UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 24, 2018
LANDSTAR SYSTEM, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 021238 | 06-1313069 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 13410 Sutton Park Drive South, Jacksonville, Florida | 32224 | |
| (Address of principal executive offices) | (Zip Code) |
(904) 398-9400
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On October 24, 2018, Landstar System, Inc. issued a press release announcing results for the third quarter of fiscal 2018. A copy of the press release is attached hereto as Exhibit 99.1.
The information contained in Item 7.01 concerning the presentation to Landstar investors is hereby incorporated into this Item 2.02 by reference.
The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 7.01 Regulation FD Disclosure
A slide presentation, dated October 24, 2018, is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The slide presentation provides information that may be referred to by the Company on its conference call with investors scheduled to occur on October 25, 2018 in connection with the Company’s release of results for the third quarter of fiscal 2018.
The information furnished under Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits
| Exhibits |
||
| 99.1 | News Release dated October 24, 2018 of Landstar System, Inc. | |
| 99.2 | Slide Presentation dated October 24, 2018 of Landstar System, Inc. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LANDSTAR SYSTEM, INC. | ||||||
| Date: October 24, 2018 | By: | /s/ L. Kevin Stout | ||||
| Name: L. Kevin Stout | ||||||
| Title: Vice President and Chief Financial Officer | ||||||
Exhibit 99.1
| For Immediate Release | Contact: Kevin Stout | |
| Landstar System, Inc. | ||
| www.landstar.com | ||
| October 24, 2018 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS RECORD QUARTERLY
REVENUE OF $1.202 BILLION AND RECORD QUARTERLY DILUTED
EARNINGS PER SHARE OF $1.63
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $1.202 billion in the 2018 third quarter, a 27 percent increase over revenue of $943 million reported in the 2017 third quarter. Net income of $67.0 million and diluted earnings per share of $1.63 were also quarterly records and increased 58 percent and 61 percent, respectively, over net income and diluted earnings per share in the 2017 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 third quarter was $171.3 million, 22 percent above the 2017 third quarter, while 2018 third quarter operating income was $87.1 million, 44 percent above the 2017 third quarter. Operating income in the 2018 third quarter was an all-time quarterly record, while gross profit was a third quarter record, second all-time only to the Company’s 2018 second quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2018 third quarter was $1.118 billion, or 93 percent of revenue, compared to $877.6 million, or 93 percent of revenue, in the 2017 third quarter. Truckload transportation revenue hauled via van equipment in the 2018 third quarter was $717.0 million compared to $550.5 million in the 2017 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 third quarter was $375.7 million compared to $304.5 million in the 2017 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $65.7 million, or 5 percent of revenue, in the 2018 third quarter compared to $53.7 million, or 6 percent of revenue, in the 2017 third quarter.
LANDSTAR SYSTEM/2
Landstar did not purchase any shares of its common stock during the 2018 third quarter. Currently, the Company is authorized to purchase up to an additional 2,000,000 shares of the Company’s common stock under Landstar’s previously announced share purchase programs. As of September 29, 2018, the Company had $254 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility.
In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.165 per share payable on December 7, 2018, to stockholders of record as of the close of business on November 13, 2018. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
“I am extremely pleased with Landstar’s financial performance during the 2018 third quarter,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “The 2018 third quarter established all-time Landstar quarterly records for revenue, operating income and diluted earnings per share while gross profit was a third quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,443 as of the end of the quarter and net truck additions in a single quarter with the net addition of 288 trucks in the third quarter.”
Gattoni continued, “Demand for our services continued to be strong in the 2018 third quarter. The number of loads hauled via truck in the 2018 third quarter was a third quarter record and increased 7 percent over the 2017 third quarter, driven by a 7 percent increase in the number of loads hauled via van equipment, a 5 percent increase in the number of loads hauled via unsided/platform equipment and a 5 percent increase in less-than-truckload volume. Excluding the approximately 16,000 truckloads hauled by Landstar in September 2017 related to the storms that impacted the southeastern U.S. and Texas, truckload volumes increased 10 percent over the 2017 third quarter. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 25 percent higher in the 2018 third quarter compared to the 2017 third quarter, primarily due to a 21 percent increase in rail intermodal volume and a 46 percent increase in ocean volume.”
