Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per
share of $1.04 in the 2020 first quarter on revenue of $927.6
million. Landstar reported diluted earnings per share of $1.58 on
revenue of $1.033 billion in the 2019 first quarter. Gross profit
(defined as revenue less the cost of purchased transportation and
commissions to agents) was $142.9 million in the 2020 first quarter
compared to $155.6 million in the 2019 first quarter.
Truck transportation revenue hauled by
independent business capacity owners (“BCOs”) and truck brokerage
carriers in the 2020 first quarter was $854.6 million, or 92
percent of revenue, compared to $953.1 million, or 92 percent of
revenue, in the 2019 first quarter. Truckload transportation
revenue hauled via van equipment in the 2020 first quarter was
$545.3 million compared to $619.0 million in the 2019 first
quarter. Truckload transportation revenue hauled via
unsided/platform equipment in the 2020 first quarter was $286.3
million compared to $310.7 million in the 2019 first quarter.
Revenue hauled by rail, air and ocean cargo carriers was $54.7
million, or 6 percent of revenue, in the 2020 first quarter
compared to $60.7 million, or 6 percent of revenue, in the 2019
first quarter.
During the 2020 first quarter Landstar generated
$99.2 million in operating cash flow, spent $5.8 million in cash
capital expenditures and paid $86.3 million in dividends.
Additionally, Landstar purchased 1,178,970 shares of its common
stock during the 2020 first quarter at an aggregate cost of
approximately $116.0 million. Currently, the Company is authorized
to purchase up to 1,821,030 shares of the Company’s common stock
under Landstar’s previously announced share purchase program.
Also, Landstar announced today that its Board of Directors
has declared a quarterly dividend of $0.185 per share payable on
May 29, 2020, to stockholders of record as of the close of business
on May 7, 2020. It is currently the intention of the Board to
pay dividends on a quarterly basis going forward.
“Overall, I was pleased with the 2020 first
quarter financial results given the somewhat balanced freight
environment and difficult comparisons to the record 2019 first
quarter,” said Landstar’s President and Chief Executive Officer Jim
Gattoni. “Landstar performed as we anticipated until the
final week of the quarter. Through the first twelve weeks of
the quarter, the week-to-week trends in the number of loads hauled
and revenue per load on loads hauled via truck were consistent with
our expectations based on historical experience. In fact, as
the quarter progressed, we began to see signs that demand was
improving as year-over-year comparisons eased. Unfortunately,
these positive signs were completely extinguished by the impact of
the coronavirus (COVID-19) pandemic. Dispatched truck load
volume in the final week of the 2020 first quarter decreased
significantly from the previous week as a result of actions taken
by governmental authorities and businesses to reduce the spread of
the coronavirus. Shelter-at-home mandates and closing of
manufacturing facilities significantly affected demand for
transportation by many industry segments we service. We
expect those conditions to persist throughout the 2020 second
quarter. Accordingly, we believe our 2020 first quarter
results and operating trends will in no way provide any indication
regarding what our financial results may be with respect to
Landstar’s 2020 second quarter.”
Gattoni continued, “Although it is unclear as to
the duration and depth of impact the coronavirus will have on the
freight transportation industry, we believe Landstar is in a good
position operationally and financially to withstand the most
significant and rapid decline of the U.S. economy in recent
history. Operationally, the decentralized nature of the
Landstar model, where independent agents provide truck dispatch,
freight tracking, trailer management and numerous other operational
functions from over 1,200 agent locations throughout North America,
provides a clear advantage in an environment where social
distancing can disrupt centralized business structures.
Landstar employees, however, who service agents, BCOs and
other third party capacity providers via administrative and
operational support, are centralized in two primary Company
locations. In order to protect the health and well-being of
all Landstar employees and their families, reduce the risk of
community spread within our two primary office locations and
substantially limit the potential for disruption in our
administrative and operational functions, during March we
transitioned over 800 of Landstar’s 1,200 corporate employees based
in the United States to work-at-home. We now have over 1,000
Landstar employees working remotely. That transformation has
been highly successful.”
“During the 2020 second quarter, we do not
expect to take any drastic cost reduction measures that would
disrupt our ability to service Landstar’s customers, agents, BCOs
or other third party capacity providers or slow the progress on our
technology initiatives,” Gattoni said. “Additionally, we have
undertaken to provide additional financial support to Landstar’s
agents and BCOs during this crisis. These initiatives will
impact the Company’s earnings in the 2020 second quarter.
