EX-99.1 2 d450998dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

 

LOGO

 

For Immediate Release

   Contact: Jim Todd (CFO)
     Landstar System, Inc.
     www.landstar.com

April 26, 2023

   904-398-9400

LANDSTAR SYSTEM REPORTS

FIRST QUARTER REVENUE OF $1.436B AND

FIRST QUARTER DILUTED EARNINGS PER SHARE OF $2.17

Jacksonville, FL - Landstar System, Inc. (NASDAQ: LSTR) (“Landstar” or the “Company”) reported diluted earnings per share (“DEPS”) of $2.17 in the 2023 first quarter on revenue of $1.436 billion. Landstar reported DEPS of $3.34 on revenue of $1.971 billion in the 2022 first quarter.

Gross profit in the 2023 first quarter was $152.9 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2023 first quarter was $208.7 million. Gross profit in the 2022 first quarter was $214.6 million and variable contribution in the 2022 first quarter was $270.5 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2023 and 2022 first quarters are provided in the Company’s accompanying financial disclosures.

Trailing twelve month return on average shareholders’ equity was 44 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 38 percent. During the 2023 first quarter, Landstar purchased approximately 90,000 shares of its common stock at an aggregate cost of $15.4 million. 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 $0.30 per share payable on May 26, 2023, to stockholders of record as of the close of business on May 4, 2023. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.


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Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2023 first quarter was $1,323.7 million, or 92 percent of revenue, compared to $1,751.3 million, or 89 percent of revenue, in the 2022 first quarter. Truckload transportation revenue hauled via van equipment in the 2023 first quarter was $755.1 million, compared to $1,081.2 million in the 2022 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2023 first quarter was $377.6 million, compared to $408.8 million in the 2022 first quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2023 first quarter was $159.5 million, compared to $227.6 million in the 2022 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $86.8 million, or 6 percent of revenue, in the 2023 first quarter, compared to $194.7 million, or 10 percent of revenue, in the 2022 first quarter.

“Given a challenging freight environment to begin our 2023 fiscal year, I am pleased with Landstar’s first quarter financial performance,” said Landstar President and Chief Executive Officer Jim Gattoni. “As we expected, our record 2022 first quarter also made for difficult comparisons during our 2023 first quarter. As compared to the 2022 first quarter, revenue generated via unsided/platform equipment held up considerably better than revenue generated via van equipment and other truck transportation services, which tend to be more correlated to U.S. consumer demand. Our truck services, which primarily operate in the U.S. spot market, experienced pricing pressure throughout the 2023 first quarter as industry-wide truck capacity was significantly more readily available as compared to the 2022 first quarter, during which pandemic-related supply chain disruption was at a high point. As a result, revenue per load on loads hauled via truck decreased 14% in the 2023 first quarter compared to the 2022 first quarter. However, it should be noted that revenue per load on loads hauled via truck only decreased 3.5% in the 2023 first quarter compared to the 2022 fourth quarter. This performance was reasonably in-line with sequential historical patterns experienced during pre-pandemic periods (with 2018 being an exception due to the impact of the December 2017 federal mandate requiring use of electronic logging devices). Truck load volumes also decreased quarter-over-prior-year-quarter, with the number of loads hauled via truck in the 2023 first quarter below the 2022 first quarter by 12%.”


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Gattoni further commented, “Through the first several weeks of April, truck revenue per load has thus far sequentially trended slightly below first quarter to the beginning of second quarter pre-pandemic, historical patterns, while the number of loads hauled via truck through the first several weeks of the 2023 second quarter has sequentially trended a bit further below these historical patterns. After several years where past trends were less applicable in light of the impact of the pandemic, I anticipate that as we move into May, we will begin to experience truck revenue per load and truck load volume sequential trends closer to pre-pandemic, historical patterns. Assuming that truck revenue per load and truck load volume sequential trends are in fact closer to pre-pandemic, historical patterns, I expect revenue per load on loads hauled via truck to be in a range of 12% to 14% below the 2022 second quarter and the number of loads hauled via truck to be in a range of 14% to 16% below the 2022 second quarter. As such, I anticipate revenue for the 2023 second quarter to be in a range of $1.40 billion to $1.45 billion.”

Gattoni concluded, “Based on the range of revenue estimated for the 2023 second quarter, I would anticipate DEPS to be in a range of $1.90 to $2.00. During the 2023 first quarter, DEPS was favorably impacted by a lower effective income tax rate and increased net interest income, partially offset by insurance and claims expense at 5.3% of BCO revenue. The anticipated range of DEPS for the 2023 second quarter includes insurance and claims expense estimated to be similar to the insurance and claims expense reported in the 2023 first quarter and an effective income tax rate of 24.4%.”

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 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,


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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


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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, 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.


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Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Thirteen Weeks Ended  
     April 1,
2023
    March 26,
2022
 

Revenue

   $ 1,435,675     $ 1,970,599  

Investment income

     1,368       721  

Costs and expenses:

    

Purchased transportation

     1,101,294       1,550,330  

Commissions to agents

     125,675       149,778  

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

     12,378       11,141  

Insurance and claims

     27,647       30,768  

Selling, general and administrative

     53,567       52,713  

Depreciation and amortization

     15,198       13,757  
  

 

 

   

 

 

 

Total costs and expenses

     1,335,759       1,808,487  
  

 

 

   

 

 

 

Operating income

     101,284       162,833  

Interest and debt (income) expense

     (726     1,123  
  

 

 

   

 

 

 

Income before income taxes

     102,010       161,710  

Income taxes

     23,815       36,871  
  

 

 

   

 

 

 

Net income

   $ 78,195     $ 124,839  
  

 

 

   

 

 

 

Diluted earnings per share

   $ 2.17     $ 3.34  
  

 

