Exhibit 99.1

 

LOGO

 

For Immediate Release    Contact: Kevin Stout
   Landstar System, Inc.
   www.landstar.com
October 24, 2018    904-398-9400

LANDSTAR SYSTEM REPORTS RECORD QUARTERLY

REVENUE OF $1.202 BILLION AND RECORD QUARTERLY DILUTED

EARNINGS PER SHARE OF $1.63

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $1.202 billion in the 2018 third quarter, a 27 percent increase over revenue of $943 million reported in the 2017 third quarter. Net income of $67.0 million and diluted earnings per share of $1.63 were also quarterly records and increased 58 percent and 61 percent, respectively, over net income and diluted earnings per share in the 2017 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 third quarter was $171.3 million, 22 percent above the 2017 third quarter, while 2018 third quarter operating income was $87.1 million, 44 percent above the 2017 third quarter. Operating income in the 2018 third quarter was an all-time quarterly record, while gross profit was a third quarter record, second all-time only to the Company’s 2018 second quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 third quarter was $1.118 billion, or 93 percent of revenue, compared to $877.6 million, or 93 percent of revenue, in the 2017 third quarter. Truckload transportation revenue hauled via van equipment in the 2018 third quarter was $717.0 million compared to $550.5 million in the 2017 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 third quarter was $375.7 million compared to $304.5 million in the 2017 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $65.7 million, or 5 percent of revenue, in the 2018 third quarter compared to $53.7 million, or 6 percent of revenue, in the 2017 third quarter.


LANDSTAR SYSTEM/2

 

Landstar did not purchase any shares of its common stock during the 2018 third quarter. 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 September 29, 2018, the Company had $254 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 December 7, 2018, to stockholders of record as of the close of business on November 13, 2018. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“I am extremely pleased with Landstar’s financial performance during the 2018 third quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 third quarter established all-time Landstar quarterly records for revenue, operating income and diluted earnings per share while gross profit was a third quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,443 as of the end of the quarter and net truck additions in a single quarter with the net addition of 288 trucks in the third quarter.”

Gattoni continued, “Demand for our services continued to be strong in the 2018 third quarter. The number of loads hauled via truck in the 2018 third quarter was a third quarter record and increased 7 percent over the 2017 third quarter, driven by a 7 percent increase in the number of loads hauled via van equipment, a 5 percent increase in the number of loads hauled via unsided/platform equipment and a 5 percent increase in less-than-truckload volume. Excluding the approximately 16,000 truckloads hauled by Landstar in September 2017 related to the storms that impacted the southeastern U.S. and Texas, truckload volumes increased 10 percent over the 2017 third quarter. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 25 percent higher in the 2018 third quarter compared to the 2017 third quarter, primarily due to a 21 percent increase in rail intermodal volume and a 46 percent increase in ocean volume.”


LANDSTAR SYSTEM/3

 

Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 third quarter, as industry-wide truck capacity continued to be tight. Revenue per load on loads hauled via van equipment increased 21 percent over the 2017 third quarter and revenue per load on loads hauled via unsided/platform equipment increased 17 percent over the 2017 third quarter. As a result, revenue per load on loads hauled via truck was 19 percent higher than the 2017 third quarter.”