Most notably, for each load delivered by a BCO with a confirmed
delivery date from April 1 through April 30, 2020, Landstar will
pay an extra $50 to each of the BCO hauling the load and the
Landstar agent dispatching the load. We estimate Landstar
BCOs will deliver between 60,000 and 70,000 loads in April of
2020. Also, if a Landstar BCO tests positive for COVID-19 or
is placed under a mandatory quarantine by a public health
authority, Landstar will provide up to $2,000 to the affected
BCO.”
“In this highly unpredictable economic
environment, we will not be providing revenue and earnings guidance
for the 2020 second quarter. Nevertheless, as an example of
how Landstar’s variable cost business model would react under
certain unfavorable assumptions, it is worth noting that if one
were to assume a 20% to 30% decrease in revenue in the 2020 second
quarter as compared to the 2019 second quarter, plus taking into
account the $100 per load cost of the additional purchased
transportation and commissions to agents payable with respect to
loads anticipated to be delivered by BCOs in the month of April,
diluted earnings per share would be expected to be in a range of
$0.70 to $0.85. This in no way should be interpreted as any
sort of guidance, but rather a demonstration of the resiliency of
the Landstar model, and that Landstar’s ability to generate
earnings is somewhat insulated from the possible effects of a
prolonged recession. Additionally, in the event that current
market conditions persist, it is possible that Landstar will
provide additional financial pandemic relief to its agents and/or
BCOs during the 2020 second quarter which could impact the
Company’s earnings.”
“Our overarching goals throughout this crisis
are to preserve the culture and strength of the Landstar network
while keeping the participants in our network safe. We expect
near-term revenue and earnings to be significantly adversely
impacted by the current economic environment, but ultimately expect
to generate sufficient operating cash flow to pay all members of
our network in a timely manner, pay the regular quarterly dividend,
fund our technology initiatives and pay finance lease
obligations. We will be prudent in our approach to share
purchases over the next few months as the depth and duration of the
crisis becomes clearer. We ended the 2020 first quarter with
$211 million in cash and short-term investments with undrawn
revolver capacity under our senior credit facility of $216 million
(with the ability to increase to $366 million). Although we
expect the COVID-19 pandemic to have a significant adverse impact
on our results of operations in the 2020 second quarter, we expect
our financial position to remain strong throughout this
unprecedented time.”
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 First 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.
(Tables follow)
Landstar System, Inc. and Subsidiary |
Consolidated Statements of Income |
(Dollars in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
|
|
|
|
March 28, |
|
March 30, |
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
$ |
927,566 |
|
$ |
1,033,000 |
|
Investment
income |
|
|
|
1,167 |
|
|
1,138 |
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
Purchased
transportation |
|
|
709,257 |
|
|
791,755 |
|
|
Commissions to
agents |
|
|
|
75,376 |
|
|
85,671 |
|
|
Other operating
costs, net of gains on asset sales/dispositions |
|
|
8,306 |
|
|
8,239 |
|
|
Insurance and
claims |
|
|
|
24,957 |
|
|
14,993 |
|
|
Selling, general
and administrative |
|
|
45,327 |
|
|
41,268 |
|
|
Depreciation and
amortization |
|
|
11,505 |
|
|
11,316 |
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses |
|
|
874,728 |
|
|
