JACKSONVILLE, Fla., July 20, 2022 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported revenue of $1.975 billion in the 2022 second quarter, a 26 percent increase over revenue of $1.571 billion in the 2021 second quarter; quarterly net income of $112.6 million, an increase of 22 percent over net income of $92.3 million in the 2021 second quarter; and quarterly diluted earnings per share (“DEPS”) of $3.05, an increase of 27 percent compared to $2.40 in the 2021 second quarter. 2022 second quarter revenue, net income and DEPS each established new all-time second quarter records for Landstar.
Gross profit in the 2022 second quarter was $208.1 million, a second quarter record and 19 percent above 2021 second quarter gross profit of $174.8 million. Variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2022 second quarter also reached a second quarter record of $267.5 million, 21 percent above 2021 second quarter variable contribution of $220.8 million. A reconciliation of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2022 and 2021 second quarters and year-to-date periods is provided in the Company’s accompanying financial disclosures.
Trailing twelve month return on average shareholders’ equity was 52 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 46 percent. Landstar continues to return significant amounts of capital to stockholders through the Company’s stock purchase program and dividends. During the 2022 second quarter, Landstar purchased approximately 703,000 shares of its common stock at an aggregate cost of $103.3 million, bringing the total number of common shares purchased during the twenty-six weeks ended June 25, 2022 to 1,397,000 shares at an aggregate cost of approximately $212.6 million. The Company is currently authorized to purchase up to an additional 1,603,239 shares of the Company’s common stock under its previously announced share purchase program.
Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.30 per share payable on August 26, 2022, to stockholders of record as of the close of business on August 8, 2022. This quarterly dividend includes a $0.05 per share increase, or 20 percent, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters. The $0.05 per share increase is the largest increase in the Company’s regularly scheduled quarterly dividend in the Company’s history. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
Also, as previously disclosed in a Form 8-K filed with the SEC on July 8, 2022, Landstar entered into a Second Amended and Restated Credit Agreement, dated July 1, 2022, with a bank syndicate led by J.P. Morgan Chase that, among other things, extended the termination date of the credit facility to July 2027, and increased the size of the facility from $250 million to $300 million (with an “accordion” feature providing for possible increase up to an aggregate amount of $600 million). As of June 25, 2022, Landstar had no outstanding borrowings under its revolving credit facility.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2022 second quarter was $1,747.2 million, or 88 percent of revenue, compared to $1,444.2 million, or 92 percent of revenue, in the 2021 second quarter. Truckload transportation revenue hauled via van equipment in the 2022 second quarter was $1,026.9 million, compared to $854.5 million in the 2021 second quarter, an increase of 20 percent. Truckload transportation revenue hauled via unsided/platform equipment in the 2022 second quarter was $474.3 million, compared to $391.9 million in the 2021 second quarter, an increase of 21 percent. Revenue from other truck transportation, which is largely related to power-only services, in the 2022 second quarter was $209.1 million, compared to $168.7 million in the 2021 second quarter, an increase of 24 percent. Revenue hauled by rail, air and ocean cargo carriers was $202.3 million, or 10 percent of revenue, in the 2022 second quarter, compared to $104.6 million, or 7 percent of revenue, in the 2021 second quarter, an increase of 93 percent.
“Customer demand for our freight transportation services remained strong during the 2022 second quarter,” said Landstar President and CEO Jim Gattoni. “The number of loads hauled via truck in the 2022 second quarter increased 10 percent over the 2021 second quarter. Although slightly below the low end of our second quarter 2022 guidance issued in our 2022 first quarter earnings release on April 20, 2022, truck load volume growth continued to be impressive given tough year-over-year comparisons and an overall shift of consumer spending from goods to services. Similarly, revenue per truck load in the 2022 second quarter was 10 percent above the 2021 second quarter and remained very strong compared to historical levels. Revenue per load on loads hauled via truck also came in below our April 20 second quarter guidance, mostly due to a deceleration in the rate of year-over-year growth beginning in May. Truck revenue per load decreased approximately 4 percent sequentially from April to May, which was not anticipated in the 2022 second quarter guidance. It should also be noted that the year-over-year increase in revenue per truck load was partly impacted by a 6 percent decrease in the average length of haul in the 2022 second quarter compared to the 2021 second quarter.”
Gattoni continued, “Landstar’s business model continued to perform well during the 2022 second quarter. The Company achieved a 27 percent increase in DEPS on a 26 percent increase in revenue, in both cases as compared to the 2021 second quarter. DEPS was 5 percent below the low-end of the second quarter guidance we provided on April 20, 2022. In addition to the impact of the shortfalls versus expectations in truck loads and revenue per load discussed above, Landstar also experienced higher than expected insurance and claims cost of 4.9 percent of BCO revenue in the 2022 second quarter, driven mostly by two tragic vehicular accidents that occurred during the quarter.”
