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Landstar System Inc (LSTR) SEC Filing 8-K Material Event for the period ending Wednesday, April 20, 2022

Landstar System Inc

CIK: 853816 Ticker: LSTR

Exhibit 99.1

 

LOGO

 

Landstar System, Inc.

13410 Sutton Park Drive, South

Jacksonville, FL 32224

904 398 9400

 

 

For Immediate Release  

Contact: Fred Pensotti (CFO)

Landstar System, Inc.

www.landstar.com

April 20, 2022   904-398-9400

LANDSTAR SYSTEM REPORTS ALL-TIME QUARTERLY RECORD

DILUTED EARNINGS PER SHARE OF $3.34 IN THE 2022 FIRST QUARTER

Jacksonville, FL - Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $1.971 billion in the 2022 first quarter, a 53 percent increase over revenue of $1.288 billion in the 2021 first quarter; quarterly net income of $124.8 million, an increase of 62 percent over net income of $77.2 million in the 2021 first quarter; and quarterly diluted earnings per share (“DEPS”) of $3.34, an increase of 66 percent compared to $2.01 in the 2021 first quarter. To put these 2022 first quarter results into perspective, the Company’s revenue, net income, and DEPS were the highest amounts achieved in any quarter in Landstar history, surpassing the prior record amounts established in the 2021 fourth quarter.

Gross profit in the 2022 first quarter was $214.6 million, an all-time quarterly record, compared to $147.1 million in the 2021 first quarter. Variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) also reached an all-time quarterly record of $270.5 million in the 2022 first quarter, 43 percent above 2021 first quarter variable contribution of $189.2 million. A reconciliation of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2022 and 2021 first quarters is provided in the Company’s accompanying financial disclosures.

Trailing twelve month return on average shareholders’ equity was 51 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 45 percent. During the 2022 first quarter, Landstar purchased approximately 694,000 shares of its common stock at an aggregate cost of $109.3 million.


 

LANDSTAR SYSTEM/2

 

 

The Company is currently authorized to purchase up to an additional 2,306,450 shares of the Company’s common stock under its previously announced share purchase programs. Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.25 per share payable on May 27, 2022, to stockholders of record as of the close of business on May 5, 2022. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2022 first quarter was $1,751.3 million, or 89 percent of revenue, compared to $1,193.5 million, or 93 percent of revenue, in the 2021 first quarter. Truckload transportation revenue hauled via van equipment in the 2022 first quarter was $1,081.2 million, compared to $729.4 million in the 2021 first quarter, an increase of 48 percent. Truckload transportation revenue hauled via unsided/platform equipment in the 2022 first quarter was $408.8 million, compared to $297.5 million in the 2021 first quarter, an increase of 37 percent. Revenue from other truck transportation in the 2022 first quarter was $227.6 million, compared to $140.9 million in the 2021 first quarter, an increase of 61 percent. Revenue hauled by rail, air and ocean cargo carriers in the 2022 first quarter was $194.7 million, or 10 percent of revenue, compared to $79.3 million, or 6 percent of revenue, in the 2021 first quarter, an increase of 146 percent.

“I am very pleased overall with Landstar’s 2022 first quarter performance, as the Company continued to perform at record levels. The 2022 first quarter once again set a new standard for the best quarterly financial performance in Landstar history. Revenue, gross profit, variable contribution, net income and diluted earnings per share were each all-time quarterly records. The increase in truck revenue per load and the number of loads hauled via truck over the 2021 first quarter represent very strong, balanced growth. Remarkably, for the first time in Landstar history, February truck revenue per load was higher than in the preceding December,” said Landstar President and CEO Jim Gattoni.

As previously disclosed in a Current Report on Form 8-K filed on February 28, 2022, through the first 8 weeks of the Company’s 2022 first fiscal quarter as compared to the first 8 weeks of the Company’s 2021 first fiscal quarter, revenue per load on loads hauled via truck increased 27 percent and the number of loads hauled via truck


 

LANDSTAR SYSTEM/3

 

 

increased 24 percent. The Company also noted in the February 28 Form 8-K that two of the largest Landstar independent commission sales agencies, as measured by Landstar revenue generated in fiscal year 2021, maintain administrative operations in Ukraine that could be significantly disrupted by the Russian invasion of Ukraine.

