LANDSTAR SYSTEM, INC. JACKSONVILLE, Fla., Jan. 28, 2016 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported fourth quarter net income of $37.9 million, or $0.88 per diluted share, on fourth quarter revenue of $849 million. Diluted earnings per share for the 2015 fourth quarter was the highest fourth quarter diluted earnings per share from continuing operations in Landstar history. Landstar reported net income of $38.5 million, or $0.86 per diluted share, on revenue of $863 million in the 2014 fourth quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $126.4 million in the 2015 fourth quarter compared to $124.7 million in gross profit in the 2014 fourth quarter. Operating income was $62.6 million in the 2015 fourth quarter and operating margin, representing operating income divided by gross profit, was 49.6 percent.
Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2015 fourth quarter was $786.4 million, or 93 percent of revenue, compared to $811.2 million, or 94 percent of revenue, in the 2014 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2015 fourth quarter was $481.4 million compared to $499.7 million in the 2014 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2015 fourth quarter was $285.6 million compared to $289.6 million in the 2014 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $50.6 million, or 6 percent of revenue, in the 2015 fourth quarter compared to $41.0 million, or 5 percent of revenue, in the 2014 fourth quarter.
Return on average shareholders' equity was 31 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 25 percent in fiscal year 2015. Landstar purchased approximately 779,000 shares of its common stock during the fiscal quarter ended December 26, 2015 at an aggregate cost of $48.5 million. Landstar purchased approximately 2,498,000 shares of its common stock during the fiscal year ended December 26, 2015 at an aggregate cost of $161.2 million. Currently, there are approximately 1,809,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program. As of December 26, 2015, the Company had $163 million in cash and short term investments and $192 million available for borrowing under the Company's senior credit facility.
In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.08 per share payable on March 11, 2016 to stockholders of record at the close of business on February 15, 2016. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
"Given the backdrop of a low growth macro environment and very difficult year-over-year comparisons, I am very pleased with our 2015 fourth quarter operating performance," said Landstar's President and Chief Executive Officer, Jim Gattoni. "The number of loads hauled via truck in the 2015 fourth quarter increased 7 percent over the 2014 fourth quarter, while the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers increased 35 percent over the 2014 fourth quarter. The growth in the number of loads hauled via truck was driven by increased volumes from unsided/platform equipment, van equipment and less-than-truckload services of 12 percent, 4 percent, and 6 percent, respectively. The growth in the number of loads hauled via unsided/platform equipment in the 2015 fourth quarter was entirely due to the continuation of demand from one shipper in the automotive sector for a project that began in April 2015. Otherwise, unsided/platform volumes were 4 percent lower in the 2015 fourth quarter compared to the 2014 fourth quarter. We expect the number of loads hauled on behalf of that shipper for this project to be insignificant in the 2016 first quarter. As expected, revenue per load on loads hauled via truck was lower in the 2015 fourth quarter as compared to the 2014 fourth quarter. Truck revenue per load in the 2015 fourth quarter was 9 percent lower as compared to the 2014 fourth quarter, mostly due to the impact of lower diesel fuel costs on loads hauled via truck brokerage carriers, the difficult comparison to record truck revenue per load experienced in the 2014 fourth quarter and a somewhat softer freight environment."
Gattoni continued, "In terms of annual performance, 2015 included a number of tremendous achievements. The Company established a new record for annual revenue, surpassing $3.3 billion for the first time in its history. Landstar also set new annual records for many other financial metrics including gross profit, operating income, net income and diluted earnings per share. The Company achieved these milestones against a backdrop of a low growth macro environment, declining fuel prices which impacted top-line growth and very tough comparisons to the previous record performance of fiscal year 2014. These fiscal year 2015 achievements speak to the continued strength of our variable cost business model and ability to execute in almost any environment. In particular, I am pleased by our continued organic load volume growth across all of the Company's service offerings with increases in truck, rail, air and ocean shipments of 8 percent, 42 percent, 13 percent and 10 percent, respectively, in fiscal year 2015 compared to fiscal year 2014. We continue to invest in the agent network and are currently underway in a multi-year project aimed at increasing efficiencies, primarily through technology, at both Landstar and across all of our agent offices that we believe will continue to fuel growth in the years to come. We expect costs associated with this initiative to impact diluted earnings per share by approximately $0.05 to $0.10 in fiscal year 2016."
