Landstar System Reports All-Time Quarterly Records With Revenue of $1.296 Billion and Diluted Earnings Per Share of $1.70 in the 2020 Fourth Quarter

Rhea-AI Summary

Landstar System reported record quarterly results for Q4 2020, with revenues of $1.296 billion and diluted earnings per share of $1.70. Excluding a one-time cost of $15.5 million, operating income would have also reached all-time highs. Truck transportation revenue grew significantly, with van and platform equipment revenues increasing 44% and 12% year-over-year, respectively. The company ended 2020 with $291 million in cash and declared a special dividend of $2.00 per share. Future guidance predicts Q1 2021 revenue between $1.10 billion and $1.15 billion.

Positive

• Record revenue of $1.296 billion in Q4 2020, up from $994.9 million in Q4 2019.
• Diluted EPS of $1.70 exceeded guidance and last year's $1.27.
• Gross profit increased 23% year-over-year, reaching an all-time quarterly record.
• Strong performance in truckload transportation, with significant increases in revenue per load.

Negative

• One-time cost of $15.5 million impacted earnings by $0.31 per share.

JACKSONVILLE, Fla., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) reported all-time quarterly records with revenue of $1.296 billion and diluted earnings per share of $1.70 in the 2020 fourth quarter. Diluted earnings per share in the quarter included a previously announced one-time cost of $15.5 million, or $0.31 per diluted share, related to buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a truck owner-operator recruitment and retention program formerly involving those agents. Landstar reported revenue of $994.9 million and diluted earnings per share of $1.27 in the 2019 fourth quarter. Gross profit in the 2020 fourth quarter of $182.4 million, 23 percent above 2019 fourth quarter gross profit of $148.7 million, was also an all-time Landstar quarterly record.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2020 fourth quarter was $1,201.7 million, or 93 percent of revenue, compared to $911.8 million, or 92 percent of revenue, in the 2019 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2020 fourth quarter was $821.0 million compared to $571.8 million in the 2019 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2020 fourth quarter was $354.1 million compared to $315.2 million in the 2019 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $75.7 million, or 6 percent of revenue, in the 2020 fourth quarter compared to $63.0 million, or 6 percent of revenue, in the 2019 fourth quarter.

Return on average shareholders’ equity was 28 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 25 percent in fiscal year 2020. Landstar purchased approximately 1,179,000 shares of its common stock during fiscal year 2020 at an aggregate cost of approximately $116.0 million. The Company currently is authorized to purchase up to 1,821,030 shares of the Company’s common stock under its previously announced share purchase program. As previously disclosed by the Company in a Form 8-K filed with the Securities and Exchange Commission on December 9, 2020, its Board of Directors declared a special one-time cash dividend in the amount of $2.00 per share that was paid on January 22, 2021, to stockholders of record as of the close of business on January 8, 2021. In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.21 per share payable on March 12, 2021, to stockholders of record as of the close of business on February 15, 2021. It is currently the intention of the Board to pay dividends on a quarterly basis going forward. As of December 26, 2020, the Company had $291 million in cash and short-term investments and $216 million available for borrowings under the Company’s senior credit facility, with the ability to increase borrowings to $366 million using the facility’s accordion feature.

“Landstar’s 2020 fourth quarter performance was outstanding,” said Landstar President and CEO Jim Gattoni. “Revenue, gross profit, and diluted earnings per share were each all-time quarterly records. Additionally, excluding the $15.5 million one-time cost to buyout certain incentive commission arrangements with several agents, operating income and operating margin in the 2020 fourth quarter would have achieved all-time quarterly records. Revenue from truck loads hauled via van equipment exceeded the 2019 fourth quarter by 44 percent and revenue from truck loads hauled via unsided/platform equipment exceeded the 2019 fourth quarter by 12 percent. Consumer demand for durables, building products and e-commerce drove record van quarterly revenue. For loads hauled via van equipment in the 2020 fourth quarter compared to the 2019 fourth quarter, the number of loads increased 16 percent and revenue per load increased 24 percent. Moreover, the fourth quarter was the only quarter of fiscal year 2020 in which revenue from truck loads hauled via unsided/platform equipment exceeded that of the corresponding prior year quarter. The number of loads and revenue per load on loads hauled via unsided/platform equipment in the 2020 fourth quarter exceeded the 2019 fourth quarter by 7 percent and 5 percent, respectively.”  

