JACKSONVILLE, Fla., July 26, 2023 (GLOBE NEWSWIRE) -- Landstar System, Inc. ( LSTR) (“Landstar” or the “Company”) reported diluted earnings per share (“DEPS”) of $1.85 in the 2023 second quarter on revenue of $1.374 billion. Landstar reported DEPS of $3.05 on revenue of $1.975 billion in the 2022 second quarter.
Gross profit in the 2023 second quarter was $139.7 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2023 second quarter was $198.2 million. Gross profit in the 2022 second quarter was $208.1 million and variable contribution in the 2022 second quarter was $267.5 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2023 and 2022 second quarters and year-to-date periods are provided in the Company’s accompanying financial disclosures.
Trailing twelve month return on average shareholders’ equity was 37% and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 34%. 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 August 25, 2023, to stockholders of record as of the close of business on August 10, 2023. This quarterly dividend includes a $0.03 per share increase, or 10%, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters. 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 second quarter was $1,246.9 million, or 91% of revenue, compared to $1,747.2 million, or 88% of revenue, in the 2022 second quarter. Truckload transportation revenue hauled via van equipment in the 2023 second quarter was $703.0 million, compared to $1,026.9 million in the 2022 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2023 second quarter was $394.8 million, compared to $474.3 million in the 2022 second quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2023 second quarter was $118.0 million, compared to $209.1 million in the 2022 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $100.7 million, or 7% of revenue, in the 2023 second quarter, compared to $202.3 million, or 10% of revenue, in the 2022 second quarter.
“Landstar’s business model performed well in the 2023 second quarter considering the challenging freight environment,” said Landstar President and Chief Executive Officer Jim Gattoni. “After a record-setting 2022, we entered 2023 knowing we would face very difficult year-over-year comparisons, especially during the first two fiscal quarters. On top of these tough comparisons and contrary to typical seasonal patterns common to the freight transportation industry, the domestic freight environment softened sequentially from the 2023 first fiscal quarter to the 2023 second fiscal quarter. Reflective of these tough dynamics, the number of loads hauled via truck in the 2023 second quarter decreased by 16% compared to the 2022 second quarter. On a sequential basis compared to the 2023 first quarter, we estimate that truck load volumes in the 2023 second quarter underperformed seasonal historical patterns experienced during pre-pandemic periods by 9%. The atypical sequential decrease in demand for truck load services also caused additional downward pressure on rates, especially in the spot market where the Company primarily operates. As a result, revenue per load on loads hauled via truck in the 2023 second quarter decreased 15% compared to the 2022 second quarter. We estimate that truck revenue per load during the quarter underperformed sequential historical patterns experienced during pre-pandemic periods by 6%.”
Gattoni further commented, “Through the first several weeks of July, the number of loads hauled via truck has trended below historical, pre-pandemic second quarter to the beginning of third quarter sequential patterns, while truck revenue per load has thus far trended slightly below these historical, pre-pandemic sequential patterns. Assuming that these trends continue, I expect revenue per load on loads hauled via truck to be in a range of 10% to 12% below the 2022 third quarter and the number of loads hauled via truck to be in a range of 16% to 18% below the 2022 third quarter. As such, I anticipate revenue for the 2023 third quarter to be in a range of $1.275 billion to $1.325 billion.”
Gattoni concluded, “Based on the range of revenue estimated for the 2023 third quarter, I would anticipate DEPS to be in a range of $1.65 to $1.75. The anticipated range of DEPS for the 2023 third quarter includes estimated insurance and claims costs of approximately 5.4% of BCO revenue. These costs were 5.5% of BCO revenue over the first half of 2023. The anticipated range of DEPS for the 2023 third 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 Second 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) | |||||||||||||||||||
| Twenty Six Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||||
| July 1, | June 25, | July 1, | June 25, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Revenue | $ | 2,809,532 | $ | 3,945,663 | $ | 1,373,857 | $ | 1,975,064 | |||||||||||
| Investment income | 3,852 | 1,307 | 2,484 | 586 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||
| Purchased transportation | 2,154,491 | 3,096,018 | 1,053,197 | 1,545,688 | |||||||||||||||
| Commissions to agents | 248,153 | 311,634 | 122,478 | 161,856 | |||||||||||||||
| Other operating costs, net of gains on asset sales/dispositions | 25,840 | 21,522 | 13,462 | 10,381 | |||||||||||||||
| Insurance and claims | 57,431 | 64,820 | 29,784 | 34,052 | |||||||||||||||
| Selling, general and administrative | 108,096 | 111,680 | 54,529 | 58,967 | |||||||||||||||
| Depreciation and amortization | 30,139 | 28,045 | 14,941 | 14,288 | |||||||||||||||
| Total costs and expenses | 2,624,150 | 3,633,719 | 1,288,391 | 1,825,232 | |||||||||||||||
| Operating income | 189,234 | 313,251 | 87,950 | 150,418 | |||||||||||||||
| Interest and debt (income) expense | (1,033 | ) | 2,228 | (307 | ) | 1,105 | |||||||||||||
| Income before income taxes | 190,267 | 311,023 | 88,257 | 149,313 | |||||||||||||||
| Income taxes | 45,513 | 73,629 | 21,698 | 36,758 | |||||||||||||||
| Net income | $ | 144,754 | $ | 237,394 | $ | 66,559 | $ | 112,555 | |||||||||||
| Diluted earnings per share | $ | 4.03 | $ | 6.39 | $ | 1.85 | $ | 3.05 | |||||||||||
| Average diluted shares outstanding | 35,962,000 | 37,162,000 | 35,941,000 | 36,905,000 | |||||||||||||||
| Dividends per common share | $ | 0.60 | $ | 0.50 | $ | 0.30 | $ | 0.25 | |||||||||||
| Landstar System, Inc. and Subsidiary | |||||||||||||
| Consolidated Balance Sheets | |||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||
| (Unaudited) | |||||||||||||
| July 1, | December 31, | ||||||||||||
| 2023 | 2022 | ||||||||||||
| ASSETS | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 360,528 | $ | 339,581 | |||||||||
| Short-term investments | 58,574 | 53,955 | |||||||||||
| Trade accounts receivable, less allowance | |||||||||||||
| of $12,715 and $12,121 | 848,839 | 967,793 | |||||||||||
| Other receivables, including advances to independent | |||||||||||||
| contractors, less allowance of $13,673 and $10,579 | 64,079 | 56,235 | |||||||||||
| Other current assets | 41,667 | 21,826 | |||||||||||
| Total current assets | 1,373,687 | 1,439,390 | |||||||||||
| Operating property, less accumulated depreciation | |||||||||||||
| and amortization of $417,364 and $393,274 | 297,066 | 314,990 | |||||||||||
| Goodwill | 42,166 | 41,220 | |||||||||||
| Other assets | 124,846 | 136,279 | |||||||||||
| Total assets | $ | 1,837,765 | $ | 1,931,879 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
