Exhibit 99.1

 

LOGO

 

For Immediate Release    Contact: Kevin Stout
   Landstar System, Inc.
   www.landstar.com
July 25, 2018    904-398-9400

LANDSTAR SYSTEM REPORTS RECORD QUARTERLY

REVENUE OF $1.183 BILLION AND RECORD SECOND QUARTER DILUTED

EARNINGS PER SHARE OF $1.51

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $1.183 billion in the 2018 second quarter, a 36 percent increase over the $870 million revenue reported in the 2017 second quarter. Net income of $62.5 million and diluted earnings per share of $1.51 were each second quarter records and increased 67 percent and 70 percent, respectively, over net income and diluted earnings per share in the 2017 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 second quarter was $171.4 million, 29 percent above the 2017 second quarter, while 2018 second quarter operating income was $83.4 million, 37 percent above the 2017 second quarter. Gross profit and operating income in the 2018 second quarter were both all-time quarterly records.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 second quarter was $1.105 billion, or 93 percent of revenue, compared to $815.6 million, or 94 percent of revenue, in the 2017 second quarter. Truckload transportation revenue hauled via van equipment in the 2018 second quarter was $713.3 million compared to $509.1 million in the 2017 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 second quarter was $364.7 million compared to $283.5 million in the 2017 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $60.3 million, or 5 percent of revenue, in the 2018 second quarter compared to $43.1 million, or 5 percent of revenue, in the 2017 second quarter.


LANDSTAR SYSTEM/ 2

 

Landstar purchased approximately 986,000 shares of its common stock during the 2018 second quarter at an aggregate cost of approximately $104.0 million. Currently, the Company is authorized to purchase up to an additional 2,000,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of June 30, 2018, the Company had $189 million in cash and short term investments and $216 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 $0.165 per share payable on August 31, 2018, to stockholders of record as of the close of business on August 13, 2018. This quarterly dividend includes a 10 percent increase to the amount of the Company’s regular quarterly dividend declared following each of the prior two quarters. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“I am extremely pleased with the financial performance of the Landstar model during the 2018 second quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 second quarter established all-time Landstar quarterly records for revenue, gross profit and operating income while diluted earnings per share was a second quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,155 as of the end of the quarter and net truck additions in a single quarter with the net addition of 287 trucks in the second quarter.”

Gattoni continued, “Demand for our services was strong throughout the 2018 first half. The number of loads hauled via truck in the 2018 second quarter was an all-time quarterly record and increased 11 percent over the 2017 second quarter, driven by a 13 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 an 8 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 23 percent higher in the 2018 second quarter compared to the 2017 second quarter, primarily due to a 32 percent increase in rail intermodal volume.”


LANDSTAR SYSTEM/ 3

 

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 second quarter, as industry-wide truck capacity continued to be very tight. Revenue per load on loads hauled via van equipment increased 25 percent over the 2017 second quarter and revenue per load on loads hauled via unsided/platform equipment increased 19 percent over the 2017 second quarter. As a result, revenue per load on loads hauled via truck was 22 percent higher than the 2017 second quarter.”

Gattoni continued, “Through the first few weeks of July our truck load volumes continue to reflect strong demand. I expect that demand to continue through the 2018 third quarter and, therefore, expect the number of loads hauled via truck in the 2018 third quarter to approximate the number of loads hauled in the 2018 second quarter. My expectation is that pricing conditions for truck services in the 2018 third quarter will continue to be very strong with little change in the level of demand or available truck capacity. Assuming those conditions remain, I expect 2018 third quarter truck revenue per load to be higher than the 2017 third quarter in a 19 to 22 percent range. I anticipate record revenue for the 2018 third quarter in a range of $1.175 billion to $1.225 billion. Assuming that range of estimated revenue and insurance and claims expense at 3.5 percent of projected BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate record diluted earnings per share in the 2018 third quarter in a range of $1.58 to $1.64 per share compared to $1.01 per diluted share 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 2018 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


LANDSTAR SYSTEM/ 4

 

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 2017 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/ 5

 

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Twenty Six Weeks Ended      Thirteen Weeks Ended  
     June 30,
2018
    July 1,
2017
     June 30,
2018
    July 1,
2017
 

Revenue

   $ 2,230,712     $ 1,651,342      $ 1,182,786     $ 870,434  

Investment income

     1,752       1,022        891       608  

Costs and expenses:

         

Purchased transportation

     1,727,237       1,263,111        916,940       667,588  

Commissions to agents

     176,524       134,080        94,399       70,282  

Other operating costs, net of gains on asset sales/dispositions

     15,210       14,400        7,606       7,503  

Insurance and claims

     38,899       28,406        21,539       13,893  

Selling, general and administrative

     94,249       79,184        48,998       40,861  

Depreciation and amortization

     21,766       19,831        10,769       9,897  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total costs and expenses

     2,073,885       1,539,012        1,100,251       810,024  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     158,579       113,352        83,426       61,018  

Interest and debt expense

     1,639       1,902        839       819  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income before income taxes

     156,940       111,450        82,587       60,199  

Income taxes

     36,975       41,557        20,095       22,689  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

     119,965       69,893        62,492       37,510  

Less: Net loss attributable to noncontrolling interest

     (75     —          (31     —    
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income attributable to Landstar System, Inc. and subsidiary

   $ 120,040     $ 69,893      $ 62,523     $ 37,510  
  

 

 

   

 

 

    

 

 

   

 

 

 

Earnings per common share attributable to Landstar System, Inc. and subsidiary

   $ 2.88     $ 1.67      $ 1.51     $ 0.89  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted earnings per share attributable to Landstar System, Inc. and subsidiary

