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Landstar System Reports All-Time Quarterly Record Diluted Earnings Per Share Of $2.58 in the 2021 Third Quarter

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JACKSONVILLE, Fla., Oct. 20, 2021 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ:LSTR) reported record quarterly revenue of $1.734 billion in the 2021 third quarter, a 60 percent increase over revenue of $1.086 billion in the 2020 third quarter. Net income was a quarterly record of $98.7 million, or diluted earnings per share of $2.58, in the 2021 third quarter compared to net income of $61.9 million, or diluted earnings per share of $1.61, in the 2020 third quarter. Operating income grew to an all-time quarterly record of $131.4 million in the 2021 third quarter, 60 percent above operating income of $82.4 million in the 2020 third quarter. To put the strength of our 2021 third quarter performance in perspective, revenue, operating income, net income and diluted earnings per share increased 60 percent, 60 percent, 59 percent and 60 percent, respectively, over the 2020 third quarter, which at the time included the second highest amounts achieved of each of these financial metrics in any third quarter in the Company’s history.

Please note that commencing with the release of our financial results for the 2021 third quarter, the Company revised its definition of the term “gross profit”. Gross profit is now defined as revenue less costs of revenue. In conjunction with this change, the Company has initiated the use of the term “variable contribution”, a non-GAAP financial measure, to refer to the amount represented by revenue less the costs of purchased transportation and commissions to agents that we formerly referred to as gross profit. In addition, the Company now defines “gross profit margin” to refer to gross profit divided by revenue and “variable contribution margin”, a non-GAAP financial measure, to refer to variable contribution divided by revenue. Gross profit in the 2021 third quarter was $189.2 million, an all-time quarterly record, compared to $119.8 million in the 2020 third quarter. Variable contribution also reached an all-time quarterly record of $242.3 million in the 2021 third quarter compared to $160.9 million in the 2020 third quarter. A tabulation of the expenses identified as costs of revenue as well as a reconciliation of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2021 and 2020 third quarters and year-to-date periods is provided in the Company’s accompanying financial disclosures.

Trailing twelve-month return on average shareholders’ equity was 43 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 38 percent. During the 2021 third quarter, Landstar purchased 167,000 shares of its common stock bringing the year-to-date number of shares purchased to 317,000 at an aggregate cost of $50 million. The Company is currently authorized to purchase up to approximately 1,504,000 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 December 3, 2021, to stockholders of record as of the close of business on November 9, 2021. 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 2021 third quarter was $1.581 billion, or 91 percent of revenue, compared to $1.006 billion, or 93 percent of revenue, in the 2020 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $128.6 million, or 7 percent of revenue, in the 2021 third quarter compared to approximately $62 million, or 6 percent of revenue, in the 2020 third quarter.

The supplemental information schedule included as a table to this press release includes changes to the historical classification of truck services and equipment type. Power-only, expedited, straight truck, cargo van and miscellaneous other truck transportation services that were formerly included in revenue from van or unsided/platform services have been classified in a single line item named “other truck transportation” as demand for these types of truck services increased significantly during the pandemic. Other truck transportation revenue was 13.2 percent and 10.8 percent of total truck transportation revenue in the 2021 and 2020 third quarters, respectively.

Truckload transportation revenue hauled via van equipment in the 2021 third quarter was $918.1 million, an increase of 59 percent compared to $578.2 million in the 2020 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2021 third quarter was $423.0 million, an increase of 44 percent compared to $294.3 million in the 2020 third quarter. Other truck transportation revenue, which includes power only, expedited, straight truck, cargo van and miscellaneous other truck transportation revenue, in the 2021 third quarter was $208.8 million, an increase of 92 percent compared to $108.6 million in the 2020 third quarter.

“Following a record-breaking 2021 second quarter, the 2021 third quarter reset the standard as the best quarterly financial performance in Landstar history. 2021 third quarter revenue, gross profit, variable contribution, net income and diluted earnings per share each set all-time quarterly records,” said Landstar President and CEO Jim Gattoni. “Our load volume hauled by truck in the third quarter grew 22 percent compared to the 2020 third quarter, which at the time was the second highest third quarter load volume hauled by truck in Landstar history. Additionally, third quarter truck loadings increased from the 2021 second quarter by 3.5 percent, the second largest ever increase in truck loadings from the second to the third quarter in Landstar history behind only 2020 when the second quarter included the most significant volume declines caused by the COVID-19 pandemic. Our 2021 third quarter performance was particularly impressive considering we were following an already record-setting second quarter, and, in most years, load volume hauled by truck experiences a slight decrease sequentially from the second quarter to the third quarter. We attribute this unseasonal increase in volume to ongoing, broad-based demand for freight transportation services, with particular strength in sectors benefiting from consumer spending that has continued to be a big driver of freight activity.”