Gattoni further stated, "During the first three weeks of the 2016 first quarter, growth in the number of loads hauled via truck has softened somewhat as compared to the quarter over quarter growth rates experienced during 2015. I expect the number of loads hauled via truck in the 2016 first quarter to increase in a low to mid-single digit range over the 2015 first quarter. As it pertains to revenue per load on loads hauled via truck, a low growth environment and looser capacity is putting further pressure on rates. However, I do not expect a significant change in the rate environment over the balance of the 2016 first quarter. As such, I expect revenue per load on loads hauled via truck in the 2016 first quarter to be below the 2015 first quarter in a mid-single digit percentage range. Assuming the current environment continues throughout the 2016 first quarter, I anticipate revenue for the 2016 first quarter to be in a range of $720 million to $770 million and, assuming that range of estimated revenue, I would anticipate 2016 first quarter diluted earnings per share to be in a range of $0.70 to $0.75 per share, compared to $0.67 per diluted share in the 2015 first quarter. From a longer term perspective, recent turmoil in world markets, the impact of a slowing global economy and uncertainty surrounding the 2016 election cycle all contribute to a highly unpredictable environment for our industry. As such, we will not be providing annual guidance. Nevertheless, regardless of these challenges, Landstar's variable cost business model performs well in almost any environment and I would expect Landstar to outperform industry fundamentals in the years ahead."
Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5:00 pm 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 Fourth Quarter 2015 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; 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 2014 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 owners 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.
(Tables follow)
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Fiscal Years Ended Fiscal Quarters Ended
------------------ ---------------------
December 26, December 27, December 26, December 27,
2015 2014 2015 2014
---- ---- ---- ----
Revenue $3,321,091 $3,184,790 $848,602 $862,830
Investment income 1,396 1,381 353 354
Costs and expenses:
Purchased
transportation 2,551,343 2,461,143 651,030 668,583
Commissions to
agents 270,260 250,780 71,147 69,584
Other operating
costs, net of
gains/losses on
asset sales/
dispositions 31,618 25,771 7,230 6,421
Insurance and
claims 48,754 46,280 11,144 8,548
Selling, general
and
administrative 149,704 150,250 37,907 41,683
Depreciation and
amortization 29,102 27,575 7,849 7,156
----------------
Total costs and expenses 3,080,781 2,961,799 786,307 801,975
--------- --------- ------- -------
Operating income 241,706 224,372 62,648 61,209
Interest and debt expense 2,949 3,177 741 917
----- ----- --- ---
Income before income taxes 238,757 221,195 61,907 60,292
Income taxes 91,068 82,386 24,052 21,801
------ ------ ------ ------
Net income $147,689 $138,809 $37,855 $38,491
======== ======== ======= =======
Earnings per common share $3.38 $3.09 $0.89 $0.86
===== ===== ===== =====
Diluted earnings per share $3.37 $3.07 $0.88 $0.86
===== ===== ===== =====
Average number of shares outstanding:
Earnings per
common share 43,664,000 44,956,000 42,729,000 44,770,000
=============
Diluted earnings
per share 43,813,000 45,169,000 42,849,000 45,002,000
================
Dividends per common share $0.30 $1.26 $0.08 $1.07
===== ===== ===== =====
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
December 26, December 27,
2015 2014
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $114,520 $163,944
Short-term
investments 48,823 37,007
Trade accounts
receivable, less
allowance of
$4,327 and $4,338
462,699 492,642
Other receivables,
including advances
to independent
contractors, less
allowance of
$4,143 and $4,189
18,472 15,132
