LANDSTAR SYSTEM, INC. JACKSONVILLE, Fla., April 20, 2016 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported record first quarter diluted earnings per share of $0.69, on revenue of $712 million in the 2016 first quarter. Landstar reported diluted earnings per share of $0.67 on revenue of $762 million in the 2015 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $112.2 million in the 2016 first quarter compared to $115.4 million in the 2015 first quarter. Operating margin, representing operating income divided by gross profit, was 42.7 percent in the 2016 first quarter.
Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2016 first quarter was $655.1 million, or 92 percent of revenue, compared to $708.9 million, or 93 percent of revenue, in the 2015 first quarter. Truckload transportation revenue hauled via van equipment in the 2016 first quarter was $428.2 million compared to $449.7 million in the 2015 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2016 first quarter was $209.4 million compared to $239.5 million in the 2015 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $44.9 million, or 6 percent of revenue, in the 2016 first quarter compared to $42.8 million, or 6 percent of revenue, in the 2015 first quarter.
Trailing twelve-month return on average shareholders' equity was 31 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 25 percent. Landstar purchased 175,000 shares of its common stock during 2016 at an aggregate cost of $10.2 million. Currently, there are approximately 1,634,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program. As of March 26, 2016, the Company had $217 million in cash and short term investments and $192 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 $0.08 per share payable on May 27, 2016, to stockholders of record as of the close of business on May 5, 2016. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
"During the 2016 first quarter, the number of loads hauled via truck was higher than any first quarter in Landstar history. Given the freight environment during the quarter, where demand was somewhat softer than during the 2015 first quarter, I am pleased with the continued execution of adding increased volumes," said Landstar's President and Chief Executive Officer, Jim Gattoni.
Gattoni continued, "Overall, however, 2016 first quarter revenue was 7 percent below the comparable prior year period entirely due to lower revenue per load, particularly on loads hauled via truck. The number of loads hauled via truck in the 2016 first quarter increased 3 percent over the 2015 first quarter, driven by a 4 percent increase in the number of loads hauled via van equipment, a 1 percent increase in the number of loads hauled via unsided/platform equipment and a 3 percent increase in less-than-truckload volume. The number of loads hauled via unsided/platform equipment was impacted by a 5 percent decrease in the number of heavy/specialized loads, which comprised approximately 28 percent of Landstar's unsided/platform revenue in the 2016 first quarter. Landstar also achieved a 22 percent increase in the 2016 first quarter over the 2015 first quarter in the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers."
Gattoni further commented, "As I mentioned earlier, our truckload services experienced pricing pressure throughout the 2016 first quarter, as industry-wide truck capacity was more readily available as compared to the 2015 first quarter. This pricing pressure was more apparent in the U.S. spot market, in which the Company mostly operates. Additionally, the average cost of a gallon of diesel fuel was over 25 percent lower during the 2016 first quarter compared to the 2015 first quarter putting additional pressure on pricing, especially as it relates to loads hauled via truck brokerage carriers. As such, revenue per load on loads hauled via truck was 10 percent lower in the 2016 first quarter compared to the 2015 first quarter. Despite the softer pricing environment, 2016 first quarter operating margin was 42.7 percent, in line with seasonal historical first quarter results, and diluted earnings per share in the 2016 first quarter increased 3 percent over the 2015 first quarter."
Gattoni continued, "Through the first several weeks of April, the number of loads hauled via truck exceeded the prior year comparable period in a low single digit percentage, consistent with the growth rate Landstar experienced in the 2016 first quarter. In mid-April 2015, we began a project to haul a significant number of loads for a single account in the automotive industry. That project ended at the end of 2015. Excluding the 13,000 loads hauled via truck in the 2015 second quarter related to that project (representing approximately $27 million in revenue), I expect the number of loads hauled via truck in the 2016 second quarter to increase in a low single digit range over the 2015 second quarter. Although we have recently experienced the normal seasonal uptick in revenue per load as we moved into April, I anticipate truck revenue per load in the 2016 second quarter to be below the 2015 second quarter in a high single digit to low double digit percentage range. My expectation is that pricing conditions for truck services in the 2016 second quarter will continue to be impacted by more readily available truck capacity as compared to the prior year second quarter and a relatively low per gallon cost of diesel fuel. Assuming the current environment continues throughout the 2016 second quarter, I anticipate revenue for the 2016 second quarter to be in a range of $770 million to $820 million and, assuming that range of estimated revenue, I would anticipate 2016 second quarter diluted earnings per share to be in a range of $0.80 to $0.85 per share compared to $0.92 per diluted share in the 2015 second 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 First Quarter 2016 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; substantial industry competition; disruptions or failures in the Company's computer systems; cyber incidents; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; 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 2015 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 logistics services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees. All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2013 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.
