Landstar System Reports First Quarter Revenue Of $1.436B And First Quarter Diluted Earnings Per Share Of $2.17

Rhea-AI Summary

Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share (DEPS) of $2.17 for Q1 2023, down from $3.34 in Q1 2022, amidst challenging freight conditions. Revenue totaled $1.436 billion, compared to $1.971 billion in the same period last year. Gross profit decreased to $152.9 million from $214.6 million. Notably, truckload transportation revenue dropped significantly, reflecting a 14% decrease in revenue per load. Landstar purchased approximately 90,000 shares for $15.4 million and declared a quarterly dividend of $0.30 per share. The company expects Q2 revenue between $1.40 billion and $1.45 billion with projected DEPS of $1.90 to $2.00.

Positive

• Return on average shareholders’ equity at 44%.
• Return on invested capital at 38%.
• Share buyback of 90,000 shares for $15.4 million.
• Declaring a quarterly dividend of $0.30.

Negative

• DEPS declined 35% year-over-year.
• Revenue decreased by 27% compared to Q1 2022.
• Gross profit down 29% year-over-year.
• Truckload transportation revenue fell 30% from Q1 2022.
• Truck revenue per load decreased 14% year-over-year.

JACKSONVILLE, Fla., April 26, 2023 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) (“Landstar” or the “Company”) reported diluted earnings per share (“DEPS”) of $2.17 in the 2023 first quarter on revenue of $1.436 billion. Landstar reported DEPS of $3.34 on revenue of $1.971 billion in the 2022 first quarter.

Gross profit in the 2023 first quarter was $152.9 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2023 first quarter was $208.7 million. Gross profit in the 2022 first quarter was $214.6 million and variable contribution in the 2022 first quarter was $270.5 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2023 and 2022 first quarters are provided in the Company’s accompanying financial disclosures.

Trailing twelve month return on average shareholders’ equity was 44 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 38 percent. During the 2023 first quarter, Landstar purchased approximately 90,000 shares of its common stock at an aggregate cost of $15.4 million. 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 $0.30 per share payable on May 26, 2023, to stockholders of record as of the close of business on May 4, 2023. 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 first quarter was $1,323.7 million, or 92 percent of revenue, compared to $1,751.3 million, or 89 percent of revenue, in the 2022 first quarter. Truckload transportation revenue hauled via van equipment in the 2023 first quarter was $755.1 million, compared to $1,081.2 million in the 2022 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2023 first quarter was $377.6 million, compared to $408.8 million in the 2022 first quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2023 first quarter was $159.5 million, compared to $227.6 million in the 2022 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $86.8 million, or 6 percent of revenue, in the 2023 first quarter, compared to $194.7 million, or 10 percent of revenue, in the 2022 first quarter.

“Given a challenging freight environment to begin our 2023 fiscal year, I am pleased with Landstar’s first quarter financial performance,” said Landstar President and Chief Executive Officer Jim Gattoni. “As we expected, our record 2022 first quarter also made for difficult comparisons during our 2023 first quarter. As compared to the 2022 first quarter, revenue generated via unsided/platform equipment held up considerably better than revenue generated via van equipment and other truck transportation services, which tend to be more correlated to U.S. consumer demand. Our truck services, which primarily operate in the U.S. spot market, experienced pricing pressure throughout the 2023 first quarter as industry-wide truck capacity was significantly more readily available as compared to the 2022 first quarter, during which pandemic-related supply chain disruption was at a high point. As a result, revenue per load on loads hauled via truck decreased 14% in the 2023 first quarter compared to the 2022 first quarter. However, it should be noted that revenue per load on loads hauled via truck only decreased 3.5% in the 2023 first quarter compared to the 2022 fourth quarter. This performance was reasonably in-line with sequential historical patterns experienced during pre-pandemic periods (with 2018 being an exception due to the impact of the December 2017 federal mandate requiring use of electronic logging devices). Truck load volumes also decreased quarter-over-prior-year-quarter, with the number of loads hauled via truck in the 2023 first quarter below the 2022 first quarter by 12%.”