Gattoni continued, “In our third quarter earnings release on October 21, 2020, we provided fourth quarter revenue guidance of $1.15 billion to $1.20 billion and fourth quarter diluted earnings per share guidance of $1.32 to $1.42. On November 17, 2020, we disclosed in a Form 8-K filed with the SEC and further explained at a webcast investor conference the next day that based on overall market conditions, we expected 2020 fourth quarter revenue and diluted earnings per share for the 2020 fourth quarter to be slightly above the high end of the previously issued guidance. The updated guidance provided on November 17, 2020 reflected truck load volume that at the time was trending near the high end of the previous guidance of high single digit percentage growth and revenue per load on loads hauled via truck trending above the 2019 fourth quarter in a mid-teen percentage range, as compared to the low double-digit percentage range reflected in our previously issued guidance. The year-over-year growth in the number of loads and revenue per load on loads hauled via truck in November and December continued to improve from October, with exceptional strength in substitute line haul services provided in support of e-commerce related demand during the holiday peak season. The number of loads hauled via truck in October, November and December exceeded the corresponding months of 2019 by 10 percent, 13 percent and 15 percent, respectively, while revenue per load on loads hauled via truck increased in October, November and December over the corresponding months of 2019 by 15 percent, 17 percent and 18 percent, respectively. Overall, truck load volume increased in the 2020 fourth quarter by 13% as compared to the 2019 fourth quarter, and truck revenue per load increased by 17% as compared to the 2019 fourth quarter. Ultimately, revenue in the 2020 fourth quarter was $1.296 billion and diluted earnings per share for the 2020 fourth quarter was $1.70.

Gattoni commented, “The achievement of revenue in excess of our guidance updated on November 17, 2020, primarily resulted from the continuing sequential increases Landstar experienced in the number of loads and revenue per load on loads hauled via truck from mid-November through the end of the fiscal year. Diluted earnings per share of $1.70 in the 2020 fourth quarter significantly exceeded the high end of our inital guidance of $1.42 due to the increase in revenue, actual insurance and claims costs that came in below the 4.8 percent of BCO revenue used in our previous guidance, and a lower effective income tax rate in the fourth quarter than initially anticipated.”

Gattoni further stated, “Landstar’s financial performance in 2020 was exceptional given the unprecedented impact of the COVID-19 pandemic on the U.S. economy and supply chains throughout the world, the softness in the U.S. manufacturing sector throughout the year, the transition of over 80 percent of the Company’s employees to work remotely beginning in March and the many other challenges experienced by Landstar customers, employees, agents, BCOs and other third party capacity providers in managing through the business and personal disruptions caused by the pandemic. The sudden closing of manufacturing facilities in the U.S. adversely impacted the financial results of Landstar’s 2020 second quarter with a decrease in diluted earnings per share of almost 60 percent compared to the 2019 second quarter. In light of the softness in U.S. manufacturing that continued beyond the 2020 second quarter, the Company’s financial performance in the back half of 2020 was remarkable. Revenue, gross profit, operating income and diluted earnings per share exceeded the back half of 2019 by 19 percent, 14 percent, 22 percent and 27 percent, respectively. Additionally, the Company ended the year with a record number of trucks provided by BCOs and a record number of approved third-party truck brokerage carriers. The resiliency of Landstar’s variable cost, light asset-based business model continues to shine.”