Consistent with the estimated amounts set forth in a Current Report on Form 8-K subsequently filed by the Company on April 5, 2022, during the Company’s 2022 first quarter compared to the 2021 first quarter, revenue per load on loads hauled via truck increased 22 percent and the number of loads hauled via truck increased 20 percent. The Company attributes the decrease in the year-over-year growth rate of revenue per load on loads hauled via truck in the 13-week 2022 first quarter compared to that of the first 8 weeks of the 2022 first quarter to a more difficult year-over-year comparison in March. Prior year March experienced an atypical increase in truck revenue per load of 11 percent on a sequential basis from fiscal February 2021 to fiscal March 2021. The decrease in the year-over-year growth rate of loads hauled via truck in the 2022 first quarter compared to that of the first 8 weeks of the 2022 first fiscal quarter was attributable to (1) the impact of the Russian invasion of Ukraine, although as disclosed in the April 5 Form 8-K, first quarter truck load volumes arranged by the two independent commission sales agencies with significant administrative operations based in Ukraine were significantly less impacted than initially anticipated by the Company, and (2) an atypical increase in the number of loads hauled via truck from fiscal February 2021 to fiscal March 2021 that resulted from severe winter weather experienced during the last week of fiscal February 2021.

Gattoni continued, “Over the trailing 12 month period, Landstar’s financial performance has been unparalleled in our history. As a result, our prior year comparisons will become more challenging as we move further into 2022. Moreover, the headwinds relating to inflation and a potential shift in consumer spending, as well as potential impacts relating to the war in Ukraine, make it difficult to predict the future direction of the U.S. freight transportation environment. Nevertheless, throughout March and through the first few weeks of the 2022 second quarter, customer demand for our freight transportation services remained strong.”


 

LANDSTAR SYSTEM/4

 

 

In March 2022, revenue per load for loads hauled via truck was approximately equal to that of February 2022 even though the cost of a gallon of diesel fuel increased approximately $1, or 27%, from February to March. This suggests a decrease in revenue per load (excluding fuel) in March compared to February on loads hauled via truck brokerage carriers, as the cost of fuel is often reflected in all-in rates billed by Landstar to customers on loads hauled by truck brokerage carriers and included in the Company’s revenue. Notably though, revenue per load on loads hauled by BCOs only experienced a slight decrease in March compared to February. In this regard it is important to note that revenue per load on loads hauled by BCOs is typically less sensitive to changes in the cost of diesel fuel as fuel surcharges billed to customers on freight hauled by BCOs are paid 100% by Landstar to the hauling BCO and not included in the Company’s revenue.

Gattoni further stated, “Currently, overall truck revenue per load is trending at levels similar to March. Although it is difficult to predict what may occur with respect to prices for diesel fuel going forward, we expect a relatively stable revenue per load environment to continue throughout the 2022 second quarter. As such, I expect revenue per load on loads hauled via truck in the 2022 second quarter to be in a mid-teen percentage range above the 2021 second quarter. As I previously noted, we enter the second quarter with continued strong demand for our services but also with more difficult year-over-prior-year period comparisons ahead of us. Assuming these conditions continue through the 2022 second quarter, I expect the number of loads hauled via truck to increase over the 2021 second quarter in a range of 11 percent to 13 percent. As such, I anticipate revenue for the 2022 second quarter to be in a range of $2.0 billion to $2.05 billion.”

Gattoni concluded, “Based on the range of revenue estimated for the 2022 second quarter, I would anticipate DEPS to be in a range of $3.22 to $3.32. This range of DEPS includes insurance and claims expense estimated at 4.2 percent of BCO revenue.”

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 2022 Earnings Release Conference Call.”


 

LANDSTAR SYSTEM/5

 

 

About Landstar:

Landstar System, Inc. is a worldwide, technology-enabled, 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.

Non-GAAP Financial Measures:

In this earnings release and accompanying financial disclosures, the Company provides the following information that may be deemed a non-GAAP financial measure: variable contribution and variable contribution margin. The Company believes variable contribution and variable contribution margin are useful measures of the variable costs that we incur at a shipment-by-shipment level attributable to our transportation network of third-party capacity providers and independent agents in order to provide services to our customers. The Company also believes that it is appropriate to present each of the financial measures that may be deemed a non-GAAP financial measure, as referred to above, for the following reasons: (1) disclosure of these matters will allow investors to better understand the underlying trends in the Company’s financial condition and results of operations; (2) this information will facilitate comparisons by investors of the Company’s results as compared to the results of peer companies; and (3) management considers this financial information in its decision making.