 

   

 

 

 

Average diluted shares outstanding

     35,982,000       37,418,000  
  

 

 

   

 

 

 

Dividends per common share

   $ 0.30     $ 0.25  
  

 

 

   

 

 

 


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Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     April 1,
2023
    December 31,
2022
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 340,987     $ 339,581  

Short-term investments

     47,168       53,955  

Trade accounts receivable, less allowance of $12,577 and $12,121

     899,811       967,793  

Other receivables, including advances to independent contractors, less allowance of $11,758 and $10,579

     53,242       56,235  

Other current assets

     12,684       21,826  
  

 

 

   

 

 

 

Total current assets

     1,353,892       1,439,390  
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $406,648 and $393,274

     306,224       314,990  

Goodwill

     41,726       41,220  

Other assets

     136,018       136,279  
  

 

 

   

 

 

 

Total assets

   $ 1,837,860     $ 1,931,879  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 66,195     $ 92,953  

Accounts payable

     490,304       527,372  

Current maturities of long-term debt

     33,801       36,175  

Insurance claims

     50,064       50,836  

Dividends payable

     —         71,854  

Other current liabilities

     100,980       98,945  
  

 

 

   

 

 

 

Total current liabilities

     741,344       878,135  
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     60,191       67,225  

Insurance claims

     57,974       58,268  

Deferred income taxes and other non-current liabilities

     42,699       41,030  

Shareholders’ equity:

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,483,963 and 68,382,310

     685       684  

Additional paid-in capital

     253,138       258,487  

Retained earnings

     2,703,349       2,635,960  

Cost of 32,550,852 and 32,455,300 shares of common stock in treasury

     (2,009,327     (1,992,886

Accumulated other comprehensive loss

     (12,193     (15,024
  

 

 

   

 

 

 

Total shareholders’ equity

     935,652       887,221  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,837,860     $ 1,931,879  
  

 

 

   

 

 

 


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Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirteen Weeks Ended  
     April 1,
2023
    March 26,
2022
 

Revenue generated through (in thousands):

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 755,083     $ 1,081,206  

Unsided/platform equipment

     377,564       408,757  

Less-than-truckload

     31,558       33,720  

Other truck transportation (1)

     159,503       227,601  
  

 

 

   

 

 

 

Total truck transportation

     1,323,708       1,751,284  

Rail intermodal

     25,657       42,688  

Ocean and air cargo carriers

     61,093       152,057  

Other (2)

     25,217       24,570  
  

 

 

   

 

 

 
   $ 1,435,675     $ 1,970,599  
  

 

 

   

 

 

 

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

   $ 519,526     $ 727,574  

Number of loads:

    

Truck transportation

    

Truckload:

    

Van equipment

     331,954       376,268  

Unsided/platform equipment

     127,572       131,829  

Less-than-truckload

     46,192       47,843  

Other truck transportation (1)

     58,062       85,930  
  

 

 

   

 

 

 

Total truck transportation

     563,780       641,870  

Rail intermodal

     7,760       12,630  

Ocean and air cargo carriers

     8,440       11,560  
  

 

 

   

 

 

 
     579,980       666,060  
  

 

 

   

 

 

 

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

     232,550       262,240  

Revenue per load:

    

Truck transportation

    

Truckload:

    

Van equipment

   $ 2,275     $ 2,873  

Unsided/platform equipment

     2,960       3,101  

Less-than-truckload

     683       705  

Other truck transportation (1)

     2,747       2,649  

Total truck transportation

     2,348       2,728  

Rail intermodal

     3,306       3,380  

Ocean and air cargo carriers

     7,239       13,154  

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

   $ 2,234     $ 2,774  

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

    

Truck capacity providers:

    

BCO Independent Contractors (3)

     36     37

Truck Brokerage Carriers

     56     52

Rail intermodal

     2     2

Ocean and air cargo carriers

     4     8

Other

     2     1
     April 1,
2023
    March 26,
2022
 

Truck Capacity Providers

    

BCO Independent Contractors (3)

     9,996       11,089  
  

 

 

   

 

 

 

Truck Brokerage Carriers:

    

Approved and active (4)

     61,771       68,859  

Other approved

     30,893       28,094  
  

 

 

   

 

 

 
     92,664       96,953  
  

 

 

   

 

 

 

Total available truck capacity providers

     102,660       108,042  
  

 

 

   

 

 

 

Trucks provided by BCO Independent Contractors (3)

     10,809       11,935  

 

(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.


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Landstar System, Inc. and Subsidiary

Reconciliation of Gross Profit to Variable Contribution

(Dollars in thousands)

(Unaudited)

 

     Thirteen Weeks Ended  
     April 1,
2023
    March 26,
2022
 

Revenue

   $ 1,435,675     $ 1,970,599  

Costs of revenue:

    

Purchased transportation

     1,101,294       1,550,330  

Commissions to agents

     125,675       149,778  
  

 

 

   

 

 

 

Variable costs of revenue

     1,226,969       1,700,108  

Trailing equipment depreciation

     8,369       9,083  

Information technology costs (1)

     6,751       4,046  

Insurance-related costs (2)

     28,260       31,655  

Other operating costs

     12,378       11,141  
  

 

 

   

 

 

 

Other costs of revenue

     55,758       55,925  
  

 

 

   

 

 

 

Total costs of revenue

     1,282,727       1,756,033  
  

 

 

   

 

 

 

Gross profit

   $ 152,948     $ 214,566  
  

 

 

   

 

 

 

Gross profit margin

     10.7     10.9

Plus: other costs of revenue

     55,758       55,925  
  

 

 

   

 

 

 

Variable contribution

   $ 208,706     $ 270,491  
  

 

 

   

 

 

 

Variable contribution margin

     14.5     13.7

 

(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.