JACKSONVILLE, Fla., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) ("Landstar" or the "Company") reported basic and diluted earnings per share ("EPS") of $1.71 in the 2023 third quarter on revenue of $1.289 billion. Landstar reported EPS of $2.76 on revenue of $1.816 billion in the 2022 third quarter.
Gross profit in the 2023 third quarter was $128.1 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2023 third quarter was $187.4 million. Gross profit in the 2022 third quarter was $185.7 million and variable contribution in the 2022 third quarter was $245.7 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2023 and 2022 third quarters and year-to-date periods are provided in the Company's accompanying financial disclosures.
Trailing twelve month return on average shareholders' equity was 32% and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 29%. The Company is currently authorized to purchase up to 2,910,339 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 $0.33 per share payable on December 1, 2023, to stockholders of record as of the close of business on November 7, 2023. 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 2023 third quarter was $1,173.8 million, or 91% of revenue, compared to $1,598.8 million, or 88% of revenue, in the 2022 third quarter. Truckload transportation revenue hauled via van equipment in the 2023 third quarter was $665.6 million, compared to $914.2 million in the 2022 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2023 third quarter was $378.1 million, compared to $453.9 million in the 2022 third quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2023 third quarter was $102.0 million, compared to $195.3 million in the 2022 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $88.9 million, or 7% of revenue, in the 2023 third quarter, compared to $191.9 million, or 11% of revenue, in the 2022 third quarter.
"The soft freight market fundamentals experienced during the 2023 second quarter continued throughout the 2023 third quarter and made for challenging comparisons against our record 2022 third quarter performance," said Landstar President and Chief Executive Officer Jim Gattoni. "Lackluster demand, driven by continued weakness in the U.S. manufacturing sector and the ongoing impact of an inflation-challenged consumer goods sector, plus the continuation of a loose truck capacity market drove Landstar's truck revenue per load and volumes in the 2023 third quarter below prior year levels. The number of loads hauled via truck declined 16% as compared to the 2022 third quarter, at the high end of the Company's guidance included as part of the Company's 2023 second quarter earnings release on July 26, 2023, while truck revenue per load declined 12% as compared to the 2022 third quarter, at the low end of the Company's previously issued guidance." Gattoni continued, "The Company's balance sheet continues to be very strong, with cash and short term investments of approximately $497 million as of September 30, 2023. Cash flow from operations was $304 million through the first three quarters of fiscal year 2023."
Gattoni further commented, "Through the first several weeks of October, the number of loads hauled via truck has trended below historical, pre-pandemic end of third quarter to the beginning of fourth quarter sequential patterns, while truck revenue per load has thus far trended reasonably in-line with these historical, pre-pandemic sequential patterns. As a reminder, the 2022 fourth quarter included 14 weeks of operations while the 2023 fourth quarter will include 13 weeks. Taking that extra week in 2022 into consideration and assuming a continuation of the October trends coupled with our expectation of a muted peak season, I expect revenue per load on loads hauled via truck to be in a range of 6% to 8% below the 2022 fourth quarter and the number of loads hauled via truck to be in a range of 20% to 22% below the 2022 fourth quarter. As such, I anticipate revenue for the 2023 fourth quarter to be in a range of $1.225 billion to $1.275 billion."
Gattoni concluded, "Based on the range of revenue estimated for the 2023 fourth quarter, I would anticipate EPS to be in a range of $1.60 to $1.70. The anticipated range of EPS for the 2023 fourth quarter includes estimated insurance and claims costs of approximately 5.5% of BCO revenue. These costs were 5.6% of BCO revenue over the first nine months of 2023. The anticipated range of EPS for the 2023 fourth quarter also reflects an estimated effective income tax rate of 24.5%."
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 2023 Earnings Release Conference Call."
