Landstar System Reports All-Time Quarterly Record Diluted Earnings
GlobeNewswire Inc | Jul 21, 2021 04:15PM EDT
July 21, 2021
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 Companys 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 Companys 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 Companys regular quarterly dividend declared following each of the prior four quarters. The $0.04 per share increase is the largest increase in the Companys regularly scheduled quarterly dividend in the Companys 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, Landstars 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 2021Second Quarter 2021 Original Guidance Revised Guidance ActualTruck 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 weve 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 Companys 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 Companys 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 Companys third fiscal quarter has been relatively consistent with revenue generated in the Companys 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, Landstars first half performance has been outstanding. The Companys 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 Companys website at www.landstar.com; click on Investor Relations and Webcasts, then click on Landstars 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 Landstars 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 Companys 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 Landstars 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 SubsidiaryConsolidated 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 $ 823,514Investment 1,432 2,002 748 835income Costs and expenses:Purchased 2,226,526 1,344,390 1,228,241 635,133transportationCommissions 221,702 150,642 121,693 75,266to agentsOtheroperatingcosts, net of 16,545 15,674 8,903 7,368gains on assetsales/dispositionsInsurance 45,629 44,708 24,124 19,751and claimsSelling,general and 99,522 85,928 54,114 40,601administrativeDepreciationand 24,244 22,972 12,143 11,467amortizationImpairmentof intangible - 2,582 - 2,582and otherassets Totalcosts and 2,634,168 1,666,896 1,449,218 792,168expenses Operating 225,516 86,186 122,248 32,181incomeInterest and 2,009 1,928 967 976debt expense Income before 223,507 84,258 121,281 31,205income taxesIncome taxes 53,973 19,109 28,987 6,951 Net income $ 169,534 $ 65,149 $ 92,294 $ 24,254 Dilutedearnings per $ 4.41 $ 1.68 $ 2.40 $ 0.63share Averagediluted shares 38,403,000 38,816,000 38,402,000 38,379,000outstanding Dividends per $ 0.420 $ 0.370 $ 0.210 $ 0.185common share
Landstar System, Inc. and SubsidiaryConsolidated 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 49,819 134,757 $6,843 and $7,239 Other current assets 41,533 18,520 Total current assets 1,233,266 1,208,175 Operating property, less accumulated depreciation and amortization of $321,181 281,016 296,996 and $299,407Goodwill 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 51,181 65,359 maturitiesInsurance claims 43,053 38,867 Deferred income taxes and other 58,591 51,601 non-current liabilities Shareholders' equity: Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,229,880 and 682 682 68,183,702 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 784,883 533,716 444,251 247,388 equipment Less-than-truckload 54,732 45,859 29,062 22,918 Total truck 2,637,676 1,607,909 1,444,187 753,333 transportation Rail intermodal 76,068 51,315 44,360 23,186 Ocean and air cargo 107,840 57,250 60,240 30,663 carriers 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 $ 1,209,056 $ 809,779 $ 648,942 $ 378,500 transportation Number of loads: Truck transportation Truckload: Van equipment 777,921 600,519 409,048 285,174 Unsided/platform 275,754 231,122 149,489 110,533 equipment Less-than-truckload 85,095 78,079 44,403 39,723 Total truck 1,138,770 909,720 602,940 435,430 transportation Rail intermodal 26,800 21,510 15,100 9,970 Ocean and air cargo 19,460 14,430 10,230 7,360 carriers 1,185,030 945,660 628,270 452,760 Loads hauledvia BCO Independent Contractors ^(2) included in total truck 510,150 443,830 264,200 210,430 transportation Revenue per load: Truck transportation Truckload: Van equipment $ 2,311 $ 1,712 $ 2,373 $ 1,694 Unsided/platform 2,846 2,309 2,972 2,238 equipment Less-than-truckload 643 587 655 577 Total truck 2,316 1,767 2,395 1,730 transportation Rail intermodal 2,838 2,386 2,938 2,326 Ocean and air cargo 5,542 3,967 5,889 4,166 carriers Revenue per load on loads hauledvia BCO $ 2,370 $ 1,825 $ 2,456 $ 1,799 Independent Contractors ^(2) Revenue by capacity type(as a % of total revenue); Truck capacity providers: BCO Independent Contractors ^(2) 42 % 46 % 41 % 46 % Truck Brokerage 50 % 46 % 51 % 46 % Carriers Rail intermodal 3 % 3 % 3 % 3 % Ocean and air cargo 4 % 3 % 4 % 4 % carriers Other 1 % 2 % 1 % 2 % June 26, June 27, 2021 2020 Truck Capacity Providers BCO Independent 10,778 9,632 Contractors ^(2) Truck Brokerage Carriers: Approved and active 53,891 37,600 ^(3) Other approved 24,098 16,365 77,989 53,965 Total available truck 88,767 63,597 capacity providers Trucks provided by BCO Independent 11,557 10,299 Contractors ^(2) ^(1) Includes primarily reinsurance premium revenue generated by the insurancesegment and intra-Mexico transportation services revenue generated byLandstarMetro. ^(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.
Contacts:Jim Gattoni (CEO)Fred Pensotti (CFO)Landstar System, Inc.www.landstar.com904-398-9400
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