953,242 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
|
|
|
54,005 |
|
|
80,896 |
|
Interest and debt
expense |
|
|
|
952 |
|
|
805 |
|
|
|
|
|
|
|
|
|
|
Income before
income taxes |
|
|
53,053 |
|
|
80,091 |
|
Income taxes |
|
|
|
|
12,158 |
|
|
16,791 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
40,895 |
|
|
63,300 |
|
Less: Net loss
attributable to noncontrolling interest |
|
|
- |
|
|
(17 |
) |
Net income
attributable to Landstar System, |
|
|
|
|
|
Inc. and
subsidiary |
|
|
$ |
40,895 |
|
$ |
63,317 |
|
|
|
|
|
|
|
|
|
|
Earnings per
common share attributable to |
|
|
|
|
|
Landstar System,
Inc. and subsidiary |
|
$ |
1.04 |
|
$ |
1.58 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share attributable to |
|
|
|
|
|
Landstar System,
Inc. and subsidiary |
|
$ |
1.04 |
|
$ |
1.58 |
|
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding: |
|
|
|
|
|
Earnings per
common share |
|
|
39,254,000 |
|
|
40,161,000 |
|
|
Diluted earnings
per share |
|
|
39,254,000 |
|
|
40,166,000 |
|
|
|
|
|
|
|
|
|
|
Dividends per
common share |
|
$ |
0.185 |
|
$ |
0.165 |
|
|
|
|
|
|
|
|
|
|
Landstar System, Inc. and Subsidiary |
Consolidated Balance Sheets |
(Dollars in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, |
|
December 28, |
|
|
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
ASSETS |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
$ |
177,224 |
|
|
$ |
319,515 |
|
|
Short-term
investments |
|
|
|
33,627 |
|
|
|
32,901 |
|
|
Trade accounts
receivable, less allowance |
|
|
|
|
|
of $8,536 and
$7,284 |
|
|
|
562,528 |
|
|
|
588,549 |
|
|
Other receivables,
including advances to independent |
|
|
|
|
|
contractors, less
allowance of $8,847 and $7,667 |
|
35,153 |
|
|
|
35,553 |
|
|
Other current
assets |
|
|
|
7,624 |
|
|
|
21,370 |
|
|
|
Total current
assets |
|
|
|
816,156 |
|
|
|
997,888 |
|
|
|
|
|
|
|
|
|
|
|
Operating
property, less accumulated depreciation |
|
|
|
|
|
and amortization of $286,593
and $280,849 |
|
|
276,663 |
|
|
|
285,855 |
|
Goodwill |
|
|
|
|
|
37,182 |
|
|
|
38,508 |
|
Other assets |
|
|
|
|
106,432 |
|
|
|
105,460 |
|
Total assets |
|
|
|
$ |
1,236,433 |
|
|
$ |
1,427,711 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Cash
overdraft |
|
|
|
$ |
36,002 |
|
|
$ |
53,878 |
|
|
Accounts
payable |
|
|
|
272,175 |
|
|
|
271,996 |
|
|
Current maturities
of long-term debt |
|
|
39,944 |
|
|
|
42,632 |
|
|
Insurance
claims |
|
|
|
50,773 |
|
|
|
44,532 |
|
|
Dividends
payable |
|
|
|
- |
|
|
|
78,947 |
|
|
Contractor
escrow |
|
|
|
24,517 |
|
|
|
24,902 |
|
|
Other current
liabilities |
|
|
|
41,420 |
|
|
|
36,017 |
|
|
|
Total current
liabilities |
|
|
|
464,831 |
|
|
|
552,904 |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities |
|
61,977 |
|
|
|
70,212 |
|
Insurance
claims |
|
|
|
|
33,456 |
|
|
|
33,575 |
|
Deferred income
taxes and other non-current liabilities |
|
49,074 |
|
|
|
49,551 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
|
|
|
|
Common stock,
$0.01 par value, authorized 160,000,000 |
|
|
|
|
|
shares, issued
68,167,482 and 68,083,419 shares |
|
682 |
|
|
|
681 |
|
|
Additional paid-in
capital |
|
|
|
224,973 |
|
|
|
226,123 |
|
|
Retained
earnings |
|
|
|
1,995,018 |
|
|
|
1,962,161 |
|
|
Cost of 29,796,974
and 28,609,926 shares of common |
|
|
|
|
|
stock in
treasury |
|
|
|
(1,581,885 |
) |
|
|
(1,465,284 |
) |
|
Accumulated other
comprehensive loss |
|
(11,693 |
) |
|
|
(2,212 |
) |
|
|
Total
shareholders' equity |
|
|
|
627,095 |
|
|
|
721,469 |
|
Total liabilities
and shareholders' equity |
|
$ |
1,236,433 |
|
|
$ |
1,427,711 |
|
|
|
|
|
|
|
|
|
|
|
Landstar System, Inc. and Subsidiary |
Supplemental Information |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
|
|
|
March 28, |
|