Gattoni further commented, “Through the first several weeks of April, truck revenue per load has thus far sequentially trended slightly below first quarter to the beginning of second quarter pre-pandemic, historical patterns, while the number of loads hauled via truck through the first several weeks of the 2023 second quarter has sequentially trended a bit further below these historical patterns. After several years where past trends were less applicable in light of the impact of the pandemic, I anticipate that as we move into May, we will begin to experience truck revenue per load and truck load volume sequential trends closer to pre-pandemic, historical patterns. Assuming that truck revenue per load and truck load volume sequential trends are in fact closer to pre-pandemic, historical patterns, I expect revenue per load on loads hauled via truck to be in a range of 12% to 14% below the 2022 second quarter and the number of loads hauled via truck to be in a range of 14% to 16% below the 2022 second quarter. As such, I anticipate revenue for the 2023 second quarter to be in a range of $1.40 billion to $1.45 billion.”

Gattoni concluded, “Based on the range of revenue estimated for the 2023 second quarter, I would anticipate DEPS to be in a range of $1.90 to $2.00. During the 2023 first quarter, DEPS was favorably impacted by a lower effective income tax rate and increased net interest income, partially offset by insurance and claims expense at 5.3% of BCO revenue. The anticipated range of DEPS for the 2023 second quarter includes insurance and claims expense estimated to be similar to the insurance and claims expense reported in the 2023 first quarter and an effective income tax rate of 24.4%.”

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 First 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, 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)
						Thirteen Weeks Ended
						April 1,				March 26,
							2023				2022
Revenue						$	1,435,675			$	1,970,599
Investment income							1,368				721
Costs and expenses:
	Purchased transportation						1,101,294				1,550,330
	Commissions to agents						125,675				149,778
	Other operating costs, net of gains on asset sales/dispositions						12,378				11,141
	Insurance and claims						27,647				30,768
	Selling, general and administrative						53,567				52,713
	Depreciation and amortization						15,198				13,757
		Total costs and expenses					1,335,759				1,808,487
Operating income							101,284				162,833
Interest and debt (income) expense							(726	)			1,123
Income before income taxes							102,010				161,710
Income taxes							23,815				36,871
Net income						$	78,195			$	124,839
Diluted earnings per share						$	2.17			$	3.34
Average diluted shares outstanding							35,982,000				37,418,000
Dividends per common share						$	0.30			$	0.25

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
							April 1,				December 31,
								2023				2022
ASSETS
Current assets:
	Cash and cash equivalents						$	340,987			$	339,581
	Short-term investments							47,168				53,955
	Trade accounts receivable, less allowance
		of $12,577 and $12,121						899,811				967,793
	Other receivables, including advances to independent
		contractors, less allowance of $11,758 and $10,579						53,242				56,235
	Other current assets							12,684				21,826
		Total current assets						1,353,892				1,439,390
Operating property, less accumulated depreciation
			and amortization of $406,648 and $393,274					306,224				314,990
Goodwill								41,726				41,220
Other assets								136,018				136,279
Total assets							$	1,837,860			$	1,931,879
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Cash overdraft						$	66,195			$	92,953
	Accounts payable							490,304				527,372
	Current maturities of long-term debt							33,801				36,175
	Insurance claims							50,064				50,836
	Dividends payable							-				71,854
	Other current liabilities							100,980				98,945
		Total current liabilities						741,344				878,135
Long-term debt, excluding current maturities								60,191				67,225
Insurance claims								57,974				58,268
Deferred income taxes and other non-current liabilities								42,699				41,030
Shareholders' equity:
	Common stock, $0.01 par value, authorized 160,000,000
		shares, issued 68,483,963 and 68,382,310						685				684
	Additional paid-in capital							253,138				258,487
	Retained earnings							2,703,349				2,635,960
	Cost of 32,550,852 and 32,455,300 shares of common
		stock in treasury						(2,009,327	)			(1,992,886	)
	Accumulated other comprehensive loss							(12,193	)			(15,024	)
		Total shareholders' equity						935,652				887,221
Total liabilities and shareholders' equity							$	1,837,860			$	1,931,879

