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Landstar System Reports All-Time Quarterly Record Diluted Earnings Per Share of $2.40 in the 2021 Second Quarter

·16 min read

JACKSONVILLE, Fla., July 21, 2021 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported all-time quarterly record net income of $92.3 million, or $2.40 per diluted share, in the 2021 second quarter, on record quarterly revenue of $1.571 billion. Landstar reported net income of $24.3 million, or $0.63 per diluted share, on $824 million of revenue in the 2020 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) also reached an all-time quarterly record of $220.8 million in the 2021 second quarter compared to $113.1 million in the 2020 second quarter. Given the significant adverse impact of the COVID-19 pandemic on the U.S. economy and the Company’s financial results during the 2020 second quarter, quarter-over-prior-year-quarter comparisons are not meaningful. Comparing the 2021 second quarter to the 2021 first quarter, however, puts into context the strength of our 2021 second quarter financial performance. 2021 first quarter revenue was the second highest quarterly revenue in Landstar history and 2021 first quarter gross profit established a new all-time quarterly record. In the 2021 second quarter compared to the 2021 first quarter, revenue increased $283 million and gross profit increased approximately $32 million. These amounts of growth in revenue and gross profit from the 2021 first quarter to the 2021 second quarter were each all-time first to second quarter records.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2021 second quarter was $1.444 billion, or 92 percent of revenue, compared to $753 million, or 91 percent of revenue, in the 2020 second quarter. Truckload transportation revenue hauled via van equipment in the 2021 second quarter was $970.9 million compared to $483.0 million in the 2020 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2021 second quarter was $444.3 million compared to $247.4 million in the 2020 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $104.6 million, or 7 percent of revenue, in the 2021 second quarter compared to $53.8 million, or 7 percent of revenue, in the 2020 second quarter.

Trailing twelve-month return on average shareholders’ equity was 41 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 36 percent. During the 2021 second quarter, Landstar purchased 150,000 shares of its common stock at an aggregate cost of approximately $23.8 million. The Company is currently authorized to purchase up to 1,671,030 additional 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 $0.25 per share payable on August 27, 2021, to stockholders of record as of the close of business on August 9, 2021. This quarterly dividend includes a $0.04 per share increase, or 19 percent, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters. The $0.04 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.

“Following a record-breaking 2021 first quarter, Landstar’s 2021 second quarter set a new standard as the best quarterly financial performance in our history. 2021 second quarter revenue, gross profit, net income and diluted earnings per share each set all-time quarterly records. 2021 second quarter operating margin, representing operating income divided by gross profit, was 55.4 percent, also an all-time quarterly record,” said Landstar President and CEO Jim Gattoni. “Our truckload volume in the second quarter exceeded the 2021 first quarter by over 12 percent, the second largest first quarter to second quarter increase in over 10 years. This outperformance was particularly impressive considering we were following an already record-setting first quarter. We attribute this strong demand to an ongoing, broad-based economic recovery, with particular strength in consumer spending, that has been a big driver of freight activity.”

Gattoni continued, “Revenue from truck loads hauled via van equipment exceeded the 2020 second quarter by 101 percent and was also 60 percent above the corresponding period from 2019. Revenue from truck loads hauled via unsided/platform equipment exceeded the 2020 second quarter by 80 percent and was 31 percent above the same period in 2019. Consumer demand for durable goods, building products, and e-commerce, which were strong in the first quarter of 2021, continued to drive record quarterly van revenue, while revenue generated via unsided/platform equipment benefitted from growth in the U.S. metals and machinery sectors. For revenue generated via van equipment in the 2021 second quarter compared to the 2020 second quarter, the number of loads (volume) and revenue per load (rate) increased 43 percent and 40 percent, respectively, while the growth in volume and rate compared to the same period in 2019 was 19 percent and 35 percent, respectively. Revenue from truck loads hauled via unsided/platform equipment continued to improve in comparison to the softer conditions that existed throughout most of 2020. The number of loads (volume) and revenue per load (rate) on loads hauled via unsided/platform equipment in the 2021 second quarter exceeded the 2020 second quarter by 35 percent and 33 percent, respectively, and were higher than the corresponding period in 2019 by 10 percent and 19 percent, respectively.”