March 30, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
Revenue generated
through (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
transportation |
|
|
|
|
|
|
Truckload: |
|
|
|
|
|
|
|
Van equipment |
|
$ |
545,307 |
|
|
$ |
619,014 |
|
|
|
|
Unsided/platform
equipment |
|
|
286,328 |
|
|
|
310,721 |
|
|
|
Less-than-truckload |
|
|
22,941 |
|
|
|
23,376 |
|
|
|
|
Total truck
transportation |
|
|
854,576 |
|
|
|
953,111 |
|
|
Rail
intermodal |
|
|
28,129 |
|
|
|
30,015 |
|
|
Ocean and air
cargo carriers |
|
|
26,587 |
|
|
|
30,669 |
|
|
Other (1) |
|
|
18,274 |
|
|
|
19,205 |
|
|
|
|
|
|
$ |
927,566 |
|
|
$ |
1,033,000 |
|
|
|
|
|
|
|
|
|
|
Revenue on loads
hauled via BCO Independent Contractors (2) |
|
|
|
|
|
|
included in total
truck transportation |
|
$ |
431,279 |
|
|
$ |
449,308 |
|
|
|
|
|
|
|
|
|
Number of
loads: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
transportation |
|
|
|
|
|
|
Truckload: |
|
|
|
|
|
|
|
Van equipment |
|
|
315,345 |
|
|
|
341,821 |
|
|
|
|
Unsided/platform
equipment |
|
|
120,589 |
|
|
|
125,170 |
|
|
|
Less-than-truckload |
|
|
38,356 |
|
|
|
35,309 |
|
|
|
|
Total truck
transportation |
|
|
474,290 |
|
|
|
502,300 |
|
|
Rail
intermodal |
|
|
11,540 |
|
|
|
12,460 |
|
|
Ocean and air
cargo carriers |
|
|
7,070 |
|
|
|
7,510 |
|
|
|
|
|
|
|
492,900 |
|
|
|
522,270 |
|
|
|
|
|
|
|
|
|
|
Loads hauled via
BCO Independent Contractors (2) |
|
|
|
|
|
|
included in total
truck transportation |
|
|
233,400 |
|
|
|
234,850 |
|
|
|
|
|
|
|
|
|
Revenue per
load: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck
transportation |
|
|
|
|
|
|
Truckload: |
|
|
|
|
|
|
|
Van equipment |
|
$ |
1,729 |
|
|
$ |
1,811 |
|
|
|
|
Unsided/platform
equipment |
|
|
2,374 |
|
|
|
2,482 |
|
|
|
Less-than-truckload |
|
|
598 |
|
|
|
662 |
|
|
|
|
Total truck
transportation |
|
|
1,802 |
|
|
|
1,897 |
|
|
Rail
intermodal |
|
|
2,438 |
|
|
|
2,409 |
|
|
Ocean and air
cargo carriers |
|
|
3,761 |
|
|
|
4,084 |
|
|
|
|
|
|
|
|
|
|
Revenue per load
on loads hauled via BCO Independent Contractors (2) |
|
$ |
1,848 |
|
|
$ |
1,913 |
|
|
|
|
|
|
|
|
|
Revenue by
capacity type (as a % of total revenue); |
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck capacity
providers: |
|
|
|
|
|
|
BCO Independent
Contractors (2) |
|
|
46 |
% |
|
|
43 |
% |
|
|
Truck Brokerage
Carriers |
|
|
46 |
% |
|
|
49 |
% |
|
Rail
intermodal |
|
|
3 |
% |
|
|
3 |
% |
|
Ocean and air
cargo carriers |
|
|
3 |
% |
|
|
3 |
% |
|
Other |
|
|
|
2 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, |
|
March 30, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
Truck Capacity
Providers |
|
|
|
|
|
|
|
|
|
|
|
|
|
BCO Independent
Contractors (2) |
|
|
9,444 |
|
|
|
9,911 |
|
|
Truck Brokerage
Carriers: |
|
|
|
|
|
Approved and active (3) |
|
|
38,879 |
|
|
|
40,404 |
|
|
Other approved |
|
|
16,657 |
|
|
|
18,659 |
|
|
|
|
|
|
|
55,536 |
|
|
|
59,063 |
|
|
Total available
truck capacity providers |
|
|
64,980 |
|
|
|
68,974 |
|
|
|
|
|
|
|
|
|
|
Trucks provided by
BCO Independent Contractors (2) |
|
|
10,112 |
|
|
|
10,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
primarily reinsurance premium revenue generated by the insurance
segment and intra-Mexico transportation services revenue generated
by Landstar Metro. |
|
|
|
|
|
|
|
|
|
|
|
|
(2) BCO
Independent Contractors are independent contractors who provide
truck capacity to the Company under exclusive lease
arrangements. |
|
|
|
|
|
|
|
|
|
|
|
|
(3) Active refers
to Truck Brokerage Carriers who moved at least one load in the 180
days immediately preceding the fiscal quarter end. |
Contact: Kevin Stout
Landstar System, Inc.
www.landstar.com
904-398-9400
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