About Landstar:
Landstar System, Inc., a Fortune 500 company, 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 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 2022 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; U.S. trade relationships; substantial industry competition; disruptions or failures in the Company's computer systems; cyber and other information security incidents; dependence on key vendors; potential changes in 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 2022 fiscal year, described in Item 1A Risk Factors, Landstar's Form 10-Q for the 2023 first fiscal quarter, 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, Inc. and Subsidiary | |||||||||||||||||
| Consolidated Statements of Income | |||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Thirty-Nine Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||
| September 30, | September 24, | September 30, | September 24, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Revenue | $ | 4,098,877 | $ | 5,761,795 | $ | 1,289,345 | $ | 1,816,132 | |||||||||
| Investment income | 6,874 | 2,023 | 3,022 | 716 | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Purchased transportation | 3,141,234 | 4,512,341 | 986,743 | 1,416,323 | |||||||||||||
| Commissions to agents | 363,397 | 465,759 | 115,244 | 154,125 | |||||||||||||
| Other operating costs, net of gains on asset sales/dispositions | 40,998 | 34,878 | 15,158 | 13,356 | |||||||||||||
| Insurance and claims | 86,971 | 96,265 | 29,540 | 31,445 | |||||||||||||
| Selling, general and administrative | 159,071 | 165,199 | 50,975 | 53,519 | |||||||||||||
| Depreciation and amortization | 44,498 | 42,627 | 14,359 | 14,582 | |||||||||||||
| Total costs and expenses | 3,836,169 | 5,317,069 | 1,212,019 | 1,683,350 | |||||||||||||
| Operating income | 269,582 | 446,749 | 80,348 | 133,498 | |||||||||||||
| Interest and debt (income) expense | (2,079 | ) | 3,275 | (1,046 | ) | 1,047 | |||||||||||
| Income before income taxes | 271,661 | 443,474 | 81,394 | 132,451 | |||||||||||||
| Income taxes | 65,254 | 105,862 | 19,741 | 32,233 | |||||||||||||
| Net income | $ | 206,407 | $ | 337,612 | $ | 61,653 | $ | 100,218 | |||||||||
| Basic and diluted earnings per share | $ | 5.74 | $ | 9.15 | $ | 1.71 | $ | 2.76 | |||||||||
| Average basic and diluted shares outstanding | 35,958,000 | 36,886,000 | 35,951,000 | 36,334,000 | |||||||||||||
| Dividends per common share | $ | 0.93 | $ | 0.80 | $ | 0.33 | $ | 0.30 | |||||||||
| Landstar System, Inc. and Subsidiary | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||
| (Unaudited) | ||||||||||
| September 30, | December 31, | |||||||||
| 2023 | 2022 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 439,661 | $ | 339,581 | ||||||
| Short-term investments | 57,099 | 53,955 | ||||||||
| Trade accounts receivable, less allowance | ||||||||||
| of $12,054 and $12,121 | 810,801 | 967,793 | ||||||||
| Other receivables, including advances to independent | ||||||||||
| contractors, less allowance of $14,405 and $10,579 | 57,063 | 56,235 | ||||||||
| Other current assets | 30,918 | 21,826 | ||||||||
| Total current assets | 1,395,542 | 1,439,390 | ||||||||
| Operating property, less accumulated depreciation | ||||||||||
| and amortization of $426,984 and $393,274 | 284,081 | 314,990 | ||||||||
| Goodwill | 41,934 | 41,220 | ||||||||
| Other assets | 130,970 | 136,279 | ||||||||
| Total assets | $ | 1,852,527 | $ | 1,931,879 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Cash overdraft | $ | 48,067 | $ | 92,953 | ||||||