Gattoni further stated, “In our 2021 first quarter earnings release on April 21, 2021, we provided second quarter revenue guidance of $1.40 billion to $1.45 billion and second quarter diluted earnings per share guidance of $2.20 to $2.30. On May 28, 2021, we revised our initial guidance based on trends in volume and rates through the first seven weeks of the second quarter. Our updated 2021 second quarter guidance issued on May 28th reflected our expectation that revenue per load on loads hauled via truck would exceed the 2021 first quarter in a high single-digit percentage range and the number of loads hauled via truck in the 2021 second quarter would exceed the 2021 first quarter in a low double-digit percentage range. Actual revenue per load on loads hauled via truck in the 2021 second quarter compared to the 2021 first quarter increased 7.5 percent and the number of loads hauled via truck in the 2021 second quarter compared to the 2021 first quarter increased 12.5 percent, each in-line with our May 28th revised guidance and as summarized in the following chart:

% growth vs. first quarter 2021

Second Quarter 2021

Original Guidance

Revised Guidance

Actual

Truck revenue per load

4%-6%

High single digit

7.5%

Number of truck loads

4%-6%

Low double digit

12.5%

Based on our expectations as to truck load volume and pricing, our May 28th updated guidance anticipated that revenue and diluted earnings per share would each be slightly above the high end of our previously issued 2021 second quarter guidance. Actual 2021 second quarter revenue was $1.571 billion and diluted earnings per share was $2.40, both generally in-line with our May 28th updated guidance.”

Gattoni continued, “As we’ve discussed, our second quarter year-over-prior-year revenue and diluted earnings per share comparisons were not meaningful due to the adverse impact the COVID-19 pandemic had on the Company’s 2020 second quarter financial results. As we look to the 2021 third quarter, comparisons to prior year should begin to normalize as the adverse impact of the COVID-19 pandemic on the Company’s financial results significantly receded during the 2020 third quarter. While our year-over-year comparisons will be more challenging, our outlook for the 2021 third quarter is for continued solid performance on the expectation that broad-based economic strength will support a strong freight environment for the near future. In addition, we will likely continue to be in a capacity-constrained environment, which should continue to support elevated revenue per truck load in the third quarter.”

“Historically, revenue in the Company’s third fiscal quarter has been relatively consistent with revenue generated in the Company’s second fiscal quarter. We also typically see our revenue per load on loads hauled via truck in the third quarter to be slightly higher than the second quarter, and the number of loads hauled via truck in the third quarter to be slightly below the second quarter. Through the first few weeks of July, revenue per load on loads hauled via truck and the number of loads hauled via truck are trending fairly consistent with historical second quarter to third quarter sequential patterns. I expect these trends to continue and as such, I anticipate revenue for the 2021 third quarter to be in a range of $1.55 billion to $1.60 billion.”

“Based on the range of revenue estimated and assuming insurance and claims costs of 4.6 percent of BCO revenue, I would anticipate diluted earnings per share to be in a range of $2.20 to $2.30 in the 2021 third quarter. As it relates to our third quarter estimate of insurance and claims costs, these costs were 3.8 percent of BCO revenue over the first half of 2021. Our third quarter estimate reflects an increased estimate of insurance and claims costs due to the potential reversion of claim costs to be more in line with historical trends over a longer period of time, increased premiums relating to auto liability coverage that we are paying to third party insurance companies and increased severity we have already experienced during the first several weeks of July as compared to the 2021 first half, mostly due to a small number of specific incidents.”

Gattoni concluded, “Landstar’s first half performance has been outstanding. The Company’s agent family is executing on all cylinders and we continue to add qualified truck capacity to the network. Given the exceptional performance by Landstar through the first half, 2021 is well on its way to be a record setting year.”

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 2021 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; 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 2020 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.

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 26,

June 27,

June 26,

June 27,

2021

2020

2021

2020

Revenue

$

2,858,252

$

1,751,080

$

1,570,718

$

823,514

Investment income

1,432

2,002

748

835

Costs and expenses:

Purchased transportation

2,226,526

1,344,390

1,228,241

635,133

Commissions to agents

221,702

150,642

121,693

75,266

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

16,545

15,674

8,903

7,368

Insurance and claims

45,629

44,708

24,124

19,751

Selling, general and administrative

99,522

85,928

54,114

40,601

Depreciation and amortization

24,244

22,972

12,143

11,467

Impairment of intangible and other assets

-

2,582

-

2,582

Total costs and expenses

2,634,168

1,666,896

1,449,218

792,168

Operating income

225,516

86,186

122,248

32,181

Interest and debt expense

2,009

1,928

967

976

Income before income taxes

223,507

84,258

121,281

31,205

Income taxes

53,973

19,109

28,987

6,951

Net income

$

169,534

$

65,149

$

92,294

$

24,254

Diluted earnings per share

$

4.41

$

1.68

$

2.40

$

0.63

Average diluted shares outstanding

38,403,000

38,816,000

38,402,000

38,379,000

Dividends per common share

$

0.420

$

0.370

$

0.210

$

0.185


Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

June 26,

December 26,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

186,404

$

249,354

Short-term investments

52,560

41,375

Trade accounts receivable, less allowance

of $6,199 and $8,670

902,950

764,169

Other receivables, including advances to independent

contractors, less allowance of $6,843 and $7,239

49,819

134,757

Other current assets

41,533

18,520

Total current assets

1,233,266

1,208,175

Operating property, less accumulated depreciation

and amortization of $321,181 and $299,407

281,016

296,996

Goodwill

40,973

40,949

Other assets

147,958

107,679

Total assets

$

1,703,213

$

1,653,799

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Cash overdraft

$

70,554

$

74,748

Accounts payable

481,711

380,505

Current maturities of long-term debt

30,450

35,415

Insurance claims

41,854

149,774

Dividends payable

-

76,770

Other current liabilities

95,646

88,925

Total current liabilities

720,215

806,137

Long-term debt, excluding current maturities

51,181

65,359

Insurance claims

43,053

38,867

Deferred income taxes and other non-current liabilities

58,591

51,601

Shareholders' equity:

Common stock, $0.01 par value, authorized 160,000,000

shares, issued 68,229,880 and 68,183,702

682

682

Additional paid-in capital

238,422

228,875

Retained earnings

2,199,637

2,046,238

Cost of 29,954,081 and 29,797,639 shares of common

stock in treasury

(1,606,716

)

(1,581,961

)

Accumulated other comprehensive loss

(1,852

)

(1,999

)

Total shareholders' equity

830,173

691,835

Total liabilities and shareholders' equity

$

1,703,213

$

1,653,799


Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Twenty Six Weeks Ended

Thirteen Weeks Ended

June 26,

June 27,

June 26,

June 27,

2021

2020

2021

2020

Revenue generated through (in thousands):

Truck transportation

Truckload:

Van equipment

$

1,798,061

$

1,028,334

$

970,874

$

483,027

Unsided/platform equipment

784,883

533,716

444,251

247,388

Less-than-truckload

54,732

45,859

29,062

22,918

Total truck transportation

2,637,676

1,607,909

1,444,187

753,333

Rail intermodal

76,068

51,315

44,360

23,186

Ocean and air cargo carriers

107,840

57,250

60,240

30,663

Other (1)

36,668

34,606

21,931

16,332

$

2,858,252

$

1,751,080

$

1,570,718

$

823,514

Revenue on loads hauled via BCO Independent Contractors (2)

included in total truck transportation

$

1,209,056

$

809,779

$

648,942

$

378,500

Number of loads:

Truck transportation

Truckload:

Van equipment

777,921

600,519

409,048

285,174

Unsided/platform equipment

275,754

231,122

149,489

110,533

Less-than-truckload

85,095

78,079

44,403

39,723

Total truck transportation

1,138,770

909,720

602,940

435,430

Rail intermodal

26,800

21,510

15,100

9,970

Ocean and air cargo carriers

19,460

14,430

10,230

7,360

1,185,030

945,660

628,270

452,760

Loads hauled via BCO Independent Contractors (2)

included in total truck transportation

510,150

443,830

264,200

210,430

Revenue per load:

Truck transportation

Truckload:

Van equipment

$

2,311

$

1,712

$

2,373

$

1,694

Unsided/platform equipment

2,846

2,309

2,972

2,238

Less-than-truckload

643

587

655

577

Total truck transportation

2,316

1,767

2,395

1,730

Rail intermodal

2,838

2,386

2,938

2,326

Ocean and air cargo carriers

5,542

3,967

5,889

4,166

Revenue per load on loads hauled via BCO Independent Contractors (2)

$

2,370

$

1,825

$

2,456

$

1,799

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

Truck capacity providers:

BCO Independent Contractors (2)

42

%

46

%

41

%

46

%

Truck Brokerage Carriers

50

%

46

%

51

%

46

%

Rail intermodal

3

%

3

%

3

%

3

%

Ocean and air cargo carriers

4

%

3

%

4

%

4

%

Other

1

%

2

%

1

%

2

%

June 26,

June 27,

2021

2020

Truck Capacity Providers

BCO Independent Contractors (2)

10,778

9,632

Truck Brokerage Carriers:

Approved and active (3)

53,891

37,600

Other approved

24,098

16,365

77,989

53,965

Total available truck capacity providers

88,767

63,597

Trucks provided by BCO Independent Contractors (2)

11,557

10,299

(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: Contacts: Jim Gattoni (CEO) Fred Pensotti (CFO) Landstar System, Inc. www.landstar.com 904-398-9400