Landstar System Reports All-Time Quarterly Records With Revenue of $1.296 Billion and Diluted Earnings Per Share of $1.70 in the 2020 Fourth Quarter

Wednesday, 27. January 2021 22:15

JACKSONVILLE, Fla., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported all-time quarterly records with revenue of $1.296 billion and diluted earnings per share of $1.70 in the 2020 fourth quarter. Diluted earnings per share in the quarter included a previously announced one-time cost of $15.5 million, or $0.31 per diluted share, related to buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a truck owner-operator recruitment and retention program formerly involving those agents. Landstar reported revenue of $994.9 million and diluted earnings per share of $1.27 in the 2019 fourth quarter. Gross profit in the 2020 fourth quarter of $182.4 million, 23 percent above 2019 fourth quarter gross profit of $148.7 million, was also an all-time Landstar quarterly record.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2020 fourth quarter was $1,201.7 million, or 93 percent of revenue, compared to $911.8 million, or 92 percent of revenue, in the 2019 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2020 fourth quarter was $821.0 million compared to $571.8 million in the 2019 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2020 fourth quarter was $354.1 million compared to $315.2 million in the 2019 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $75.7 million, or 6 percent of revenue, in the 2020 fourth quarter compared to $63.0 million, or 6 percent of revenue, in the 2019 fourth quarter.

Return on average shareholders’ equity was 28 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 2020. Landstar purchased approximately 1,179,000 shares of its common stock during fiscal year 2020 at an aggregate cost of approximately $116.0 million. The Company currently is authorized to purchase up to 1,821,030 shares of the Company’s common stock under its previously announced share purchase program. As previously disclosed by the Company in a Form 8-K filed with the Securities and Exchange Commission on December 9, 2020, its Board of Directors declared a special one-time cash dividend in the amount of $2.00 per share that was paid on January 22, 2021, to stockholders of record as of the close of business on January 8, 2021. In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.21 per share payable on March 12, 2021, to stockholders of record as of the close of business on February 15, 2021. It is currently the intention of the Board to pay dividends on a quarterly basis going forward. As of December 26, 2020, the Company had $291 million in cash and short-term investments and $216 million available for borrowings under the Company’s senior credit facility, with the ability to increase borrowings to $366 million using the facility’s accordion feature.

“Landstar’s 2020 fourth quarter performance was outstanding,” said Landstar President and CEO Jim Gattoni. “Revenue, gross profit, and diluted earnings per share were each all-time quarterly records. Additionally, excluding the $15.5 million one-time cost to buyout certain incentive commission arrangements with several agents, operating income and operating margin in the 2020 fourth quarter would have achieved all-time quarterly records. Revenue from truck loads hauled via van equipment exceeded the 2019 fourth quarter by 44 percent and revenue from truck loads hauled via unsided/platform equipment exceeded the 2019 fourth quarter by 12 percent. Consumer demand for durables, building products and e-commerce drove record van quarterly revenue. For loads hauled via van equipment in the 2020 fourth quarter compared to the 2019 fourth quarter, the number of loads increased 16 percent and revenue per load increased 24 percent. Moreover, the fourth quarter was the only quarter of fiscal year 2020 in which revenue from truck loads hauled via unsided/platform equipment exceeded that of the corresponding prior year quarter. The number of loads and revenue per load on loads hauled via unsided/platform equipment in the 2020 fourth quarter exceeded the 2019 fourth quarter by 7 percent and 5 percent, respectively.”  

Gattoni continued, “In our third quarter earnings release on October 21, 2020, we provided fourth quarter revenue guidance of $1.15 billion to $1.20 billion and fourth quarter diluted earnings per share guidance of $1.32 to $1.42. On November 17, 2020, we disclosed in a Form 8-K filed with the SEC and further explained at a webcast investor conference the next day that based on overall market conditions, we expected 2020 fourth quarter revenue and diluted earnings per share for the 2020 fourth quarter to be slightly above the high end of the previously issued guidance. The updated guidance provided on November 17, 2020 reflected truck load volume that at the time was trending near the high end of the previous guidance of high single digit percentage growth and revenue per load on loads hauled via truck trending above the 2019 fourth quarter in a mid-teen percentage range, as compared to the low double-digit percentage range reflected in our previously issued guidance. The year-over-year growth in the number of loads and revenue per load on loads hauled via truck in November and December continued to improve from October, with exceptional strength in substitute line haul services provided in support of e-commerce related demand during the holiday peak season. The number of loads hauled via truck in October, November and December exceeded the corresponding months of 2019 by 10 percent, 13 percent and 15 percent, respectively, while revenue per load on loads hauled via truck increased in October, November and December over the corresponding months of 2019 by 15 percent, 17 percent and 18 percent, respectively. Overall, truck load volume increased in the 2020 fourth quarter by 13% as compared to the 2019 fourth quarter, and truck revenue per load increased by 17% as compared to the 2019 fourth quarter. Ultimately, revenue in the 2020 fourth quarter was $1.296 billion and diluted earnings per share for the 2020 fourth quarter was $1.70.

