Exhibit 99.1

 

LOGO

 

For Immediate Release    Contact: Kevin Stout
   Landstar System, Inc.
   www.landstar.com
October 23, 2019    904-398-9400

LANDSTAR SYSTEM REPORTS THIRD QUARTER

REVENUE OF $1.012 BILLION AND

DILUTED EARNINGS PER SHARE OF $1.35

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $1.35 in the 2019 third quarter on revenue of $1.012 billion. Landstar reported diluted earnings per share of $1.63 on revenue of $1.202 billion in the 2018 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $152.6 million in the 2019 third quarter compared to $171.3 million in the 2018 third quarter. Operating margin, representing operating income divided by gross profit, was 46.3 percent in the 2019 third quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2019 third quarter was $932.2 million, or 92 percent of revenue, compared to $1.118 billion, or 93 percent of revenue, in the 2018 third quarter. Truckload transportation revenue hauled via van equipment in the 2019 third quarter was $575.0 million compared to $717.0 million in the 2018 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2019 third quarter was $331.8 million compared to $375.7 million in the 2018 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $59.3 million, or 6 percent of revenue, in the 2019 third quarter compared to $65.7 million, or 5 percent of revenue, in the 2018 third quarter.


 

LANDSTAR SYSTEM/2

 

Trailing twelve-month return on average shareholders’ equity was 34 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 29 percent. Landstar purchased approximately 175,000 shares of its common stock during the 2019 third quarter at an aggregate cost of approximately $18.8 million. Currently, the Company is authorized to purchase up to approximately 1,151,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of September 28, 2019, the Company had $316 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility. Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.185 per share payable on December 6, 2019, to stockholders of record as of the close of business on November 12, 2019. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“The current macroeconomic environment made for challenging comparisons against our record 2018 third quarter performance,” said Landstar President and Chief Executive Officer Jim Gattoni. “Softer demand, driven by slowing production in the U.S. manufacturing sector, and more readily available capacity drove Landstar’s truck rates and volumes below prior year levels in the 2019 third quarter. Overall, 2019 third quarter revenue was 16 percent below revenue of the 2018 third quarter, mostly due to a 13 percent decrease in revenue per load on loads hauled via truck and a 5 percent decrease in truck loadings. While truck revenue per load has been below prior year levels throughout 2019, truck load volumes have more recently slowed with softening demand. Truck load volumes in the 2019 third quarter fell 5 percent as compared to the 2018 third quarter, a larger decrease than the low single digit decrease anticipated in the Company’s third quarter earnings guidance issued on July 24, 2019 as part of the Company’s 2019 second quarter earnings release.”

“In our second quarter earnings release, we provided third quarter revenue guidance of $1.01 billion to $1.06 billion and third quarter diluted earnings per share guidance of $1.48 to $1.54. On September 11, 2019, we disclosed in a Form 8-K and further explained at a webcast investor conference the next day that, based on overall market conditions and the adverse financial impact of a tragic vehicular accident involving Landstar that occurred during the 2019 third quarter, we would be near the bottom end of revenue guidance and would not achieve the bottom end of the range for earnings


 

LANDSTAR SYSTEM/3

 

per diluted share provided on July 24, 2019. Revenue in the 2019 third quarter was at the low end of our previously issued guidance while diluted earnings per share fell far below our guidance, mostly due to higher insurance and claims costs than we anticipated in our initial estimate. Third quarter guidance included insurance and claims costs at 3.6 percent of BCO revenue, whereas actual insurance and claims costs were 5.1 percent of BCO revenue in the 2019 third quarter.”