Gattoni continued, “Revenue per load and the number of loads hauled via truck in the first few weeks of October continue to significantly exceed the rates and volume of the same period of 2017, however, at a more modest pace than experienced during the first three quarters of 2018. Accordingly, we expect truck revenue per load in the 2018 fourth quarter to exceed prior year fourth quarter in an upper single digit percentage range. The anticipated deceleration in the growth in truck revenue per load is the result of: 1) a more difficult quarter over prior year quarter comparison, as truck revenue per load in the 2017 fourth quarter experienced atypical significant increases on a sequential monthly basis during the quarter and 2) truck revenue per load in the first few weeks of October 2018 is trending slightly below normal seasonal patterns. The number of loads hauled via truck in the first few weeks of October is trending above the same period of 2017 in a high single digit percentage range. We expect that trend to continue and therefore expect the number of loads hauled via truck in the 2018 fourth quarter to exceed the 2017 fourth quarter in an eight to ten percent range. Assuming recent trends continue, I anticipate record revenue for the 2018 fourth quarter in a range of $1.180 billion to $1.230 billion, which would represent growth of 12 percent to 17 percent above our record 2017 fourth quarter. 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 fourth quarter in a range of $1.56 to $1.62. As a reminder, the 2017 fourth quarter diluted earnings per share of $1.54 included the effect of one-time tax benefits of $19.5 million, or $0.46 per diluted share, related to the Company’s reasonable estimate of the change in future tax rates on net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act in December 2017.”


LANDSTAR SYSTEM/4

 

Landstar will provide a live webcast of its quarterly earnings conference call tomorrow morning at 8:00 a.m. ET. To access the webcast, visit the Company’s website at www.landstar.com; click on “Investor Relations” and “Webcasts,” then click on “Landstar’s Third Quarter 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 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.


LANDSTAR SYSTEM/5

 

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/6

 

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Thirty Nine Weeks Ended     Thirteen Weeks Ended  
     September 29,
2018
    September 30,
2017
    September 29,
2018
    September 30,
2017
 

Revenue

   $ 3,432,793     $ 2,594,772     $ 1,202,081     $ 943,430  

Investment income

     2,754       1,733       1,002       711  

Costs and expenses:

        

Purchased transportation

     2,658,710       1,989,938       931,473       726,827  

Commissions to agents

     275,828       210,678       99,304       76,598  

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

     24,176       22,497       8,966       8,097  

Insurance and claims

     57,718       46,333       18,819       17,927  

Selling, general and administrative

     140,948       123,179       46,699       43,995  

Depreciation and amortization

     32,520       29,961       10,754       10,130  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     3,189,900       2,422,586       1,116,015       883,574  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     245,647       173,919       87,068       60,567  

Interest and debt expense

     2,455       2,559       816       657  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     243,192       171,360       86,252       59,910  

Income taxes

     56,279       59,047       19,304       17,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     186,913       112,313       66,948       42,420  

Less: Net loss attributable to noncontrolling interest

     (112     (23     (37     (23
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Landstar System, Inc. and subsidiary

   $ 187,025     $ 112,336     $ 66,985     $ 42,443  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 4.50     $ 2.68     $ 1.63     $ 1.01  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 4.50     $ 2.67     $ 1.63     $ 1.01  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average number of shares outstanding:

        

Earnings per common share

     41,530,000       41,924,000       41,101,000       41,957,000  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

     41,576,000       42,013,000       41,137,000       42,028,000  
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per common share

   $ 0.465     $ 0.280     $ 0.165     $ 0.100  
  

 

 

   

 

 

   

 

 

   

 

 

 


LANDSTAR SYSTEM/7

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     September 29,
2018
    December 30,
2017
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 213,974     $ 242,416  

Short-term investments

     40,203       48,928  

Trade accounts receivable, less allowance of $6,173 and $6,131

     702,183       631,164  

Other receivables, including advances to independent contractors, less allowance of $6,188 and $6,012

     18,586       24,301  

Other current assets

     24,191       14,394  
  

 

 

   

 

 

 

Total current assets

     999,137       961,203  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $241,321 and $218,700

     268,011       276,011  

Goodwill

     38,560       39,065  

Other assets

     85,004       76,181  
  

 

 

   

 

 

 

Total assets

   $ 1,390,712     $ 1,352,460  
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 39,759     $ 42,242  

Accounts payable

     313,728       285,132  

Current maturities of long-term debt

     40,960       42,051  

Insurance claims

     43,268       38,919  

Dividends payable

     —         62,985  

Accrued compensation

     23,908       30,103  

Other current liabilities

     53,553       47,211  
  

 