Forward Looking Statements Disclaimer:

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


 

LANDSTAR SYSTEM/6

 

 

statements are by nature subject to uncertainties and risks, including but not limited to: the impact of the Russian conflict with Ukraine on the operations of certain independent commission sales agents, including the Company’s largest such agent by revenue in the 2021 fiscal year; 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; 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; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2021 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/7

 

 

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Thirteen Weeks Ended  
     March 26,      March 27,  
     2022      2021  

Revenue

   $ 1,970,599      $ 1,287,534  

Investment income

     721        684  

Costs and expenses:

     

Purchased transportation

     1,550,330        998,285  

Commissions to agents

     149,778        100,009  

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

     11,141        7,642  

Insurance and claims

     30,768        21,505  

Selling, general and administrative

     52,713        45,408  

Depreciation and amortization

     13,757        12,101  
  

 

 

    

 

 

 

Total costs and expenses

     1,808,487        1,184,950  
  

 

 

    

 

 

 

Operating income

     162,833        103,268  

Interest and debt expense

     1,123        1,042  
  

 

 

    

 

 

 

Income before income taxes

     161,710        102,226  

Income taxes

     36,871        24,986  
  

 

 

    

 

 

 

Net income

   $ 124,839      $ 77,240  
  

 

 

    

 

 

 

Diluted earnings per share

   $ 3.34      $ 2.01  
  

 

 

    

 

 

 

Average diluted shares outstanding

     37,418,000        38,404,000  
  

 

 

    

 

 

 

Dividends per common share

   $ 0.25      $ 0.21  
  

 

 

    

 

 

 


 

LANDSTAR SYSTEM/8

 

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     March 26,
2022
    December 25,
2021
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 146,025     $ 215,522  

Short-term investments

     35,679       35,778  

Trade accounts receivable, less allowance of $7,940 and $7,074

     1,223,123       1,154,314  

Other receivables, including advances to independent contractors, less allowance of $8,838 and $8,125

     123,231       101,124  

Other current assets

     10,441       16,162  
  

 

 

   

 

 

 

Total current assets

     1,538,499       1,522,900  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $356,988 and $344,099

     307,044       317,386  

Goodwill

     40,945       40,768  

Other assets

     159,325       164,411  
  

 

 

   

 

 

 

Total assets

   $ 2,045,813     $ 2,045,465  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 96,215     $ 116,478  

Accounts payable

     626,337       604,130  

Current maturities of long-term debt

     34,983       36,561  

Insurance claims

     52,644       46,896  

Dividends payable

     —         75,387  

Accrued income taxes

     50,280       18,403  

Other current liabilities

     89,793       112,128  
  

 

 

   

 

 

 

Total current liabilities

     950,252       1,009,983  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     137,289       75,243  

Insurance claims

     51,132       49,509  

Deferred income taxes and other non-current liabilities

     50,991       48,720  

Shareholders’ equity:

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,370,151 and 68,232,975

     684       682  

Additional paid-in capital

     248,230       255,148  

Retained earnings

     2,432,699       2,317,184  

Cost of 31,242,818 and 30,539,235 shares of common stock in treasury

     (1,816,149     (1,705,601

Accumulated other comprehensive loss

     (9,315     (5,403
  

 

 

   

 

 

 

Total shareholders’ equity

     856,149       862,010  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 2,045,813     $ 2,045,465  
  

 

 

   

 

 

 


 

LANDSTAR SYSTEM/9

 

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirteen Weeks Ended  
     March 26,
2022
    March 27,
2021
 

Revenue generated through (in thousands):

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 1,081,206     $ 729,402  

Unsided/platform equipment

     408,757       297,485  

Less-than-truckload

     33,720       25,670  

Other truck transportation (1)

     227,601       140,932  
  

 

 

   

 

 

 

Total truck transportation

     1,751,284       1,193,489  

Rail intermodal

     42,688       31,708  

Ocean and air cargo carriers

     152,057       47,600  

Other (2)

     24,570       14,737  
  

 

 

   

 

 

 
   $ 1,970,599     $ 1,287,534  
  

 

 

   

 

 

 