	Landstar System, Inc. and Subsidiary
	Supplemental Information
	(Unaudited)
					Thirteen Weeks Ended
					April 1,				March 26,
						2023				2022
Revenue generated through (in thousands):
	Truck transportation
		Truckload:
			Van equipment		$	755,083			$	1,081,206
			Unsided/platform equipment			377,564				408,757
		Less-than-truckload				31,558				33,720
		Other truck transportation (1)				159,503				227,601
			Total truck transportation			1,323,708				1,751,284
	Rail intermodal					25,657				42,688
	Ocean and air cargo carriers					61,093				152,057
	Other (2)					25,217				24,570
					$	1,435,675			$	1,970,599
	Revenue on loads hauled via BCO Independent Contractors (3)
		included in total truck transportation			$	519,526			$	727,574
Number of loads:
	Truck transportation
		Truckload:
			Van equipment			331,954				376,268
			Unsided/platform equipment			127,572				131,829
		Less-than-truckload				46,192				47,843
		Other truck transportation (1)				58,062				85,930
			Total truck transportation			563,780				641,870
	Rail intermodal					7,760				12,630
	Ocean and air cargo carriers					8,440				11,560
						579,980				666,060
	Loads hauled via BCO Independent Contractors (3)
		included in total truck transportation				232,550				262,240
Revenue per load:
	Truck transportation
		Truckload:
			Van equipment		$	2,275			$	2,873
			Unsided/platform equipment			2,960				3,101
		Less-than-truckload				683				705
		Other truck transportation (1)				2,747				2,649
			Total truck transportation			2,348				2,728
	Rail intermodal					3,306				3,380
	Ocean and air cargo carriers					7,239				13,154
	Revenue per load on loads hauled via BCO Independent Contractors (3)				$	2,234			$	2,774
Revenue by capacity type (as a % of total revenue):
	Truck capacity providers:
		BCO Independent Contractors (3)				36	%			37	%
		Truck Brokerage Carriers				56	%			52	%
	Rail intermodal					2	%			2	%
	Ocean and air cargo carriers					4	%			8	%
	Other					2	%			1	%
					April 1,				March 26,
						2023				2022
Truck Capacity Providers
	BCO Independent Contractors (3)					9,996				11,089
	Truck Brokerage Carriers:
	Approved and active (4)					61,771				68,859
	Other approved					30,893				28,094
						92,664				96,953
	Total available truck capacity providers					102,660				108,042
	Trucks provided by BCO Independent Contractors (3)					10,809				11,935
(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)
						Thirteen Weeks Ended
						April 1,				March 26,
							2023				2022
Revenue						$	1,435,675			$	1,970,599
Costs of revenue:
		Purchased transportation					1,101,294				1,550,330
		Commissions to agents					125,675				149,778
	Variable costs of revenue						1,226,969				1,700,108
		Trailing equipment depreciation					8,369				9,083
		Information technology costs (1)					6,751				4,046
		Insurance-related costs (2)					28,260				31,655
		Other operating costs					12,378				11,141
	Other costs of revenue						55,758				55,925
	Total costs of revenue						1,282,727				1,756,033
Gross profit						$	152,948			$	214,566
Gross profit margin							10.7	%			10.9	%
	Plus: other costs of revenue						55,758				55,925
Variable contribution						$	208,706			$	270,491
Variable contribution margin							14.5	%			13.7	%
(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) broke  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.

FAQ

What were Landstar's earnings for the first quarter of 2023?

Landstar reported diluted earnings per share (DEPS) of $2.17 for Q1 2023.

How much revenue did Landstar generate in Q1 2023?

Landstar generated revenue of $1.436 billion in the first quarter of 2023.

What is the projected revenue for Landstar in Q2 2023?

Landstar expects revenue in a range of $1.40 billion to $1.45 billion for the second quarter of 2023.

What dividend did Landstar declare for Q2 2023?

Landstar declared a quarterly dividend of $0.30 per share, payable on May 26, 2023.

How did Landstar's gross profit compare year-over-year for Q1 2023?

Landstar's gross profit in Q1 2023 was $152.9 million, down from $214.6 million in Q1 2022.