Gattoni continued, “Through the first few weeks of October, the number of loads hauled via truck was below the corresponding period of 2018 in a high single-digit percentage range. I expect that trend to continue during the remainder of the 2019 fourth quarter. Accordingly, I expect the number of loads hauled via truck in the 2019 fourth quarter to be below the number of loads hauled by truck in the 2018 fourth quarter in a high single-digit percentage range. Pricing for our truck services was fairly stable on a sequential month-to-month basis during the 2019 third quarter, continuing a trend that began in the middle of the 2019 second quarter. I expect pricing to remain stable through the 2019 fourth quarter given current demand and assuming little change in the level of truck capacity available in the marketplace. Given the slowing pricing environment experienced in the 2018 fourth quarter, year-over-year comparisons should therefore ease a bit in the 2019 fourth quarter. Assuming the current macroeconomic environment continues throughout the remainder of the fourth quarter, I expect 2019 fourth quarter truck revenue per load to be lower than the 2018 fourth quarter in a high single-digit percentage range. I anticipate revenue for the 2019 fourth quarter to be in a range of $970 million to $1.02 billion. Assuming that estimated range of revenue and insurance and claims expense at 3.6 percent of BCO revenue, representing average insurance and claims costs as a percentage of BCO revenue over the past five years, I would anticipate 2019 fourth quarter diluted earnings per share to be in a range of $1.40 to $1.46 per share.”

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 2019 Earnings Release Conference Call.”


 

LANDSTAR SYSTEM/4

 

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 2018 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 toISO 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)

 

     Thirty Nine Weeks Ended     Thirteen Weeks Ended  
     September 28,     September 29,     September 28,      September 29,  
     2019     2018     2019      2018  

Revenue

   $ 3,089,698     $ 3,432,793     $ 1,011,658      $ 1,202,081  

Investment income

     3,736       2,754       1,315        1,002  

Costs and expenses:

         

Purchased transportation

     2,365,646       2,658,710       774,520        931,473  

Commissions to agents

     257,862       275,828       84,568        99,304  

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

     28,531       24,176       10,431        8,966  

Insurance and claims

     55,248       57,718       23,969        18,819  

Selling, general and administrative

     120,717       140,948       38,152        46,699  

Depreciation and amortization

     33,045       32,520       10,695        10,754  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total costs and expenses

     2,861,049       3,189,900       942,335        1,116,015  
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

     232,385       245,647       70,638        87,068  

Interest and debt expense

     2,278       2,455       764        816  
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before income taxes

     230,107       243,192       69,874        86,252  

Income taxes

     52,452       56,279       16,619        19,304  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income

     177,655       186,913       53,255        66,948  

Less: Net loss attributable to noncontrolling interest

     (17     (112     —          (37
  

 

 

   

 

 

   

 

 

    

 

 

 

Net income attributable to Landstar System, Inc. and subsidiary

   $ 177,672     $ 187,025     $ 53,255      $ 66,985  
  

 

 

   

 

 

   

 

 

    

 

 

 

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

   $ 4.45     $ 4.50     $ 1.35      $ 1.63  
  

 

 

   

 

 

   

 

 

    

 

 

 

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

   $ 4.45     $ 4.50     $ 1.35      $ 1.63  
  

 

 

   

 

 

   

 

 

    

 

 

 

Average number of shares outstanding:

         

Earnings per common share

     39,891,000       41,530,000       39,566,000        41,101,000  
  

 

 

   

 

 

   

 

 

    

 

 

 

Diluted earnings per share

     39,891,000       41,576,000       39,566,000        41,137,000  
  

 

 

   

 

 

   

 

 

    

 

 

 

Dividends per common share

   $ 0.515     $ 0.465     $ 0.185      $ 0.165  
  

 

 

   

 

 

   

 

 

    

 

 

 


 

LANDSTAR SYSTEM/6

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     September 28,     December 29,  
     2019     2018  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 284,434     $ 199,736  

Short-term investments

     31,596       40,058  

Trade accounts receivable, less allowance of $7,296 and $6,413

     598,415       691,604  

Other receivables, including advances to independent contractors, less allowance of $8,593 and $6,216

     25,384       23,744  

Other current assets

     30,921       16,287  
  

 

 

   

 

 

 

Total current assets

     970,750       971,429  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $274,000 and $250,153

     270,430       284,032  

Goodwill

     38,232       38,232  

Other assets

     106,319       86,871  
  

 

 

   

 

 

 

Total assets

   $ 1,385,731     $ 1,380,564  
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 44,625     $ 55,339  