Gattoni further commented, “There is a lot of unease regarding U.S. economic conditions as we head into the third quarter. On a macroeconomic level, the record low level of consumer confidence and high level of inflation being reported along with possible further action by the Federal Reserve to address inflation at the risk of causing further recessionary pressure all add significant uncertainty to the performance of the overall domestic freight environment. Additionally, comparisons to prior year results become more challenging for Landstar as we move through the back half of 2022, given the strength our business experienced during the back half of fiscal year 2021. Historically, in most years truck revenue per load in July has slightly exceeded that of June. Through the first several weeks of July, overall truck revenue per load has been fairly consistent with the truck revenue per load we experienced in fiscal May and June 2022. Given the current operating environment, I view Landstar’s relatively stable revenue per load since May as a positive. Given this backdrop and recent revenue trends, I expect truck revenue per load in the 2022 third quarter to be essentially equal to that of the 2021 third quarter and the number of loads hauled via truck to increase over the 2021 third quarter in a range of 3 percent to 5 percent. As such, I anticipate revenue for the 2022 third quarter to be in a range of $1.80 billion to $1.85 billion.”
Gattoni concluded, “Based on the range of revenue estimated for the 2022 third quarter, I would anticipate DEPS to be in a range of $2.75 to $2.85. This range of DEPS includes insurance and claims expense estimated at 4.2 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 Second Quarter 2022 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 2021 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; changes in fuel 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 2021 fiscal year, described in Item 1A Risk Factors, Landstar’s Form 10-Q for the 2022 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) | |||||||||||||||||
| Twenty Six Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||
| June 25, | June 26, | June 25, | June 26, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||
| Revenue | $ | 3,945,663 | $ | 2,858,252 | $ | 1,975,064 | $ | 1,570,718 | |||||||||
| Investment income | 1,307 | 1,432 | 586 | 748 | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Purchased transportation | 3,096,018 | 2,226,526 | 1,545,688 | 1,228,241 | |||||||||||||
| Commissions to agents | 311,634 | 221,702 | 161,856 | 121,693 | |||||||||||||
| Other operating costs, net of gains on asset sales/dispositions | 21,522 | 16,545 | 10,381 | 8,903 | |||||||||||||
| Insurance and claims | 64,820 | 45,629 | 34,052 | 24,124 | |||||||||||||
| Selling, general and administrative | 111,680 | 99,522 | 58,967 | 54,114 | |||||||||||||
| Depreciation and amortization | 28,045 | 24,244 | 14,288 | 12,143 | |||||||||||||
| Total costs and expenses | 3,633,719 | 2,634,168 | 1,825,232 | 1,449,218 | |||||||||||||
| Operating income | 313,251 | 225,516 | 150,418 | 122,248 | |||||||||||||
| Interest and debt expense | 2,228 | 2,009 | 1,105 | 967 | |||||||||||||
| Income before income taxes | 311,023 | 223,507 | 149,313 | 121,281 | |||||||||||||
| Income taxes | 73,629 | 53,973 | 36,758 | 28,987 | |||||||||||||
| Net income | $ | 237,394 | $ | 169,534 | $ | 112,555 | $ | 92,294 | |||||||||
| Diluted earnings per share | $ | 6.39 | $ | 4.41 | $ | 3.05 | $ | 2.40 | |||||||||
| Average diluted shares outstanding | 37,162,000 | 38,403,000 | 36,905,000 | 38,402,000 | |||||||||||||
| Dividends per common share | $ | 0.50 | $ | 0.42 | $ | 0.25 | $ | 0.21 | |||||||||
| Landstar System, Inc. and Subsidiary | ||||||||||||||
| Consolidated Balance Sheets | ||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| June 25, | December 25, | |||||||||||||