Deferred income
taxes and other
current assets 18,156 23,603
Total current assets 662,670 732,328
------- -------
Operating property, less accumulated depreciation and
amortization of $182,591 and $160,681
225,927 202,203
Goodwill 31,134 31,134
Other assets 78,339 78,547
Total assets $998,070 $1,044,212
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $35,609 $34,629
Accounts payable 223,709 220,077
Current maturities
of long-term debt 42,499 35,064
Insurance claims 19,757 24,233
Dividends payable - 44,794
Other current
liabilities 47,963 51,654
Total current liabilities 369,537 410,451
------- -------
Long-term debt, excluding current
maturities 81,793 76,257
Insurance claims 21,477 21,769
Deferred income taxes and other non-
current liabilities 59,026 47,474
Shareholders' equity:
Common stock, $0.01
par value,
authorized
160,000,000
shares, issued
67,391,616 and
67,268,817 shares
674 673
Additional paid-in
capital 195,841 189,012
Retained earnings 1,389,975 1,255,374
Cost of 24,972,079
and 22,474,331
shares of common
stock in treasury
(1,116,765) (955,613)
Accumulated other
comprehensive loss (3,488) (1,185)
-------------
Total shareholders' equity 466,237 488,261
------- -------
Total liabilities and shareholders'
equity $998,070 $1,044,212
======== ==========
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
Fiscal Years Ended Fiscal Quarters Ended
------------------ ---------------------
December 26, December 27, December 26, December 27,
2015 2014 2015 2014
---- ---- ---- ----
Revenue generated through (in thousands):
-----------------------------------------
Truck transportation
Truckload:
Van equipment $1,894,221 $1,814,195 $481,397 $499,651
Unsided/platform equipment 1,109,356 1,093,999 285,589 289,627
Less-than-truckload 80,687 80,384 19,390 21,969
------ ------ ------ ------
Total truck transportation 3,084,264 2,988,578 786,376 811,247
Rail intermodal 105,347 81,220 28,659 22,263
Ocean and air cargo
carriers 86,664 74,952 21,939 18,784
Other (1) 44,816 40,040 11,628 10,536
$3,321,091 $3,184,790 $848,602 $862,830
========== ========== ======== ========
Revenue on loads hauled
via BCO Independent
Contractors (2)
included in total
truck
transportation $1,522,513 $1,514,254 $381,643 $388,041
Number of loads:
----------------
Truck transportation
Truckload:
Van equipment 1,102,654 1,038,517 282,431 270,875
Unsided/platform equipment 485,993 444,852 126,224 112,300
Less-than-truckload 112,363 96,541 28,525 26,835
------- ------ ------ ------
Total truck transportation 1,701,010 1,579,910 437,180 410,010
Rail intermodal 45,060 31,640 12,710 8,800
Ocean and air cargo
carriers 18,060 16,260 4,740 4,150
1,764,130 1,627,810 454,630 422,960
========= ========= ======= =======
Loads hauled via BCO
Independent Contractors
(2)
included in total
truck
transportation 826,600 818,480 210,190 203,680
Revenue per load:
-----------------
Truck transportation
Truckload:
Van equipment $1,718 $1,747 $1,704 $1,845
Unsided/platform equipment 2,283 2,459 2,263 2,579
Less-than-truckload 718 833 680 819
Total truck transportation 1,813 1,892 1,799 1,979
Rail intermodal 2,338 2,567 2,255 2,530
Ocean and air cargo
carriers 4,799 4,610 4,628 4,526
Revenue per load on
loads hauled via BCO
Independent Contractors
(2) $1,842 $1,850 $1,816 $1,905
Revenue by capacity type (as a % of total revenue);
---------------------------------------------------
Truck capacity
providers:
BCO Independent
Contractors (2) 46% 48% 45% 45%
Truck Brokerage
Carriers 47% 46% 48% 49%
Rail intermodal 3% 3% 3% 3%
Ocean and air cargo
carriers 3% 2% 3% 2%
Other 1% 1% 1% 1%
December 26, December 27,
2015 2014
---- ----
Truck Capacity Providers
------------------------
BCO Independent
Contractors (2) 8,907 8,372
Truck Brokerage
Carriers:
Approved and active
(3) 29,728 26,222
Other approved 14,715 12,135
------ ------
44,443 38,357
------ ------
Total available truck
capacity providers 53,350 46,729
Trucks provided by BCO
Independent Contractors
(2) 9,500 8,932
(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.