| Accounts payable | 464,720 | 527,372 | ||||||||
| Current maturities of long-term debt | 29,210 | 36,175 | ||||||||
| Insurance claims | 45,518 | 50,836 | ||||||||
| Dividends payable | - | 71,854 | ||||||||
| Other current liabilities | 82,550 | 98,945 | ||||||||
| Total current liabilities | 670,065 | 878,135 | ||||||||
| Long-term debt, excluding current maturities | 46,173 | 67,225 | ||||||||
| Insurance claims | 56,776 | 58,268 | ||||||||
| Deferred income taxes and other non-current liabilities | 36,359 | 41,030 | ||||||||
| Shareholders' equity: | ||||||||||
| Common stock, $0.01 par value, authorized 160,000,000 | ||||||||||
| shares, issued 68,497,324 and 68,382,310 | 685 | 684 | ||||||||
| Additional paid-in capital | 254,630 | 258,487 | ||||||||
| Retained earnings | 2,808,919 | 2,635,960 | ||||||||
| Cost of 32,550,980 and 32,455,300 shares of common | ||||||||||
| stock in treasury | (2,009,351 | ) | (1,992,886 | ) | ||||||
| Accumulated other comprehensive loss | (11,729 | ) | (15,024 | ) | ||||||
| Total shareholders' equity | 1,043,154 | 887,221 | ||||||||
| Total liabilities and shareholders' equity | $ | 1,852,527 | $ | 1,931,879 | ||||||
| Landstar System, Inc. and Subsidiary | |||||||||||||||||||
| Supplemental Information | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Thirty-Nine Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||||
| September 30, | September 24, | September 30, | September 24, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Revenue generated through (in thousands): | |||||||||||||||||||
| Truck transportation | |||||||||||||||||||
| Truckload: | |||||||||||||||||||
| Van equipment | $ | 2,123,693 | $ | 3,022,297 | $ | 665,569 | $ | 914,154 | |||||||||||
| Unsided/platform equipment | 1,150,483 | 1,336,956 | 378,147 | 453,924 | |||||||||||||||
| Less-than-truckload | 90,770 | 105,994 | 28,097 | 35,343 | |||||||||||||||
| Other truck transportation (1) | 379,471 | 632,001 | 101,951 | 195,345 | |||||||||||||||
| Total truck transportation | 3,744,417 | 5,097,248 | 1,173,764 | 1,598,766 | |||||||||||||||
| Rail intermodal | 73,953 | 113,762 | 23,064 | 27,652 | |||||||||||||||
| Ocean and air cargo carriers | 202,358 | 475,156 | 65,824 | 164,252 | |||||||||||||||
| Other (2) | 78,149 | 75,629 | 26,693 | 25,462 | |||||||||||||||
| $ | 4,098,877 | $ | 5,761,795 | $ | 1,289,345 | $ | 1,816,132 | ||||||||||||
| Revenue on loads hauled via BCO Independent Contractors (3) | |||||||||||||||||||
| included in total truck transportation | $ | 1,543,634 | $ | 2,043,772 | $ | 508,753 | $ | 627,809 | |||||||||||
| Number of loads: | |||||||||||||||||||
| Truck transportation | |||||||||||||||||||
| Truckload: | |||||||||||||||||||
| Van equipment | 966,867 | 1,130,263 | 311,831 | 366,513 | |||||||||||||||
| Unsided/platform equipment | 389,471 | 420,436 | 126,286 | 141,091 | |||||||||||||||
| Less-than-truckload | 134,580 | 142,740 | 41,514 | 45,912 | |||||||||||||||
| Other truck transportation (1) | 157,112 | 243,341 | 46,739 | 76,594 | |||||||||||||||
| Total truck transportation | 1,648,030 | 1,936,780 | 526,370 | 630,110 | |||||||||||||||
| Rail intermodal | 22,150 | 31,940 | 6,760 | 7,720 | |||||||||||||||
| Ocean and air cargo carriers | 25,380 | 34,410 | 8,630 | 11,520 | |||||||||||||||
| 1,695,560 | 2,003,130 | 541,760 | 649,350 | ||||||||||||||||
| Loads hauled via BCO Independent Contractors (3) | |||||||||||||||||||
| included in total truck transportation | 689,260 | 777,250 | 225,350 | 249,420 | |||||||||||||||
| Revenue per load: | |||||||||||||||||||