   $ 2.87     $ 1.66      $ 1.51     $ 0.89  
  

 

 

   

 

 

    

 

 

   

 

 

 

Average number of shares outstanding:

         

Earnings per common share

     41,744,000       41,907,000        41,450,000       41,935,000  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted earnings per share

     41,795,000       42,004,000        41,491,000       42,010,000  
  

 

 

   

 

 

    

 

 

   

 

 

 

Dividends per common share

   $ 0.30     $ 0.18      $ 0.15     $ 0.09  
  

 

 

   

 

 

    

 

 

   

 

 

 


LANDSTAR SYSTEM/ 6

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     June 30,
2018
    December 30,
2017
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 148,641     $ 242,416  

Short-term investments

     40,323       48,928  

Trade accounts receivable, less allowance of $6,549 and $6,131

     688,961       631,164  

Other receivables, including advances to independent contractors, less allowance of $6,495 and $6,012

     20,737       24,301  

Other current assets

     29,553       14,394  
  

 

 

   

 

 

 

Total current assets

     928,215       961,203  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $232,760 and $218,700

     256,096       276,011  

Goodwill

     38,704       39,065  

Other assets

     85,880       76,181  
  

 

 

   

 

 

 

Total assets

   $ 1,308,895     $ 1,352,460  
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 45,365     $ 42,242  

Accounts payable

     311,768       285,132  

Current maturities of long-term debt

     38,869       42,051  

Insurance claims

     42,546       38,919  

Dividends payable

     —         62,985  

Accrued compensation

     19,041       30,103  

Other current liabilities

     51,285       47,211  
  

 

 

   

 

 

 

Total current liabilities

     508,874       548,643  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     65,093       83,062  

Insurance claims

     30,205       30,141  

Deferred income taxes and other non-current liabilities

     43,790       36,737  

Equity

    

Landstar System, Inc. and subsidiary shareholders’ equity Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,847,692 and 67,740,380 shares

     678       677  

Additional paid-in capital

     216,328       209,599  

Retained earnings

     1,719,475       1,611,158  

Cost of 26,754,810 and 25,749,493 shares of common stock in treasury

     (1,273,489     (1,167,600

Accumulated other comprehensive loss

     (5,284     (3,162
  

 

 

   

 

 

 

Total Landstar System, Inc. and subsidiary shareholders’ equity

     657,708       650,672  
  

 

 

   

 

 

 

Noncontrolling interest

     3,225       3,205  
  

 

 

   

 

 

 

Total equity

     660,933       653,877  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,308,895     $ 1,352,460  
  

 

 

   

 

 

 


LANDSTAR SYSTEM/ 7

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Twenty Six Weeks Ended     Thirteen Weeks Ended  
     June 30,     July 1,     June 30,     July 1,  
     2018     2017     2018     2017  

Revenue generated through (in thousands):

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,369,476     $ 978,918     $ 713,341     $ 509,135  

Unsided/platform equipment

     664,045       520,658       364,676       283,481  

Less-than-truckload

     50,948       42,799       27,364       22,942  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     2,084,469       1,542,375       1,105,381       815,558  

Rail intermodal

     61,587       44,357       32,295       21,515  

Ocean and air cargo carriers

     51,506       41,185       28,029       21,595  

Other (1)

     33,150       23,425       17,081       11,766  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,230,712     $ 1,651,342     $ 1,182,786     $ 870,434  
  

 

 

   

 

 

   

 

 

   

 

 

 

Revenue on loads hauled via BCO Independent Contractors (2) included in total truck transportation

   $ 998,953     $ 776,085     $ 527,803     $ 411,177  

Number of loads:

        

Truck transportation

        

Truckload:

        

Van equipment

     691,866       613,565       354,947       315,499  

Unsided/platform equipment

     255,334       236,427       135,543       125,242  

Less-than-truckload

     70,670       64,508       37,250       34,589  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     1,017,870       914,500       527,740       475,330  

Rail intermodal

     26,840       20,960       13,560       10,310  

Ocean and air cargo carriers

     13,030       11,940       6,700       6,210  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,057,740       947,400       548,000       491,850  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loads hauled via BCO Independent Contractors (2) included in total truck transportation

     480,890       453,860       247,710       235,630  

Revenue per load:

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,979     $ 1,595     $ 2,010     $ 1,614  

Unsided/platform equipment

     2,601       2,202       2,690       2,263  

Less-than-truckload

     721       663       735       663  

Total truck transportation

     2,048       1,687       2,095       1,716  

Rail intermodal

     2,295       2,116       2,382       2,087  

Ocean and air cargo carriers

     3,953       3,449       4,183       3,477  

Revenue per load on loads hauled via BCO Independent Contractors (2)

   $ 2,077     $ 1,710     $ 2,131     $ 1,745  

Revenue by capacity type (as a % of total revenue);

        

Truck capacity providers:

        

BCO Independent Contractors (2)

     45     47     45     47

Truck Brokerage Carriers

     49     46     49     46

Rail intermodal

     3     3     3     2

Ocean and air cargo carriers

     2     2     2     2

Other

     1     1     1     1
                 June 30,     July 1,  
                 2018     2017  

Truck Capacity Providers

        

BCO Independent Contractors (2)

         9,501       8,818  
      

 

 

   

 

 

 

Truck Brokerage Carriers:

        

Approved and active (3)

         37,045       31,636  

Other approved

         15,406       15,381  
      

 

 

   

 

 

 
         52,451       47,017  
      

 

 

   

 

 

 

Total available truck capacity providers

         61,952       55,835  
      

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (2)

         10,155       9,404  

 

(1) Includes primarily reinsurance premium revenue generated by the insurance segment and, during the 2018 fiscal year and quarter, 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.

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