Gattoni commented, “The achievement of revenue in excess of our guidance updated on November 17, 2020, primarily resulted from the continuing sequential increases Landstar experienced in the number of loads and revenue per load on loads hauled via truck from mid-November through the end of the fiscal year. Diluted earnings per share of $1.70 in the 2020 fourth quarter significantly exceeded the high end of our inital guidance of $1.42 due to the increase in revenue, actual insurance and claims costs that came in below the 4.8 percent of BCO revenue used in our previous guidance, and a lower effective income tax rate in the fourth quarter than initially anticipated.”

Gattoni further stated, “Landstar’s financial performance in 2020 was exceptional given the unprecedented impact of the COVID-19 pandemic on the U.S. economy and supply chains throughout the world, the softness in the U.S. manufacturing sector throughout the year, the transition of over 80 percent of the Company’s employees to work remotely beginning in March and the many other challenges experienced by Landstar customers, employees, agents, BCOs and other third party capacity providers in managing through the business and personal disruptions caused by the pandemic. The sudden closing of manufacturing facilities in the U.S. adversely impacted the financial results of Landstar’s 2020 second quarter with a decrease in diluted earnings per share of almost 60 percent compared to the 2019 second quarter. In light of the softness in U.S. manufacturing that continued beyond the 2020 second quarter, the Company’s financial performance in the back half of 2020 was remarkable. Revenue, gross profit, operating income and diluted earnings per share exceeded the back half of 2019 by 19 percent, 14 percent, 22 percent and 27 percent, respectively. Additionally, the Company ended the year with a record number of trucks provided by BCOs and a record number of approved third-party truck brokerage carriers. The resiliency of Landstar’s variable cost, light asset-based business model continues to shine.”

Gattoni continued, “January of any given year is typically the slowest month of the year. Through the first several weeks of January, the macroeconomic environment experienced throughout the back half of 2020 continued, characterized by strong consumer demand, relative softness in the U.S. industrial/manufacturing sector relative to sectors servicing consumers, and tight available truck capacity. I anticipate demand for substitute line haul services in the 2021 first quarter will return to the still very strong levels we experienced throughout September and October, before the steep spike in demand that took place during the holiday peak season. I expect these market conditions throughout the remainder of the 2021 first quarter and, as a result, revenue and diluted earnings per share in the 2021 first quarter to be well above that of the 2020 first quarter.   From a revenue standpoint, I expect the number of loads hauled via truck in the 2021 first quarter to exceed the 2020 first quarter in a high single-digit percentage range. I expect revenue per load on loads hauled via truck in the 2021 first quarter to exceed the 2020 first quarter in a mid-teen percentage range. As such, I anticipate revenue for the 2021 first quarter to be in a range of $1.10 billion to $1.15 billion.”

Gattoni concluded, “Based on the range of revenue estimated for the 2021 first quarter, I would anticipate diluted earnings per share to be in a range of $1.55 to $1.65. This range of diluted earnings per share includes insurance and claims expense estimated at 4.6 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 Fourth Quarter 2020 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: 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; 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 2019 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 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, Inc. and Subsidiary 
Consolidated Statements of Income 
(Dollars in thousands, except per share amounts) 
(Unaudited) 
         
         
 Fiscal Years Ended Fiscal Quarters Ended 
 December 26, December 28, December 26, December 28, 
 2020 2019 2020 2019 
         
Revenue$4,132,981 $4,084,577  $1,296,355 $994,879 
Investment income 3,399  5,041   683  1,305 
         
Costs and expenses:        
Purchased transportation 3,192,850  3,127,474   1,009,707  761,828 
Commissions to agents 340,780  342,226   104,290  84,364 
Other operating costs, net of gains/losses on asset sales/dispositions 30,463  37,274   7,428  8,743 
Insurance and claims 87,773  80,319   21,210  25,071 
Selling, general and administrative 167,633  158,953   42,854  38,236 
Depreciation and amortization 45,855  44,468   11,643  11,423 
Impairment of intangible and other assets 2,582  -   -  - 
Commission program termination costs 15,494  -   15,494  - 
         
Total costs and expenses 3,883,430  3,790,714   1,212,626  929,665 
         
Operating income 252,950  298,904   84,412  66,519 
Interest and debt expense 3,953  3,141   1,017  863 
         
Income before income taxes 248,997  295,763   83,395  65,656 
Income taxes 56,891  68,060   18,324  15,608 
         
Net income 192,106  227,703   65,071  50,048 
Less: Net loss attributable to noncontrolling interest -  (17)  -  - 
Net income attributable to Landstar System,        
Inc. and subsidiary$192,106 $227,720  $65,071 $50,048 
         
Earnings per common share attributable to        
Landstar System, Inc. and subsidiary$4.98 $5.72  $1.70 $1.27 
         
Diluted earnings per share attributable to        
Landstar System, Inc. and subsidiary$4.98 $5.72  $1.70 $1.27 
         
Average number of shares outstanding:        
Earnings per common share 38,602,000  39,786,000   38,389,000  39,472,000 
Diluted earnings per share 38,602,000  39,786,000   38,389,000  39,472,000 
         