 

   

 

 

 

Total current liabilities

     515,176       548,643  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     72,887       83,062  

Insurance claims

     30,775       30,141  

Deferred income taxes and other non-current liabilities

     45,664       36,737  

Equity

    

Landstar System, Inc. and subsidiary shareholders’ equity

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,869,378 and 67,740,380 shares

     679       677  

Additional paid-in capital

     221,563       209,599  

Retained earnings

     1,779,680       1,611,158  

Cost of 26,755,001 and 25,749,493 shares of common stock in treasury

     (1,273,512     (1,167,600

Accumulated other comprehensive loss

     (4,569     (3,162
  

 

 

   

 

 

 

Total Landstar System, Inc. and subsidiary shareholders’ equity

     723,841       650,672  
  

 

 

   

 

 

 

Noncontrolling interest

     2,369       3,205  
  

 

 

   

 

 

 

Total equity

     726,210       653,877  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,390,712     $ 1,352,460  
  

 

 

   

 

 

 


LANDSTAR SYSTEM/8

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirty Nine Weeks Ended     Thirteen Weeks Ended  
     September 29,
2018
    September 30,
2017
    September 29,
2018
    September 30,
2017
 

Revenue generated through (in thousands):

        

Truck transportation

        

Truckload:

        

Van equipment

   $  2,086,523     $  1,529,402     $ 717,047     $  550,484  

Unsided/platform equipment

     1,039,784       825,194       375,739       304,536  

Less-than-truckload

     76,448       65,397       25,500       22,598  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     3,202,755       2,419,993       1,118,286       877,618  

Rail intermodal

     96,026       68,570       34,439       24,213  

Ocean and air cargo carriers

     82,719       70,708       31,213       29,523  

Other (1)

     51,293       35,501       18,143       12,076  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,432,793     $ 2,594,772     $ 1,202,081     $ 943,430  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 1,519,344     $ 1,211,564     $ 520,391     $ 435,479  

Number of loads:

        

Truck transportation

        

Truckload:

        

Van equipment

     1,045,322       942,894       353,456       329,329  

Unsided/platform equipment

     388,759       362,936       133,425       126,509  

Less-than-truckload

     106,639       98,740       35,969       34,232  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     1,540,720       1,404,570       522,850       490,070  

Rail intermodal

     40,260       32,040       13,420       11,080  

Ocean and air cargo carriers

     21,250       18,150       8,220       6,210  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,602,230       1,454,760       544,490       507,360  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     717,470       686,830       236,580       232,970  

Revenue per load:

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,996     $ 1,622     $ 2,029     $ 1,672  

Unsided/platform equipment

     2,675       2,274       2,816       2,407  

Less-than-truckload

     717       662       709       660  

Total truck transportation

     2,079       1,723       2,139       1,791  

Rail intermodal

     2,385       2,140       2,566       2,185  

Ocean and air cargo carriers

     3,893       3,896       3,797       4,754  

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

   $ 2,118     $ 1,764     $ 2,200     $ 1,869  

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

        

Truck capacity providers:

        

BCO Independent Contractors (2)

     44     47     43     46

Truck Brokerage Carriers

     49     47     50     47

Rail intermodal

     3     3     3     3

Ocean and air cargo carriers

     2     3     3     3

Other

     1     1     2     1
                 September 29,
2018
    September 30,
2017
 

Truck Capacity Providers

        

BCO Independent Contractors (2)

         9,751       8,939  
      

 

 

   

 

 

 

Truck Brokerage Carriers:

        

Approved and active (3)

         40,151       32,925  

Other approved

         16,803       15,138  
      

 

 

   

 

 

 
         56,954       48,063  
      

 

 

   

 

 

 

Total available truck capacity providers

         66,705       57,002  
      

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (2)

         10,443       9,548  

 

(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.

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