| Truck transportation | |||||||||||||||||||
| Truckload: | |||||||||||||||||||
| Van equipment | $ | 2,196 | $ | 2,674 | $ | 2,134 | $ | 2,494 | |||||||||||
| Unsided/platform equipment | 2,954 | 3,180 | 2,994 | 3,217 | |||||||||||||||
| Less-than-truckload | 674 | 743 | 677 | 770 | |||||||||||||||
| Other truck transportation (1) | 2,415 | 2,597 | 2,181 | 2,550 | |||||||||||||||
| Total truck transportation | 2,272 | 2,632 | 2,230 | 2,537 | |||||||||||||||
| Rail intermodal | 3,339 | 3,562 | 3,412 | 3,582 | |||||||||||||||
| Ocean and air cargo carriers | 7,973 | 13,809 | 7,627 | 14,258 | |||||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (3) | $ | 2,240 | $ | 2,629 | $ | 2,258 | $ | 2,517 | |||||||||||
| Revenue by capacity type (as a % of total revenue): | |||||||||||||||||||
| Truck capacity providers: | |||||||||||||||||||
| BCO Independent Contractors (3) | 38 | % | 35 | % | 39 | % | 35 | % | |||||||||||
| Truck Brokerage Carriers | 54 | % | 53 | % | 52 | % | 53 | % | |||||||||||
| Rail intermodal | 2 | % | 2 | % | 2 | % | 2 | % | |||||||||||
| Ocean and air cargo carriers | 5 | % | 8 | % | 5 | % | 9 | % | |||||||||||
| Other | 2 | % | 1 | % | 2 | % | 1 | % | |||||||||||
| September 30, | September 24, | ||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||
| Truck Capacity Providers | |||||||||||||||||||
| BCO Independent Contractors (3) | 9,455 | 10,742 | |||||||||||||||||
| Truck Brokerage Carriers: | |||||||||||||||||||
| Approved and active (4) | 51,717 | 71,207 | |||||||||||||||||
| Other approved | 27,925 | 30,222 | |||||||||||||||||
| 79,642 | 101,429 | ||||||||||||||||||
| Total available truck capacity providers | 89,097 | 112,171 | |||||||||||||||||
| Trucks provided by BCO Independent Contractors (3) | 10,253 | 11,644 | |||||||||||||||||
| (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, Inc. and Subsidiary | |||||||||||||||||
| Reconciliation of Gross Profit to Variable Contribution | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Thirty-Nine Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||
| September 30, | September 24, | September 30, | September 24, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Revenue | $ | 4,098,877 | $ | 5,761,795 | $ | 1,289,345 | $ | 1,816,132 | |||||||||
| Costs of revenue: | |||||||||||||||||
| Purchased transportation | 3,141,234 | 4,512,341 | 986,743 | 1,416,323 | |||||||||||||
| Commissions to agents | 363,397 | 465,759 | 115,244 | 154,125 | |||||||||||||
| Variable costs of revenue | 3,504,631 | 4,978,100 | 1,101,987 | 1,570,448 | |||||||||||||
| Trailing equipment depreciation | 24,240 | 27,760 | 7,721 | 9,397 | |||||||||||||
| Information technology costs (1) | 19,791 | 13,868 | 6,298 | 4,829 | |||||||||||||
| Insurance-related costs (2) | 88,484 | 98,821 | 30,102 | 32,380 | |||||||||||||
| Other operating costs | 40,998 | 34,878 | 15,158 | 13,356 | |||||||||||||
| Other costs of revenue | 173,513 | 175,327 | 59,279 | 59,962 | |||||||||||||
| Total costs of revenue | 3,678,144 | 5,153,427 | 1,161,266 | 1,630,410 | |||||||||||||
| Gross profit | $ | 420,733 | $ | 608,368 | $ | 128,079 | $ | 185,722 | |||||||||
| Gross profit margin | 10.3 | % | 10.6 | % | 9.9 | % | 10.2 | % | |||||||||
| Plus: other costs of revenue | 173,513 | 175,327 | 59,279 | 59,962 | |||||||||||||
| Variable contribution | $ | 594,246 | $ | 783,695 | $ | 187,358 | $ | 245,684 | |||||||||
| Variable contribution margin | 14.5 | % | 13.6 | % | 14.5 | % | 13.5 | % | |||||||||
| (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. | |||||||||||||||||