Accounts payable

     285,442       314,134  

Current maturities of long-term debt

     39,375       43,561  

Insurance claims

     51,320       40,176  

Accrued compensation

     10,477       29,489  

Contractor escrow

     25,521       25,202  

Other current liabilities

     26,996       27,917  
  

 

 

   

 

 

 

Total current liabilities

     483,756       535,818  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     61,390       84,864  

Insurance claims

     33,024       30,429  

Deferred income taxes and other non-current liabilities

     51,586       40,320  

Equity

    

Landstar System, Inc. and subsidiary shareholders’ equity

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,072,834 and 67,870,962 shares

     681       679  

Additional paid-in capital

     225,937       226,852  

Retained earnings

     1,998,362       1,841,279  

Cost of 28,609,926 and 27,755,001 shares of common stock in treasury

     (1,465,284     (1,376,111

Accumulated other comprehensive loss

     (3,721     (5,875
  

 

 

   

 

 

 

Total Landstar System, Inc. and subsidiary shareholders’ equity

     755,975       686,824  
  

 

 

   

 

 

 

Noncontrolling interest

     —         2,309  
  

 

 

   

 

 

 

Total equity

     755,975       689,133  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,385,731     $ 1,380,564  
  

 

 

   

 

 

 


 

LANDSTAR SYSTEM/7

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirty Nine Weeks Ended     Thirteen Weeks Ended  
     September 28,     September 29,     September 28,     September 29,  
     2019     2018     2019     2018  

Revenue generated through (in thousands):

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,799,421     $ 2,086,523     $ 575,042     $ 717,047  

Unsided/platform equipment

     980,615       1,039,784       331,787       375,739  

Less-than-truckload

     73,475       76,448       25,367       25,500  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     2,853,511       3,202,755       932,196       1,118,286  

Rail intermodal

     87,555       96,026       28,970       34,439  

Ocean and air cargo carriers

     89,258       82,719       30,365       31,213  

Other (1)

     59,374       51,293       20,127       18,143  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,089,698     $ 3,432,793     $ 1,011,658     $ 1,202,081  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 1,390,135     $ 1,519,344     $ 466,207     $ 520,391  

Number of loads:

        

Truck transportation

        

Truckload:

        

Van equipment

     1,014,572       1,045,322       327,671       353,456  

Unsided/platform equipment

     391,112       388,759       130,192       133,425  

Less-than-truckload

     115,616       106,639       41,067       35,969  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     1,521,300       1,540,720       498,930       522,850  

Rail intermodal

     35,370       40,260       11,490       13,420  

Ocean and air cargo carriers

     22,150       21,250       7,340       8,220  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,578,820       1,602,230       517,760       544,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     722,870       717,470       239,210       236,580  

Revenue per load:

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,774     $ 1,996     $ 1,755     $ 2,029  

Unsided/platform equipment

     2,507       2,675       2,548       2,816  

Less-than-truckload

     636       717       618       709  

Total truck transportation

     1,876       2,079       1,868       2,139  

Rail intermodal

     2,475       2,385       2,521       2,566  

Ocean and air cargo carriers

     4,030       3,893       4,137       3,797  

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

   $ 1,923     $ 2,118     $ 1,949     $ 2,200  

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

        

Truck capacity providers:

        

BCO Independent Contractors (2)

     45     44     46     43

Truck Brokerage Carriers

     47     49     46     50

Rail intermodal

     3     3     3     3

Ocean and air cargo carriers

     3     2     3     3

Other

     2     1     2     2
                 September 28,     September 29,  
                 2019     2018  

Truck Capacity Providers

        

BCO Independent Contractors (2)

         9,738       9,751  
      

 

 

   

 

 

 

Truck Brokerage Carriers:

        

Approved and active (3)

         39,963       40,151  

Other approved

         16,984       16,803  
      

 

 

   

 

 

 
         56,947       56,954  
      

 

 

   

 

 

 

Total available truck capacity providers

         66,685       66,705  
      

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (2)

         10,441       10,443  

 

(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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