| 2022 | 2021 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 78,220 | $ | 215,522 | ||||||||||
| Short-term investments | 41,549 | 35,778 | ||||||||||||
| Trade accounts receivable, less allowance | ||||||||||||||
| of $9,940 and $7,074 | 1,216,518 | 1,154,314 | ||||||||||||
| Other receivables, including advances to independent | ||||||||||||||
| contractors, less allowance of $9,856 and $8,125 | 114,794 | 101,124 | ||||||||||||
| Other current assets | 54,190 | 16,162 | ||||||||||||
| Total current assets | 1,505,271 | 1,522,900 | ||||||||||||
| Operating property, less accumulated depreciation and amortization of $369,344 and $344,099 | 314,191 | 317,386 | ||||||||||||
| Goodwill | 40,977 | 40,768 | ||||||||||||
| Other assets | 156,628 | 164,411 | ||||||||||||
| Total assets | $ | 2,017,067 | $ | 2,045,465 | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Cash overdraft | $ | 113,603 | $ | 116,478 | ||||||||||
| Accounts payable | 670,534 | 604,130 | ||||||||||||
| Current maturities of long-term debt | 36,827 | 36,561 | ||||||||||||
| Insurance claims | 53,971 | 46,896 | ||||||||||||
| Dividends payable | - | 75,387 | ||||||||||||
| Other current liabilities | 102,956 | 130,531 | ||||||||||||
| Total current liabilities | 977,891 | 1,009,983 | ||||||||||||
| Long-term debt, excluding current maturities | 73,999 | 75,243 | ||||||||||||
| Insurance claims | 53,303 | 49,509 | ||||||||||||
| Deferred income taxes and other non-current liabilities | 55,004 | 48,720 | ||||||||||||
| Shareholders' equity: | ||||||||||||||
| Common stock, $0.01 par value, authorized 160,000,000 | ||||||||||||||
| shares, issued 68,376,934 and 68,232,975 | 684 | 682 | ||||||||||||
| Additional paid-in capital | 252,045 | 255,148 | ||||||||||||
| Retained earnings | 2,535,997 | 2,317,184 | ||||||||||||
| Cost of 31,946,616 and 30,539,235 shares of common | ||||||||||||||
| stock in treasury | (1,919,535 | ) | (1,705,601 | ) | ||||||||||
| Accumulated other comprehensive loss | (12,321 | ) | (5,403 | ) | ||||||||||
| Total shareholders' equity | 856,870 | 862,010 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 2,017,067 | $ | 2,045,465 | ||||||||||
| Landstar System, Inc. and Subsidiary | ||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Twenty Six Weeks Ended | Thirteen Weeks Ended | |||||||||||||||||||
| June 25, | June 26, | June 25, | June 26, | |||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||
| Revenue generated through (in thousands): | ||||||||||||||||||||
| Truck transportation | ||||||||||||||||||||
| Truckload: | ||||||||||||||||||||
| Van equipment | $ | 2,108,143 | $ | 1,583,911 | $ | 1,026,938 | $ | 854,509 | ||||||||||||
| Unsided/platform equipment | 883,032 | 689,378 | 474,274 | 391,893 | ||||||||||||||||
| Less-than-truckload | 70,651 | 54,732 | 36,931 | 29,062 | ||||||||||||||||
| 436,656 | 309,655 | 209,055 | 168,723 | |||||||||||||||||
| Total truck transportation | 3,498,482 | 2,637,676 | 1,747,198 | 1,444,187 | ||||||||||||||||
| Rail intermodal | 86,110 | 76,068 | 43,422 | 44,360 | ||||||||||||||||
| Ocean and air cargo carriers | 310,904 | 107,840 | 158,847 | 60,240 | ||||||||||||||||
| 50,167 | 36,668 | 25,597 | 21,931 | |||||||||||||||||
| $ | 3,945,663 | $ | 2,858,252 | $ | 1,975,064 | $ | 1,570,718 | |||||||||||||
| included in total truck transportation | $ | 1,415,963 | $ | 1,209,056 | $ | 688,389 | $ | 648,942 | ||||||||||||
| Number of loads: | ||||||||||||||||||||
| Truck transportation | ||||||||||||||||||||
| Truckload: | ||||||||||||||||||||
| Van equipment | 763,750 | 678,253 | 387,482 | 357,041 | ||||||||||||||||
| Unsided/platform equipment | 279,345 | 248,262 | 147,516 | 133,999 | ||||||||||||||||
| Less-than-truckload | 96,828 | 85,095 | 48,985 | 44,403 | ||||||||||||||||
| 166,747 | 127,160 | 80,817 | 67,497 | |||||||||||||||||