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Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
--------------------
March 26, March 28,
2016 2015
---- ----
Revenue $711,644 $762,380
Investment income 380 354
Costs and expenses:
Purchased
transportation 540,328 587,153
Commissions to
agents 59,092 59,784
Other operating
costs, net of
gains on asset
sales/
dispositions 7,407 7,689
Insurance and
claims 14,213 14,796
Selling, general
and
administrative 34,614 37,248
Depreciation and
amortization 8,438 7,019
Total costs
and
expenses 664,092 713,689
------- -------
Operating income 47,932 49,045
Interest and debt expense 889 781
--- ---
Income before income taxes 47,043 48,264
Income taxes 17,859 18,249
------ ------
Net income $29,184 $30,015
======= =======
Earnings per common share $0.69 $0.67
===== =====
Diluted earnings per share $0.69 $0.67
===== =====
Average number of shares outstanding:
Earnings per
common share 42,395,000 44,588,000
Diluted earnings
per share 42,489,000 44,760,000
Dividends per common share $0.08 $0.07
===== =====
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
March 26, December 26,
2016 2015
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $156,284 $114,520
Short-term
investments 61,140 48,823
Trade accounts
receivable, less
allowance
of $4,777 and
$4,327 383,057 462,699
Other receivables,
including advances to
independent
contractors, less
allowance of $4,373
and $4,143 28,778 18,472
Other current
assets 7,529 11,604
Total current
assets 636,788 656,118
------- -------
Operating property, less accumulated depreciation
228,474 225,927
and amortization of
$185,236 and
$182,591
Goodwill 31,134 31,134
Other assets 61,096 78,339
Total assets $957,492 $991,518
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash
overdraft $30,073 $35,609
Accounts payable 172,035 223,709
Current maturities
of long-term debt 43,148 42,499
Insurance claims 22,026 19,757
Other current
liabilities 54,786 47,963
Total current
liabilities 322,068 369,537
------- -------
Long-term debt, excluding current maturities 81,385 81,793
Insurance claims 21,493 21,477
Deferred income taxes and other non-current
liabilities 50,157 52,474
Shareholders' equity:
Common stock, $0.01 par
value, authorized
160,000,000
shares, issued
67,473,450 and
67,391,616 shares 675 674
Additional paid-
in capital 195,667 195,841
Retained earnings 1,415,763 1,389,975
Cost of 25,147,079 and
24,972,079 shares of
common
stock in
treasury (1,126,993) (1,116,765)
Accumulated other
comprehensive loss (2,723) (3,488)
-------
Total
shareholders'
equity 482,389 466,237
------- -------
Total liabilities and shareholders' equity $957,492 $991,518
======== ========
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
Thirteen Weeks Ended
--------------------
March 26, March 28,
2016 2015
---- ----
Revenue generated through (in thousands):
-----------------------------------------
Truck transportation
Truckload:
Van equipment $428,193 $449,688
Unsided/platform equipment 209,422 239,483
Less-than-truckload 17,477 19,698
------ ------
Total truck transportation 655,092 708,869
Rail intermodal 26,108 23,181
Ocean and air cargo carriers 18,808 19,632
Other (1) 11,636 10,698
$711,644 $762,380
======== ========
Revenue on loads hauled via BCO Independent
Contractors (2)
included in total truck transportation $334,278 $350,325
Number of loads:
----------------
Truck transportation
Truckload:
Van equipment 269,040 258,952
Unsided/platform equipment 102,742 102,166
Less-than-truckload 26,898 25,992
------ ------
Total truck transportation 398,680 387,110
Rail intermodal 12,030 9,480
Ocean and air cargo carriers 4,560 4,130
415,270 400,720
======= =======
Loads hauled via BCO Independent Contractors (2)
included in total truck transportation 197,670 191,300
Revenue per load:
-----------------
Truck transportation
Truckload:
Van equipment $1,592 $1,737
Unsided/platform equipment 2,038 2,344
Less-than-truckload 650 758
Total truck transportation 1,643 1,831
Rail intermodal 2,170 2,445
Ocean and air cargo carriers 4,125 4,754
Revenue per load on loads hauled via BCO Independent
Contractors (2) $1,691 $1,831
Revenue by capacity type (as a % of total revenue);
---------------------------------------------------
Truck capacity providers:
BCO Independent Contractors (2) 47% 46%
Truck Brokerage Carriers 45% 47%
Rail intermodal 4% 3%
Ocean and air cargo carriers 3% 3%
Other 2% 1%
March 26, March 28,
2016 2015
---- ----
Truck Capacity Providers
------------------------
BCO Independent Contractors (2) 8,889 8,478
Truck Brokerage Carriers:
Approved and active (3) 29,523 27,304
Other approved 15,748 13,016
45,271 40,320
------ ------
Total available truck capacity providers 54,160 48,798
Trucks provided by BCO Independent Contractors (2) 9,497 9,046
(1) Includes primarily premium revenue generated by the insurance segment.
(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 have moved at least one load in the 180 days immediately preceeding the fiscal quarter end.
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SOURCE Landstar System, Inc.
