Landstar System Reports First Quarter Revenue of $1.171B and Earnings Per Share of $1.32

JACKSONVILLE, Fla., April 24, 2024 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ: LSTR) (“Landstar” or the “Company”) today reported basic and diluted earnings per share (“EPS”) of $1.32 in the 2024 first quarter on revenue of $1.171 billion. Landstar also announced today that its Board of Directors declared a quarterly dividend of $0.33 per share payable on May 24, 2024, to stockholders of record as of the close of business on May 8, 2024.“It’s been a privilege to join Landstar and work alongside our customers, independent agents, BCOs, employees and the Board. The Landstar team performed admirably in a challenging freight environment as both the number of loads hauled via truck and revenue per load on loads hauled via truck exceeded the high-end of the Company’s guidance issued in our 2023 fourth quarter earnings release,” said Landstar President and Chief Executive Officer Frank Lonegro. “The Company is laser-focused on supporting our network of small business owners and executing on our strategic growth initiatives and technology enhancements. We are excited about the future, the new leadership structure of our sales organization and the strength of our balance sheet. Landstar is well positioned to capitalize when freight fundamentals improve. On tomorrow’s earnings call, we look forward to discussing first quarter earnings and providing second quarter guidance, which will be included within the slide presentation that accompanies the call.”
*1Q 2024*     * 1Q 2023*  
Revenue $ 1,171,043 $ 1,435,675  
Gross profit $ 113,902 $ 152,948  
Variable contribution $ 168,240 $ 208,706  
Operating income $ 59,961 $ 101,284  
Basic and diluted earnings per share $ 1.32 $ 2.17            
(1)   Dollars above in thousands, except per share amounts

(2)   Please refer to the Consolidated Statements of Income and Reconciliation of Gross Profit to Variable Contribution included belowTruck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2024 first quarter was $1,068.9 million, or 91% of revenue, compared to $1,323.7 million, or 92% of revenue, in the 2023 first quarter. Truckload transportation revenue hauled via van equipment in the 2024 first quarter was $628.3 million, compared to $755.1 million in the 2023 first quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2024 first quarter was $343.0 million, compared to $377.6 million in the 2023 first quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2024 first quarter was $72.0 million, compared to $159.5 million in the 2023 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $76.8 million, or 7% of revenue, in the 2024 first quarter, compared to $86.8 million, or 6% of revenue, in the 2023 first quarter.

While the number of loads hauled via truck declined 13% and truck revenue per load declined 7% in the 2024 first quarter as compared to the 2023 first quarter, each performed slightly better than the high end of the Company’s expectations as set forth in its previously issued guidance.   On a sequential basis as compared to the 2023 fourth quarter, the number of loads hauled via truck and truck revenue per load in the 2024 first quarter each outperformed historical, pre-pandemic patterns.

Gross profit in the 2024 first quarter was $113.9 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2024 first quarter was $168.2 million. Gross profit in the 2023 first quarter was $152.9 million and variable contribution in the 2023 first quarter was $208.7 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2024 and 2023 first quarters are provided in the Company’s accompanying financial disclosures.

The Company’s balance sheet continues to be very strong, with cash and short term investments of approximately $530 million as of March 30, 2024.   Trailing twelve month return on average shareholders’ equity was 23%, and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 22%. 

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 www.investor.landstar.com; click on “Investor Relations” and “Webcasts,” then click on “Landstar’s First Quarter 2024 Earnings Release Conference Call.”

*About Landstar:*
Landstar System, Inc., is a 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 2023 fiscal year; 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; regulations requiring the purchase and use of zero-emission vehicles; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2023 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     March 30,   April 1,       2024       2023            
Revenue $ 1,171,043     $ 1,435,675  
Investment income   3,412       1,368            
Costs and expenses:       Purchased transportation   905,521       1,101,294   Commissions to agents   97,282       125,675   Other operating costs, net of gains on asset sales/dispositions   14,859       12,378   Insurance and claims   26,268       27,647   Selling, general and administrative   56,422       53,567   Depreciation and amortization   14,142       15,198               Total costs and expenses   1,114,494       1,335,759            
Operating income   59,961       101,284  
Interest and debt (income) expense   (1,611 )     (726 )          
Income before income taxes   61,572       102,010  
Income taxes   14,476       23,815            
Net income $ 47,096     $ 78,195            
Basic and diluted earnings per share $ 1.32     $ 2.17            
Average basic and diluted shares outstanding   35,750,000       35,982,000            
Dividends per common share $ 0.33     $ 0.30            