| Total truck transportation | 1,306,670 | 1,138,770 | 664,800 | 602,940 | ||||||||||||||||
| Rail intermodal | 24,220 | 26,800 | 11,590 | 15,100 | ||||||||||||||||
| Ocean and air cargo carriers | 22,890 | 19,460 | 11,330 | 10,230 | ||||||||||||||||
| 1,353,780 | 1,185,030 | 687,720 | 628,270 | |||||||||||||||||
| included in total truck transportation | 527,830 | 510,150 | 265,590 | 264,200 | ||||||||||||||||
| Revenue per load: | ||||||||||||||||||||
| Truck transportation | ||||||||||||||||||||
| Truckload: | ||||||||||||||||||||
| Van equipment | $ | 2,760 | $ | 2,335 | $ | 2,650 | $ | 2,393 | ||||||||||||
| Unsided/platform equipment | 3,161 | 2,777 | 3,215 | 2,925 | ||||||||||||||||
| Less-than-truckload | 730 | 643 | 754 | 655 | ||||||||||||||||
| 2,619 | 2,435 | 2,587 | 2,500 | |||||||||||||||||
| Total truck transportation | 2,677 | 2,316 | 2,628 | 2,395 | ||||||||||||||||
| Rail intermodal | 3,555 | 2,838 | 3,747 | 2,938 | ||||||||||||||||
| Ocean and air cargo carriers | 13,583 | 5,542 | 14,020 | 5,889 | ||||||||||||||||
| $ | 2,683 | $ | 2,370 | $ | 2,592 | $ | 2,456 | |||||||||||||
| Revenue by capacity type (as a % of total revenue): | ||||||||||||||||||||
| Truck capacity providers: | ||||||||||||||||||||
| 36 | % | 42 | % | 35 | % | 41 | % | |||||||||||||
| Truck Brokerage Carriers | 53 | % | 50 | % | 54 | % | 51 | % | ||||||||||||
| Rail intermodal | 2 | % | 3 | % | 2 | % | 3 | % | ||||||||||||
| Ocean and air cargo carriers | 8 | % | 4 | % | 8 | % | 4 | % | ||||||||||||
| Other | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||
| June 25, | June 26, | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Truck Capacity Providers | ||||||||||||||||||||
| 11,023 | 10,778 | |||||||||||||||||||
| Truck Brokerage Carriers: | ||||||||||||||||||||
| 70,649 | 53,891 | |||||||||||||||||||
| Other approved | 29,454 | 24,098 | ||||||||||||||||||
| 100,103 | 77,989 | |||||||||||||||||||
| Total available truck capacity providers | 111,126 | 88,767 | ||||||||||||||||||
| 11,887 | 11,557 | |||||||||||||||||||
| (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) | ||||||||||||||||||||||||
| Twenty Six Weeks Ended | Thirteen Weeks Ended | |||||||||||||||||||||||
| June 25, | June 26, | June 25, | June 26, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||
| Revenue | $ | 3,945,663 | $ | 2,858,252 | $ | 1,975,064 | $ | 1,570,718 | ||||||||||||||||
| Costs of revenue: | ||||||||||||||||||||||||
| Purchased transportation | 3,096,018 | 2,226,526 | 1,545,688 | 1,228,241 | ||||||||||||||||||||
| Commissions to agents | 311,634 | 221,702 | 161,856 | 121,693 | ||||||||||||||||||||
| Variable costs of revenue | 3,407,652 | 2,448,228 | 1,707,544 | 1,349,934 | ||||||||||||||||||||
| Trailing equipment depreciation | 18,363 | 17,747 | 9,280 | 8,840 | ||||||||||||||||||||
| Information technology costs (1) | 9,039 | 6,084 | 4,993 | 3,146 | ||||||||||||||||||||
| Insurance-related costs (2) | 66,441 | 47,673 | 34,786 | 25,051 | ||||||||||||||||||||
| Other operating costs | 21,522 | 16,545 | 10,381 | 8,903 | ||||||||||||||||||||
| Other costs of revenue | 115,365 | 88,049 | 59,440 | 45,940 | ||||||||||||||||||||
| Total costs of revenue | 3,523,017 | 2,536,277 | 1,766,984 | 1,395,874 | ||||||||||||||||||||
| Gross profit | $ | 422,646 | $ | 321,975 | $ | 208,080 | $ | 174,844 | ||||||||||||||||
| Gross profit margin | 10.7 | % | 11.3 | % | 10.5 | % | 11.1 | % | ||||||||||||||||
| Plus: other costs of revenue | 115,365 | 88,049 | 59,440 | 45,940 | ||||||||||||||||||||
| Variable contribution | $ | 538,011 | $ | 410,024 | $ | 267,520 | $ | 220,784 | ||||||||||||||||
| Variable contribution margin | 13.6 | % | 14.3 | % | 13.5 | % | 14.1 | % | ||||||||||||||||
| (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. | ||||||||||||||||||||||
Contacts: Jim Gattoni (CEO)
Jim Todd (CFO)
Landstar System, Inc.
www.landstar.com
904-398-9400