LANDSTAR SYSTEM/3
Gattoni further commented, “As expected, the pricing environment for our truckload services continued to be very strong in the 2018 third quarter, as industry-wide truck capacity continued to be tight. Revenue per load on loads hauled via van equipment increased 21 percent over the 2017 third quarter and revenue per load on loads hauled via unsided/platform equipment increased 17 percent over the 2017 third quarter. As a result, revenue per load on loads hauled via truck was 19 percent higher than the 2017 third quarter.”
Gattoni continued, “Revenue per load and the number of loads hauled via truck in the first few weeks of October continue to significantly exceed the rates and volume of the same period of 2017, however, at a more modest pace than experienced during the first three quarters of 2018. Accordingly, we expect truck revenue per load in the 2018 fourth quarter to exceed prior year fourth quarter in an upper single digit percentage range. The anticipated deceleration in the growth in truck revenue per load is the result of: 1) a more difficult quarter over prior year quarter comparison, as truck revenue per load in the 2017 fourth quarter experienced atypical significant increases on a sequential monthly basis during the quarter and 2) truck revenue per load in the first few weeks of October 2018 is trending slightly below normal seasonal patterns. The number of loads hauled via truck in the first few weeks of October is trending above the same period of 2017 in a high single digit percentage range. We expect that trend to continue and therefore expect the number of loads hauled via truck in the 2018 fourth quarter to exceed the 2017 fourth quarter in an eight to ten percent range. Assuming recent trends continue, I anticipate record revenue for the 2018 fourth quarter in a range of $1.180 billion to $1.230 billion, which would represent growth of 12 percent to 17 percent above our record 2017 fourth quarter. Assuming that range of estimated revenue and insurance and claims expense at 3.5 percent of projected BCO revenue, representing average insurance and claims costs as a percent of BCO revenue over the past five years, I would anticipate record diluted earnings per share in the 2018 fourth quarter in a range of $1.56 to $1.62. As a reminder, the 2017 fourth quarter diluted earnings per share of $1.54 included the effect of one-time tax benefits of $19.5 million, or $0.46 per diluted share, related to the Company’s reasonable estimate of the change in future tax rates on net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act in December 2017.”
LANDSTAR SYSTEM/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 Third Quarter 2018 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: 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 2017 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/5
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/6
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 29, 2018 |
September 30, 2017 |
September 29, 2018 |
September 30, 2017 |
|||||||||||||
| Revenue |
$ | 3,432,793 | $ | 2,594,772 | $ | 1,202,081 | $ | 943,430 | ||||||||
| Investment income |
2,754 | 1,733 | 1,002 | 711 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
2,658,710 | 1,989,938 | 931,473 | 726,827 | ||||||||||||
| Commissions to agents |
275,828 | 210,678 | 99,304 | 76,598 | ||||||||||||
| Other operating costs, net of gains on asset sales/dispositions |
24,176 | 22,497 | 8,966 | 8,097 | ||||||||||||
| Insurance and claims |
57,718 | 46,333 | 18,819 | 17,927 | ||||||||||||
| Selling, general and administrative |
140,948 | 123,179 | 46,699 | 43,995 | ||||||||||||
| Depreciation and amortization |
32,520 | 29,961 | 10,754 | 10,130 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total costs and expenses |
3,189,900 | 2,422,586 | 1,116,015 | 883,574 | ||||||||||||
|
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|
|
|
|
|
|
|||||||||
| Operating income |
245,647 | 173,919 | 87,068 | 60,567 | ||||||||||||
| Interest and debt expense |
2,455 | 2,559 | 816 | 657 | ||||||||||||
|
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|
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|
|
|
|
|||||||||
| Income before income taxes |
243,192 | 171,360 | 86,252 | 59,910 | ||||||||||||