Gattoni continued, “In our 2021 second quarter earnings release on July 21, 2021, we provided third quarter revenue guidance of $1.55 billion to $1.60 billion and third quarter diluted earnings per share guidance of $2.20 to $2.30. On August 17, 2021, we filed a Form 8-K with the SEC that revised our initial guidance based on trends in volume and rates through the first seven weeks of the third quarter. Our updated 2021 third quarter guidance reflected our expectation that on a sequential basis revenue per load on loads hauled via truck would exceed the 2021 second quarter in a mid-single-digit percentage range and the number of loads hauled via truck in the 2021 third quarter would exceed the 2021 second quarter in a low single-digit percentage range. Actual sequential growth in truck revenue per load was 5.8 percent and actual sequential growth in load volume hauled via truck was 3.5 percent, each at the high end of our August 17th revised guidance. Based on our expectations as to volume and pricing on loads hauled by truck, our August 17th updated guidance anticipated that revenue would be in the range of $1.68 billion to $1.72 billion and diluted earnings per share would be in the range of $2.45 to $2.55. Actual 2021 third quarter revenue was $1.734 billion and diluted earnings per share was $2.58, each slightly exceeding the top end of our August 17th updated guidance ranges.”

Gattoni continued, “As we look to the 2021 fourth quarter, we anticipate 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 truck revenue per load in the fourth quarter.”

Gattoni further stated, “Overall, I expect the 2021 fourth quarter financial results to be similar to the 2021 third quarter. Through the first few weeks of October, revenue per load on loads hauled via truck and the number of loads hauled via truck are trending fairly consistent with historical third to fourth quarter sequential patterns. I expect normal seasonal trends in revenue per load and load volume on loads hauled via truck as we move through the final months of 2021. At those levels, both revenue per load and load volume on loads hauled via truck would establish new fourth quarter records in the 2021 fourth quarter. As such, I anticipate revenue for the 2021 fourth quarter to be in a range of $1.70 billion to $1.75 billion. Based on that range of revenue and assuming insurance and claims costs of 4.3 percent of BCO revenue, I anticipate diluted earnings per share to be in a range of $2.55 to $2.65 in the 2021 fourth quarter.”

Gattoni concluded, “Landstar’s performance so far this year has been outstanding. The Company’s agent family is executing on all cylinders and we continue to add qualified truck capacity. We ended the 2021 third quarter with a record number of trucks provided by BCOs and a record active third-party truck brokerage carrier count. Given the exceptional performance by Landstar year-to-date plus the revenue and earnings estimates we have provided for the 2021 fourth quarter, we anticipate establishing new all-time fiscal year records in 2021 with annual revenue expected to be in excess of $6 billion and diluted earnings per share expected to be in excess of $9.55. Both of these figures would be well above Landstar’s existing record performance in any year in our history and would represent remarkable achievements to cap an extraordinary year for the Company, its employees and the thousands of business owners who participate in the Landstar network.”

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 Third Quarter 2021 Earnings Release Conference Call.”

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.

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 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.

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 25,

September 26,

September 25,

September 26,

2021

2020

2021

2020

Revenue

$

4,592,551

$

2,836,626

$

1,734,299

$

1,085,546

Investment income

2,138

2,716

706

714

Costs and expenses:

Purchased transportation

3,583,197

2,183,143

1,356,671

838,753

Commissions to agents

356,997

236,490

135,295

85,848

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

27,117

23,035

10,572

7,361

Insurance and claims

75,198

66,563

29,569

21,855

Selling, general and administrative

158,720

124,779

59,198

38,851

Depreciation and amortization

36,532

34,212

12,288

11,240

Impairment of intangible and other assets

-

2,582

-

-

Total costs and expenses

4,237,761

2,670,804

1,603,593

1,003,908

Operating income

356,928

168,538

131,412

82,352

Interest and debt expense

2,974

2,936

965

1,008

Income before income taxes

353,954

165,602

130,447

81,344

Income taxes

85,745

38,567

31,772

19,458

Net income

$

268,209

$

127,035

$

98,675

$

61,886

Diluted earnings per share

$

7.00

$

3.28

$

2.58

$

1.61

Average diluted shares outstanding

38,342,000

38,673,000

38,218,000

38,386,000

Dividends per common share

$

0.67

$

0.58

$

0.25

$

0.21


Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

September 25,

December 26,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

230,564

$

249,354

Short-term investments

36,644

41,375

Trade accounts receivable, less allowance

of $6,543 and $8,670

1,010,538

764,169

Other receivables, including advances to independent

contractors, less allowance of $7,696 and $7,239

109,007

134,757

Other current assets

25,375

18,520

Total current assets

1,412,128

1,208,175

Operating property, less accumulated depreciation

and amortization of $332,785 and $299,407

301,373

296,996

Goodwill

40,980

40,949

Other assets

159,561

107,679

Total assets

$

1,914,042

$

1,653,799

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Cash overdraft

$

88,958

$

74,748

Accounts payable

548,385

380,505

Current maturities of long-term debt

34,617

35,415

Insurance claims

64,958

149,774

Dividends payable

-

76,770

Other current liabilities

110,394

88,925

Total current liabilities

847,312

806,137

Long-term debt, excluding current maturities

62,724

65,359

Insurance claims

46,914

38,867

Deferred income taxes and other non-current liabilities

57,402

51,601

Shareholders' equity:

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

shares, issued 68,231,013 and 68,183,702

682

682

Additional paid-in capital

246,302

228,875

Retained earnings

2,288,754

2,046,238

Cost of 30,122,427 and 29,797,639 shares of common

stock in treasury

(1,633,109

)

(1,581,961

)

Accumulated other comprehensive loss

(2,939

)

(1,999

)

Total shareholders' equity

899,690

691,835

Total liabilities and shareholders' equity

$

1,914,042

$

1,653,799


Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 25,

September 26,

September 25,

September 26,

2021

2020

2021

2020

Revenue generated through (in thousands):

Truck transportation

Truckload:

Van equipment

$

2,502,025

$

1,485,553

$

918,115

$

578,166

Unsided/platform equipment

1,112,358

807,966

422,979

294,273

Less-than-truckload

85,551

70,984

30,819

25,125

Other truck transportation (1)

518,472

249,584

208,817

108,614

Total truck transportation

4,218,406

2,614,087

1,580,730

1,006,178

Rail intermodal

120,540

81,747

44,472

30,432

Ocean and air cargo carriers

191,951

89,002

84,111

31,752

Other (2)

61,654

51,790

24,986

17,184

$

4,592,551

$

2,836,626

$

1,734,299

$

1,085,546

Revenue on loads hauled via BCO Independent Contractors (3)

included in total truck transportation

$

1,899,313

$

1,312,003

$

690,257

$

502,224

Number of loads:

Truck transportation

Truckload:

Van equipment

1,037,516

822,422

359,263

296,427

Unsided/platform equipment

381,594

338,696

133,332

118,026

Less-than-truckload

135,038

119,533

49,943

41,454

Other truck transportation (1)

208,402

141,669

81,242

56,693

Total truck transportation

1,762,550

1,422,320

623,780

512,600

Rail intermodal

40,420

33,410

13,620

11,900

Ocean and air cargo carriers

29,650

22,720

10,190

8,290

1,832,620

1,478,450

647,590

532,790

Loads hauled via BCO Independent Contractors (3)

included in total truck transportation

773,270

693,860

263,120

250,030

Revenue per load:

Truck transportation

Truckload:

Van equipment

$

2,412

$

1,806

$

2,556

$

1,950

Unsided/platform equipment

2,915

2,386

3,172

2,493

Less-than-truckload

634

594

617

606

Other truck transportation (1)

2,488

1,762

2,570

1,916

Total truck transportation

2,393

1,838

2,534

1,963

Rail intermodal

2,982

2,447

3,265

2,557

Ocean and air cargo carriers

6,474

3,917

8,254

3,830

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

$

2,456

$

1,891

$

2,623

$

2,009

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

Truck capacity providers:

BCO Independent Contractors (3)

41

%

46

%

40

%

46

%

Truck Brokerage Carriers

50

%

46

%

51

%

46

%

Rail intermodal

3

%

3

%

3

%

3

%

Ocean and air cargo carriers

4

%

3

%

5

%

3

%

Other

1

%

2

%

1

%

2

%

September 25,

September 26,

2021

2020

Truck Capacity Providers

BCO Independent Contractors (3)

10,955

9,866

Truck Brokerage Carriers:

Approved and active (4)

58,676

41,246

Other approved

24,602

22,181

83,278

63,427

Total available truck capacity providers

94,233

73,293

Trucks provided by BCO Independent Contractors (3)

11,746

10,571

(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)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 25,

September 26,

September 25,

September 26,

2021

2020

2021

2020

Revenue

$

4,592,551

$

2,836,626

$

1,734,299

$

1,085,546

Costs of revenue:

Purchased transportation

3,583,197

2,183,143

1,356,671

838,753

Commissions to agents

356,997

236,490

135,295

85,848

Variable costs of revenue

3,940,194

2,419,633

1,491,966

924,601

Trailing equipment depreciation

26,362

26,342

8,615

8,397

Information technology costs (1)

9,534

7,021

3,450

2,722

Insurance-related costs (2)

78,175

68,839

30,502

22,657

Other operating costs

27,117

23,035

10,572

7,361

Other costs of revenue

141,188

125,237

53,139

41,137

Total costs of revenue

4,081,382

2,544,870

1,545,105

965,738

Gross profit

$

511,169

$

291,756

$

189,194

$

119,808

Gross profit margin

11.1

%

10.3

%

10.9

%

11.0

%

Plus: other costs of revenue

141,188

125,237

53,139

41,137

Variable contribution

$

652,357

$

416,993

$

242,333

$

160,945

Variable contribution margin

14.2

%

14.7

%

14.0

%

14.8

%

(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.


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


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