Gattoni continued, “January of any given year is typically the slowest month of the year. Through the first several weeks of January, the macroeconomic environment experienced throughout the back half of 2020 continued, characterized by strong consumer demand, relative softness in the U.S. industrial/manufacturing sector relative to sectors servicing consumers, and tight available truck capacity. I anticipate demand for substitute line haul services in the 2021 first quarter will return to the still very strong levels we experienced throughout September and October, before the steep spike in demand that took place during the holiday peak season. I expect these market conditions throughout the remainder of the 2021 first quarter and, as a result, revenue and diluted earnings per share in the 2021 first quarter to be well above that of the 2020 first quarter.   From a revenue standpoint, I expect the number of loads hauled via truck in the 2021 first quarter to exceed the 2020 first quarter in a high single-digit percentage range. I expect revenue per load on loads hauled via truck in the 2021 first quarter to exceed the 2020 first quarter in a mid-teen percentage range. As such, I anticipate revenue for the 2021 first quarter to be in a range of $1.10 billion to $1.15 billion.”

Gattoni concluded, “Based on the range of revenue estimated for the 2021 first quarter, I would anticipate diluted earnings per share to be in a range of $1.55 to $1.65. This range of diluted earnings per share includes insurance and claims expense estimated at 4.6 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 Fourth Quarter 2020 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; U.S. foreign 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; 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 2019 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.

(Tables follow)

Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
	Fiscal Years Ended							Fiscal Quarters Ended
	December 26,			December 28,				December 26,			December 28,
	2020			2019				2020			2019
Revenue	$	4,132,981		$	4,084,577			$	1,296,355		$	994,879
Investment income		3,399			5,041				683			1,305
Costs and expenses:
Purchased transportation		3,192,850			3,127,474				1,009,707			761,828
Commissions to agents		340,780			342,226				104,290			84,364
Other operating costs, net of gains/losses on asset sales/dispositions		30,463			37,274				7,428			8,743
Insurance and claims		87,773			80,319				21,210			25,071
Selling, general and administrative		167,633			158,953				42,854			38,236
Depreciation and amortization		45,855			44,468				11,643			11,423
Impairment of intangible and other assets		2,582			-				-			-
Commission program termination costs		15,494			-				15,494			-
Total costs and expenses		3,883,430			3,790,714				1,212,626			929,665
Operating income		252,950			298,904				84,412			66,519
Interest and debt expense		3,953			3,141				1,017			863
Income before income taxes		248,997			295,763				83,395			65,656
Income taxes		56,891			68,060				18,324			15,608
Net income		192,106			227,703				65,071			50,048
Less: Net loss attributable to noncontrolling interest		-			(17	)			-			-
Net income attributable to Landstar System,
Inc. and subsidiary	$	192,106		$	227,720			$	65,071		$	50,048
Earnings per common share attributable to
Landstar System, Inc. and subsidiary	$	4.98		$	5.72			$	1.70		$	1.27
Diluted earnings per share attributable to
Landstar System, Inc. and subsidiary	$	4.98		$	5.72			$	1.70		$	1.27
Average number of shares outstanding:
Earnings per common share		38,602,000			39,786,000				38,389,000			39,472,000
Diluted earnings per share		38,602,000			39,786,000				38,389,000			39,472,000
Dividends per common share	$	2.790		$	2.700			$	2.210		$	2.185

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
	December 26,				December 28,
	2020				2019
ASSETS
Current assets:
Cash and cash equivalents	$	249,354			$	319,515
Short-term investments		41,375				32,901
Trade accounts receivable, less allowance
of $8,670 and $7,284		764,169				588,549
Other receivables, including advances to independent
contractors, less allowance of $7,239 and $7,667		134,757				35,553
Other current assets		18,520				21,370
Total current assets		1,208,175				997,888
Operating property, less accumulated depreciation
and amortization of $299,407 and $280,849		296,996				285,855
Goodwill		40,949				38,508
Other assets		107,679				105,460
Total assets	$	1,653,799			$	1,427,711
LIABILITIES AND EQUITY
Current liabilities:
Cash overdraft	$	74,748			$	53,878
Accounts payable		380,505				271,996
Current maturities of long-term debt		35,415				42,632
Insurance claims		149,774				44,532
Dividends payable		76,770				78,947
Other current liabilities		88,925				60,919
Total current liabilities		806,137				552,904
Long-term debt, excluding current maturities		65,359				70,212
Insurance claims		38,867				33,575
Deferred income taxes and other non-current liabilities		51,601				49,551
Shareholders' equity:
Common stock, $0.01 par value, authorized 160,000,000
shares, issued 68,183,702 and 68,083,419 shares		682				681
Additional paid-in capital		228,875				226,123
Retained earnings		2,046,238				1,962,161
Cost of 29,797,639 and 28,609,926 shares of common
stock in treasury		(1,581,961	)			(1,465,284	)
Accumulated other comprehensive loss		(1,999	)			(2,212	)
Total shareholders' equity		691,835				721,469
Total liabilities and shareholders' equity	$	1,653,799			$	1,427,711

Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
	Fiscal Years Ended								Fiscal Quarters Ended
	December 26,				December 28,				December 26,				December 28,
	2020				2019				2020				2019
Revenue generated through (in thousands):
Truck transportation
Truckload:
Van equipment	$	2,515,940			$	2,371,188			$	821,024			$	571,767
Unsided/platform equipment		1,202,295				1,295,817				354,108				315,202
Less-than-truckload		97,546				98,324				26,562				24,849
Total truck transportation		3,815,781				3,765,329				1,201,694				911,818
Rail intermodal		114,313				118,305				32,566				30,750
Ocean and air cargo carriers		132,180				121,485				43,178				32,227
Other (1)		70,707				79,458				18,917				20,084
	$	4,132,981			$	4,084,577			$	1,296,355			$	994,879
Revenue on loads hauled via BCO Independent Contractors (2)
included in total truck transportation	$	1,866,526			$	1,831,752			$	554,523			$	441,617
Number of loads:
Truck transportation
Truckload:
Van equipment		1,318,768				1,337,089				372,651				322,517
Unsided/platform equipment		487,348				513,579				130,678				122,467
Less-than-truckload		163,024				155,592				43,491				39,976
Total truck transportation		1,969,140				2,006,260				546,820				484,960
Rail intermodal		46,280				47,590				12,870				12,220
Ocean and air cargo carriers		31,900				30,110				9,180				7,960
		2,047,320				2,083,960				568,870				505,140
Loads hauled via BCO Independent Contractors (2)
included in total truck transportation		945,210				954,990				251,350				232,120
Revenue per load:
Truck transportation
Truckload:
Van equipment	$	1,908			$	1,773			$	2,203			$	1,773
Unsided/platform equipment		2,467				2,523				2,710				2,574
Less-than-truckload		598				632				611				622
Total truck transportation		1,938				1,877				2,198				1,880
Rail intermodal		2,470				2,486				2,530				2,516
Ocean and air cargo carriers		4,144				4,035				4,703				4,049
Revenue per load on loads hauled via BCO Independent Contractors (2)	$	1,975			$	1,918			$	2,206			$	1,903
Revenue by capacity type (as a % of total revenue);
Truck capacity providers:
BCO Independent Contractors (2)		45	%			45	%			43	%			44	%
Truck Brokerage Carriers		47	%			47	%			50	%			47	%
Rail intermodal		3	%			3	%			3	%			3	%
Ocean and air cargo carriers		3	%			3	%			3	%			3	%
Other		2	%			2	%			1	%			2	%
									December 26,				December 28,
									2020				2019
Truck Capacity Providers
BCO Independent Contractors (2)										10,242				9,554
Truck Brokerage Carriers:
Approved and active (3)										46,053				39,497
Other approved										22,972				16,820
										69,025				56,317
Total available truck capacity providers										79,267				65,871
Trucks provided by BCO Independent Contractors (2)										10,991				10,243
(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.

FAQ

What were Landstar's revenue and earnings for Q4 2020?

Landstar reported revenue of $1.296 billion and diluted earnings per share of $1.70 for Q4 2020.

How did Landstar's performance in Q4 2020 compare to Q4 2019?

Revenue in Q4 2020 increased by over 30% compared to Q4 2019, while diluted EPS rose from $1.27 to $1.70.

What is the expected revenue for Landstar in Q1 2021?

Landstar anticipates revenue in the range of $1.10 billion to $1.15 billion for Q1 2021.

What dividends has Landstar declared recently?

Landstar declared a special cash dividend of $2.00 per share and a quarterly dividend of $0.21 per share.