| Income taxes |
56,279 | 59,047 | 19,304 | 17,490 | ||||||||||||
|
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|
|
|
|||||||||
| Net income |
186,913 | 112,313 | 66,948 | 42,420 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest |
(112 | ) | (23 | ) | (37 | ) | (23 | ) | ||||||||
|
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|
|||||||||
| Net income attributable to Landstar System, Inc. and subsidiary |
$ | 187,025 | $ | 112,336 | $ | 66,985 | $ | 42,443 | ||||||||
|
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|
|
|
|
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|||||||||
| Earnings per common share attributable to Landstar System, Inc. and subsidiary |
$ | 4.50 | $ | 2.68 | $ | 1.63 | $ | 1.01 | ||||||||
|
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|
|
|
|
|
|
|
|||||||||
| Diluted earnings per share attributable to Landstar System, Inc. and subsidiary |
$ | 4.50 | $ | 2.67 | $ | 1.63 | $ | 1.01 | ||||||||
|
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|
|
|
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|
|||||||||
| Average number of shares outstanding: |
||||||||||||||||
| Earnings per common share |
41,530,000 | 41,924,000 | 41,101,000 | 41,957,000 | ||||||||||||
|
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|
|||||||||
| Diluted earnings per share |
41,576,000 | 42,013,000 | 41,137,000 | 42,028,000 | ||||||||||||
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|||||||||
| Dividends per common share |
$ | 0.465 | $ | 0.280 | $ | 0.165 | $ | 0.100 | ||||||||
|
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|||||||||
LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| September 29, 2018 |
December 30, 2017 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 213,974 | $ | 242,416 | ||||
| Short-term investments |
40,203 | 48,928 | ||||||
| Trade accounts receivable, less allowance of $6,173 and $6,131 |
702,183 | 631,164 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $6,188 and $6,012 |
18,586 | 24,301 | ||||||
| Other current assets |
24,191 | 14,394 | ||||||
|
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|
|||||
| Total current assets |
999,137 | 961,203 | ||||||
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|||||
| Operating property, less accumulated depreciation and amortization of $241,321 and $218,700 |
268,011 | 276,011 | ||||||
| Goodwill |
38,560 | 39,065 | ||||||
| Other assets |
85,004 | 76,181 | ||||||
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|||||
| Total assets |
$ | 1,390,712 | $ | 1,352,460 | ||||
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|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Cash overdraft |
$ | 39,759 | $ | 42,242 | ||||
| Accounts payable |
313,728 | 285,132 | ||||||
| Current maturities of long-term debt |
40,960 | 42,051 | ||||||
| Insurance claims |
43,268 | 38,919 | ||||||
| Dividends payable |
— | 62,985 | ||||||
| Accrued compensation |
23,908 | 30,103 | ||||||
| Other current liabilities |
53,553 | 47,211 | ||||||
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| Total current liabilities |
515,176 | 548,643 | ||||||
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|||||
| Long-term debt, excluding current maturities |
72,887 | 83,062 | ||||||
| Insurance claims |
30,775 | 30,141 | ||||||
| Deferred income taxes and other non-current liabilities |
45,664 | 36,737 | ||||||
| Equity |
||||||||
| Landstar System, Inc. and subsidiary shareholders’ equity |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,869,378 and 67,740,380 shares |
679 | 677 | ||||||
| Additional paid-in capital |
221,563 | 209,599 | ||||||
| Retained earnings |
1,779,680 | 1,611,158 | ||||||
| Cost of 26,755,001 and 25,749,493 shares of common stock in treasury |
(1,273,512 | ) | (1,167,600 | ) | ||||
| Accumulated other comprehensive loss |
(4,569 | ) | (3,162 | ) | ||||
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|||||
| Total Landstar System, Inc. and subsidiary shareholders’ equity |
723,841 | 650,672 | ||||||
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| Noncontrolling interest |
2,369 | 3,205 | ||||||
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| Total equity |
726,210 | 653,877 | ||||||