Dividends per common share$2.790 $2.700  $2.210 $2.185 
         


    
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
    
    
 December 26, December 28,
  2020   2019 
ASSETS   
Current assets:   
Cash and cash equivalents$249,354  $319,515 
Short-term investments 41,375   32,901 
Trade accounts receivable, less allowance   
of $8,670 and $7,284 764,169   588,549 
Other receivables, including advances to independent   
contractors, less allowance of $7,239 and $7,667 134,757   35,553 
Other current assets 18,520   21,370 
Total current assets 1,208,175   997,888 
    
Operating property, less accumulated depreciation   
and amortization of $299,407 and $280,849 296,996   285,855 
Goodwill 40,949   38,508 
Other assets 107,679   105,460 
Total assets$1,653,799  $1,427,711 
    
LIABILITIES AND EQUITY   
Current liabilities:   
Cash overdraft$74,748  $53,878 
Accounts payable 380,505   271,996 
Current maturities of long-term debt 35,415   42,632 
Insurance claims 149,774   44,532 
Dividends payable 76,770   78,947 
Other current liabilities 88,925   60,919 
Total current liabilities 806,137   552,904 
    
Long-term debt, excluding current maturities 65,359   70,212 
Insurance claims 38,867   33,575 
Deferred income taxes and other non-current liabilities 51,601   49,551 
    
Shareholders' equity:   
Common stock, $0.01 par value, authorized 160,000,000   
shares, issued 68,183,702 and 68,083,419 shares 682   681 
Additional paid-in capital 228,875   226,123 
Retained earnings 2,046,238   1,962,161 
Cost of 29,797,639 and 28,609,926 shares of common   
stock in treasury (1,581,961)  (1,465,284)
Accumulated other comprehensive loss (1,999)  (2,212)
Total shareholders' equity 691,835   721,469 
Total liabilities and shareholders' equity$1,653,799  $1,427,711 
    


        
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
        
        
 Fiscal Years Ended Fiscal Quarters Ended
 December 26, December 28, December 26, December 28,
 2020 2019 2020 2019
Revenue generated through (in thousands):       
        
Truck transportation       
Truckload:       
Van equipment$2,515,940  $2,371,188  $821,024  $571,767 
Unsided/platform equipment 1,202,295   1,295,817   354,108   315,202 
Less-than-truckload 97,546   98,324   26,562   24,849 
Total truck transportation 3,815,781   3,765,329   1,201,694   911,818 
Rail intermodal 114,313   118,305   32,566   30,750 
Ocean and air cargo carriers 132,180   121,485   43,178   32,227 
Other (1) 70,707   79,458   18,917   20,084 
 $4,132,981  $4,084,577  $1,296,355  $994,879 
        
Revenue on loads hauled via BCO Independent Contractors (2)       
included in total truck transportation$1,866,526  $1,831,752  $554,523  $441,617 
        
Number of loads:       
        
Truck transportation       
Truckload:       
Van equipment 1,318,768   1,337,089   372,651   322,517 
Unsided/platform equipment 487,348   513,579   130,678   122,467 
Less-than-truckload 163,024   155,592   43,491   39,976 
Total truck transportation 1,969,140   2,006,260   546,820   484,960 
Rail intermodal 46,280   47,590   12,870   12,220 
Ocean and air cargo carriers 31,900   30,110   9,180   7,960 
  2,047,320   2,083,960   568,870   505,140 
        
Loads hauled via BCO Independent Contractors (2)       
included in total truck transportation 945,210   954,990   251,350   232,120 
        
Revenue per load:       
        
Truck transportation       
Truckload:       
Van equipment$1,908  $1,773  $2,203  $1,773 
Unsided/platform equipment 2,467   2,523   2,710   2,574 
Less-than-truckload 598   632   611   622 
Total truck transportation 1,938   1,877   2,198   1,880 
Rail intermodal 2,470   2,486   2,530   2,516 
Ocean and air cargo carriers 4,144   4,035   4,703   4,049 
        
Revenue per load on loads hauled via BCO Independent Contractors (2)$1,975  $1,918  $2,206  $1,903 
        
Revenue by capacity type (as a % of total revenue);       
        
Truck capacity providers:       
BCO Independent Contractors (2) 45%  45%  43%  44%
Truck Brokerage Carriers 47%  47%  50%  47%
Rail intermodal 3%  3%  3%  3%
Ocean and air cargo carriers 3%  3%  3%  3%
Other  2%  2%  1%  2%
        
        
     December 26, December 28,
     2020 2019
Truck Capacity Providers       
        
BCO Independent Contractors (2)     10,242   9,554 
Truck Brokerage Carriers:       
Approved and active (3)     46,053   39,497 
Other approved     22,972   16,820 
      69,025   56,317 
Total available truck capacity providers     79,267   65,871 
        
Trucks provided by BCO Independent Contractors (2)     10,991   10,243 
        
        
(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.

Contact:  Jim Gattoni
Landstar System, Inc.
www.landstar.com
904-398-9400

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