Revenue on loads hauled via BCO Independent Contractors (3)
included in total truck transportation

   $ 727,574     $ 560,114  

Number of loads:

    

Truck transportation

    

Truckload:

    

Van equipment

     376,268       321,212  

Unsided/platform equipment

     131,829       114,263  

Less-than-truckload

     47,843       40,692  

Other truck transportation (1)

     85,930       59,663  
  

 

 

   

 

 

 

Total truck transportation

     641,870       535,830  

Rail intermodal

     12,630       11,700  

Ocean and air cargo carriers

     11,560       9,230  
  

 

 

   

 

 

 
     666,060       556,760  
  

 

 

   

 

 

 

Loads hauled via BCO Independent Contractors (3)
included in total truck transportation

     262,240       245,950  

Revenue per load:

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 2,873     $ 2,271  

Unsided/platform equipment

     3,101       2,604  

Less-than-truckload

     705       631  

Other truck transportation (1)

     2,649       2,362  

Total truck transportation

     2,728       2,227  

Rail intermodal

     3,380       2,710  

Ocean and air cargo carriers

     13,154       5,157  

Revenue per load on loads hauled via BCO Independent Contractors (3)

   $ 2,774     $ 2,277  

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

    

Truck capacity providers:

    

BCO Independent Contractors (3)

     37     44

Truck Brokerage Carriers

     52     49

Rail intermodal

     2     2

Ocean and air cargo carriers

     8     4

Other

     1     1
     March 26,
2022
    March 27,
2021
 

Truck Capacity Providers

    

BCO Independent Contractors (3)

     11,089       10,498  
  

 

 

   

 

 

 

Truck Brokerage Carriers:

    

Approved and active (4)

     68,859       49,538  

Other approved

     28,094       23,246  
  

 

 

   

 

 

 
     96,953       72,784  
  

 

 

   

 

 

 

Total available truck capacity providers

     108,042       83,282  
  

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (3)

     11,935       11,268  

 

(1)

Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation logistics segment. Power-only refers to shipments where the Company furnishes a power unit and an operator but not trailing equipment, which is typically provided by the shipper or consignee.

(2)

Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro.

(3)

BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.

(4)

Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end.


 

LANDSTAR SYSTEM/10

 

 

Landstar System, Inc. and Subsidiary

Reconciliation of Gross Profit to Variable Contribution

(Dollars in thousands)

(Unaudited)

 

     Thirteen Weeks Ended  
     March 26,
2022
    March 27,
2021
 

Revenue

   $ 1,970,599     $ 1,287,534  

Costs of revenue:

    

Purchased transportation

     1,550,330       998,285  

Commissions to agents

     149,778       100,009  
  

 

 

   

 

 

 

Variable costs of revenue

     1,700,108       1,098,294  

Trailing equipment depreciation

     9,083       8,907  

Information technology costs (1)

     4,046       2,938  

Insurance-related costs (2)

     31,655       22,622  

Other operating costs

     11,141       7,642  
  

 

 

   

 

 

 

Other costs of revenue

     55,925       42,109  
  

 

 

   

 

 

 

Total costs of revenue

     1,756,033       1,140,403  
  

 

 

   

 

 

 

Gross profit

   $ 214,566     $ 147,131  
  

 

 

   

 

 

 

Gross profit margin

     10.9     11.4

Plus: other costs of revenue

     55,925       42,109  
  

 

 

   

 

 

 

Variable contribution

   $ 270,491     $ 189,240  
  

 

 

   

 

 

 

Variable contribution margin

     13.7     14.7

 

(1)

Includes costs of revenue incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support the Company’s independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income.

(2)

Primarily includes (i) insurance premiums paid for commercial auto liability, general liability, cargo and other lines of coverage related to the transportation of freight; (ii) the related cost of claims incurred under those programs; and (iii) brokerage commissions and other fees incurred relating to the administration of insurance programs available to BCO Independent Contractors that are reinsured by the Company, which are included in selling, general and administrative in the Company’s Consolidated Statements of Income.

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Ticker: LSTR
CIK: 853816
Form Type: 8-K Corporate News
Accession Number: 0001193125-22-111156
Submitted to the SEC: Wed Apr 20 2022 4:27:10 PM EST
Accepted by the SEC: Wed Apr 20 2022
Period: Wednesday, April 20, 2022
Industry: Trucking No Local
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

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