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| Total liabilities and equity |
$ | 1,390,712 | $ | 1,352,460 | ||||
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LANDSTAR SYSTEM/8
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 29, 2018 |
September 30, 2017 |
September 29, 2018 |
September 30, 2017 |
|||||||||||||
| Revenue generated through (in thousands): |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 2,086,523 | $ | 1,529,402 | $ | 717,047 | $ | 550,484 | ||||||||
| Unsided/platform equipment |
1,039,784 | 825,194 | 375,739 | 304,536 | ||||||||||||
| Less-than-truckload |
76,448 | 65,397 | 25,500 | 22,598 | ||||||||||||
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| Total truck transportation |
3,202,755 | 2,419,993 | 1,118,286 | 877,618 | ||||||||||||
| Rail intermodal |
96,026 | 68,570 | 34,439 | 24,213 | ||||||||||||
| Ocean and air cargo carriers |
82,719 | 70,708 | 31,213 | 29,523 | ||||||||||||
| Other (1) |
51,293 | 35,501 | 18,143 | 12,076 | ||||||||||||
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| $ | 3,432,793 | $ | 2,594,772 | $ | 1,202,081 | $ | 943,430 | |||||||||
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| Revenue on loads hauled via BCO Independent Contractors (2) included in total truck transportation |
$ | 1,519,344 | $ | 1,211,564 | $ | 520,391 | $ | 435,479 | ||||||||
| Number of loads: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
1,045,322 | 942,894 | 353,456 | 329,329 | ||||||||||||
| Unsided/platform equipment |
388,759 | 362,936 | 133,425 | 126,509 | ||||||||||||
| Less-than-truckload |
106,639 | 98,740 | 35,969 | 34,232 | ||||||||||||
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|||||||||
| Total truck transportation |
1,540,720 | 1,404,570 | 522,850 | 490,070 | ||||||||||||
| Rail intermodal |
40,260 | 32,040 | 13,420 | 11,080 | ||||||||||||
| Ocean and air cargo carriers |
21,250 | 18,150 | 8,220 | 6,210 | ||||||||||||
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|||||||||
| 1,602,230 | 1,454,760 | 544,490 | 507,360 | |||||||||||||
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| Loads hauled via BCO Independent Contractors (2) included in total truck transportation |
717,470 | 686,830 | 236,580 | 232,970 | ||||||||||||
| Revenue per load: |
||||||||||||||||
| Truck transportation |
||||||||||||||||
| Truckload: |
||||||||||||||||
| Van equipment |
$ | 1,996 | $ | 1,622 | $ | 2,029 | $ | 1,672 | ||||||||
| Unsided/platform equipment |
2,675 | 2,274 | 2,816 | 2,407 | ||||||||||||
| Less-than-truckload |
717 | 662 | 709 | 660 | ||||||||||||
| Total truck transportation |
2,079 | 1,723 | 2,139 | 1,791 | ||||||||||||
| Rail intermodal |
2,385 | 2,140 | 2,566 | 2,185 | ||||||||||||
| Ocean and air cargo carriers |
3,893 | 3,896 | 3,797 | 4,754 | ||||||||||||
| Revenue per load on loads hauled via BCO Independent Contractors (2) |
$ | 2,118 | $ | 1,764 | $ | 2,200 | $ | 1,869 | ||||||||
| Revenue by capacity type (as a % of total revenue); |
||||||||||||||||
| Truck capacity providers: |
||||||||||||||||
| BCO Independent Contractors (2) |
44 | % | 47 | % | 43 | % | 46 | % | ||||||||
| Truck Brokerage Carriers |
49 | % | 47 | % | 50 | % | 47 | % | ||||||||
| Rail intermodal |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Ocean and air cargo carriers |
2 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Other |
1 | % | 1 | % | 2 | % | 1 | % | ||||||||
| September 29, 2018 |
September 30, 2017 |
|||||||||||||||
| Truck Capacity Providers |
||||||||||||||||
| BCO Independent Contractors (2) |
9,751 | 8,939 | ||||||||||||||
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| Truck Brokerage Carriers: |
||||||||||||||||
| Approved and active (3) |
40,151 | 32,925 | ||||||||||||||
| Other approved |
16,803 | 15,138 | ||||||||||||||
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|||||||||||||
| 56,954 | 48,063 | |||||||||||||||
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| Total available truck capacity providers |
66,705 | 57,002 | ||||||||||||||
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| Trucks provided by BCO Independent Contractors (2) |
10,443 | 9,548 | ||||||||||||||
| (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. |