*Landstar System, Inc. and Subsidiary*
*Consolidated Balance Sheets*
(Dollars in thousands, except per share amounts)
(Unaudited)                               March 30,   December 30,         2024       2023  
ASSETS        
Current assets:       Cash and cash equivalents $ 467,671     $ 481,043   Short-term investments   62,781       59,661   Trade accounts receivable, less allowance         of $11,764 and $11,738   723,841       743,762   Other receivables, including advances to independent         contractors, less allowance of $14,310 and $14,010   40,535       43,339   Other current assets   15,540       24,936     Total current assets   1,310,368       1,352,741              
Operating property, less accumulated depreciation           and amortization of $442,898 and $436,682   279,552       284,300  
Goodwill     42,381       42,275  
Other assets   113,540       122,530  
Total assets $ 1,745,841     $ 1,801,846              
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:       Cash overdraft $ 51,674     $ 61,541   Accounts payable   384,267       395,980   Current maturities of long-term debt   26,730       27,876   Insurance claims   40,683       41,825   Dividends payable   -       71,433   Other current liabilities   86,318       76,569     Total current liabilities   589,672       675,224              
Long-term debt, excluding current maturities   38,496       43,264  
Insurance claims   59,668       58,922  
Deferred income taxes and other non-current liabilities   40,094       40,513              
Shareholders' equity:       Common stock, $0.01 par value, authorized 160,000,000         shares, issued 68,547,553 and 68,497,324   685       685   Additional paid-in capital   254,192       254,642   Retained earnings   2,818,939       2,783,645   Cost of 32,785,515 and 32,780,651 shares of common         stock in treasury   (2,049,070 )     (2,048,184 ) Accumulated other comprehensive loss   (6,835 )     (6,865 )   Total shareholders' equity   1,017,911       983,923  
Total liabilities and shareholders' equity $ 1,745,841     $ 1,801,846              
*Landstar System, Inc. and Subsidiary* *Supplemental Information* (Unaudited)                       Thirteen Weeks Ended         March 30,   April 1,           2024       2023  
Revenue generated through (in thousands):                       Truck transportation           Truckload:             Van equipment   $ 628,304     $ 755,083       Unsided/platform equipment     343,045       377,564     Less-than-truckload     25,617       31,558     Other truck transportation^ (1)       71,966       159,503       Total truck transportation     1,068,932       1,323,708   Rail intermodal     22,695       25,657   Ocean and air cargo carriers     54,074       61,093   Other ^(2)        25,342       25,217           $ 1,171,043     $ 1,435,675                 Revenue on loads hauled via BCO Independent Contractors ^(3)                 included in total truck transportation   $ 452,561     $ 519,526                
Number of loads:                       Truck transportation           Truckload:             Van equipment     299,014       331,954       Unsided/platform equipment     117,947       127,572     Less-than-truckload     40,233       46,192     Other truck transportation ^(1)       33,526       58,062       Total truck transportation     490,720       563,780   Rail intermodal     7,150       7,760   Ocean and air cargo carriers     8,720       8,440             506,590       579,980                 Loads hauled via BCO Independent Contractors ^(3)                 included in total truck transportation     208,740       232,550                
Revenue per load:                       Truck transportation           Truckload:             Van equipment   $ 2,101     $ 2,275       Unsided/platform equipment     2,908       2,960     Less-than-truckload     637       683     Other truck transportation ^(1)       2,147       2,747       Total truck transportation     2,178       2,348   Rail intermodal     3,174       3,306   Ocean and air cargo carriers     6,201       7,239                 Revenue per load on loads hauled via BCO Independent Contractors ^(3)          $ 2,168     $ 2,234                
Revenue by capacity type (as a % of total revenue):                       Truck capacity providers:           BCO Independent Contractors ^(3)        39 %     36 %   Truck Brokerage Carriers     53 %     56 % Rail intermodal     2 %     2 % Ocean and air cargo carriers     5 %     4 % Other       2 %     2 %                                     March 30,   April 1,           2024       2023  
Truck Capacity Providers                       BCO Independent Contractors ^(3)        8,619       9,996   Truck Brokerage Carriers:           Approved and active ^(4)       45,919       61,771        Other approved     26,320       30,893             72,239       92,664   Total available truck capacity providers     80,858       102,660                 Trucks provided by BCO Independent Contractors ^(3)         9,410       10,809                              
(1) Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation shipments logistics segment. Power-only refers to 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     March 30,   April 1,       2024       2023            
Revenue $ 1,171,043     $ 1,435,675            
Costs of revenue:         Purchased transportation   905,521       1,101,294     Commissions to agents   97,282       125,675             Variable costs of revenue   1,002,803       1,226,969               Trailing equipment depreciation   6,897       8,369     Information technology costs^ (1)   5,804       6,751     Insurance-related costs^ (2)   26,778       28,260     Other operating costs   14,859       12,378             Other costs of revenue   54,338       55,758             Total costs of revenue   1,057,141       1,282,727            
Gross profit $ 113,902     $ 152,948            
Gross profit margin   9.7 %     10.7 %           Plus: other costs of revenue   54,338       55,758            
Variable contribution $ 168,240     $ 208,706            
Variable contribution margin   14.4 %     14.5 %

(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: Contact:
Jim Todd
Chief Financial Officer
904-398-9400