
|
5,220 |
|
|
|
|
|
|
|
947,400 |
|
|
|
864,840 |
|
|
|
|
491,850 |
|
|
|
449,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loads
hauled via BCO Independent Contractors (2) |
|
|
|
|
|
|
|
|
|
|
|
included in
total truck transportation |
|
|
453,860 |
|
|
|
414,660 |
|
|
|
|
235,630 |
|
|
|
216,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per
load: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
transportation |
|
|
|
|
|
|
|
|
|
|
|
Truckload: |
|
|
|
|
|
|
|
|
|
|
|
|
Van equipment |
|
$ |
1,595 |
|
|
$ |
1,594 |
|
|
|
$ |
1,614 |
|
|
$ |
1,595 |
|
|
|
|
Unsided/platform
equipment |
|
|
2,202 |
|
|
|
2,061 |
|
|
|
|
2,263 |
|
|
|
2,081 |
|
|
|
Less-than-truckload |
|
|
663 |
|
|
|
645 |
|
|
|
|
663 |
|
|
|
640 |
|
|
|
|
Total truck
transportation |
|
|
1,687 |
|
|
|
1,653 |
|
|
|
|
1,716 |
|
|
|
1,662 |
|
|
Rail
intermodal |
|
|
2,116 |
|
|
|
2,164 |
|
|
|
|
2,087 |
|
|
|
2,159 |
|
|
Ocean and
air cargo carriers |
|
|
3,449 |
|
|
|
3,856 |
|
|
|
|
3,477 |
|
|
|
3,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per
load on loads hauled via BCO Independent Contractors (2) |
$ |
1,710 |
|
|
$ |
1,707 |
|
|
|
$ |
1,745 |
|
|
$ |
1,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by
capacity type (as a % of total revenue); |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
capacity providers: |
|
|
|
|
|
|
|
|
|
|
|
BCO
Independent Contractors (2) |
|
|
47 |
% |
|
|
48 |
% |
|
|
|
47 |
% |
|
|
48 |
% |
|
|
Truck
Brokerage Carriers |
|
|
46 |
% |
|
|
45 |
% |
|
|
|
46 |
% |
|
|
45 |
% |
|
Rail
intermodal |
|
|
3 |
% |
|
|
4 |
% |
|
|
|
2 |
% |
|
|
3 |
% |
|
Ocean and
air cargo carriers |
|
|
2 |
% |
|
|
3 |
% |
|
|
|
2 |
% |
|
|
2 |
% |
|
Other |
|
|
|
1 |
% |
|
|
2 |
% |
|
|
|
1 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 1, |
|
June 25, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
Truck
Capacity Providers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCO
Independent Contractors (2) |
|
|
|
|
|
|
|
8,818 |
|
|
|
8,856 |
|
|
Truck
Brokerage Carriers: |
|
|
|
|
|
|
|
|
|
|
Approved and active (3) |
|
|
|
|
|
|
|
31,636 |
|
|
|
30,137 |
|
|
Other approved |
|
|
|
|
|
|
|
15,381 |
|
|
|
15,594 |
|
|
|
|
|
|
|
|
|
|
|
|
47,017 |
|
|
|
45,731 |
|
|
Total
available truck capacity providers |
|
|
|
|
|
|
|
55,835 |
|
|
|
54,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trucks
provided by BCO Independent Contractors (2) |
|
|
|
|
|
|
|
9,404 |
|
|
|
9,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes primarily reinsurance premium revenue generated by the
insurance segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) BCO
Independent Contractors are independent contractors who provide
truck capacity to the Company under exclusive lease
arrangements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Active
refers to Truck Brokerage Carriers who moved at least one load in
the 180 days immediately preceding the fiscal quarter end. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Kevin Stout
Landstar System, Inc.
www.landstar.com
904-398-9400
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