Exhibit 99.2 DESIGNED TO RESPOND BUILT TO DELIVER Landstar System, Inc. Earnings Conference Call Third Quarter 2018 October 24, 2018 Date Published: 10/24/2018Exhibit 99.2 DESIGNED TO RESPOND BUILT TO DELIVER Landstar System, Inc. Earnings Conference Call Third Quarter 2018 October 24, 2018 Date Published: 10/24/2018
The following is a“safeharbor” statement under the Private Securities Litigation Reform Act of 1995. Statements made during this presentation that are not based on historical facts are“forward looking statements.” During this presentation, I may make certain statements, containing forward-looking statements, such as statements which relate toLandstar’s business objectives, plans, strategies and expectations. Such statements are by nature subject to uncertainties and risks, including but not limited to: the operational, financial and legal risks detailed inLandstar’s Form 10-K for the 2017 fiscal year, described in the section Risk Factors, and 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 Landstar undertakes no obligation to publicly update or revise any forward-looking statements. 2 Date Published: 10/24/2018The following is a“safeharbor” statement under the Private Securities Litigation Reform Act of 1995. Statements made during this presentation that are not based on historical facts are“forward looking statements.” During this presentation, I may make certain statements, containing forward-looking statements, such as statements which relate toLandstar’s business objectives, plans, strategies and expectations. Such statements are by nature subject to uncertainties and risks, including but not limited to: the operational, financial and legal risks detailed inLandstar’s Form 10-K for the 2017 fiscal year, described in the section Risk Factors, and 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 Landstar undertakes no obligation to publicly update or revise any forward-looking statements. 2 Date Published: 10/24/2018
Model Definition Landstar 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. 3 Date Published: 10/24/2018Model Definition Landstar 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. 3 Date Published: 10/24/2018
The Network 2017 Results Agents Approx. $3.6 billion in revenue 1,200 2.0 million loadings 542 million dollar agents 9,696 BCO trucks (2017 year-end) Landstar 49,934 Carriers (2017 year-end) Employees 15,000+ Trailers (2017 year-end) Approx. 1,300 Customers Capacity 25,000+ 59,000+ 4 Date Published: 10/24/2018The Network 2017 Results Agents Approx. $3.6 billion in revenue 1,200 2.0 million loadings 542 million dollar agents 9,696 BCO trucks (2017 year-end) Landstar 49,934 Carriers (2017 year-end) Employees 15,000+ Trailers (2017 year-end) Approx. 1,300 Customers Capacity 25,000+ 59,000+ 4 Date Published: 10/24/2018
Transportation Management Services Percentage of Revenue 3Q17 3Q18 Truck Transportation Truckload Van equipment 58% 60% Unsided/platform equipment 32% 31% Less-than-truckload 2% 2% Rail intermodal 3% 3% Ocean and air cargo 3% 3% 5 Date Published: 10/24/2018Transportation Management Services Percentage of Revenue 3Q17 3Q18 Truck Transportation Truckload Van equipment 58% 60% Unsided/platform equipment 32% 31% Less-than-truckload 2% 2% Rail intermodal 3% 3% Ocean and air cargo 3% 3% 5 Date Published: 10/24/2018
Revenue ($’s in thousands) Quarter Year-to-Date $3,600,000 $1,300,000 $3,432,793 $1,202,081 $3,300,000 $1,220,000 $1,140,000 $3,000,000 $1,060,000 $2,700,000 $943,430 $2,594,772 $980,000 $2,400,000 $900,000 3Q17 YTD 3Q18 YTD 3Q17 3Q18 (1) (2) (1) (2) Year over Prior Year Rate Volume Change Qtr over Prior Year Qtr Rate Volume Change Truck Revenue 20.7% 9.7% 32.3% Truck Revenue 19.4% 6.7% 27.4% Rail Intermodal Revenue 11.4% 25.7% 40.0% Rail Intermodal Revenue 17.4% 21.1% 42.2% Ocean/Air Revenue - 0.1% 17.1% 17.0% Ocean/Air Revenue - 20.1% 32.4% 5.7% Insurance Premiums NA NA 10.2% Insurance Premiums NA NA 13.7% Total Revenue 32.3% Total Revenue 27.4% (1) Percentage change in rate is calculated on a revenue per load basis. (2) Percentage change in volume is calculated on the number of loads hauled. 6 Date Published: 10/24/2018Revenue ($’s in thousands) Quarter Year-to-Date $3,600,000 $1,300,000 $3,432,793 $1,202,081 $3,300,000 $1,220,000 $1,140,000 $3,000,000 $1,060,000 $2,700,000 $943,430 $2,594,772 $980,000 $2,400,000 $900,000 3Q17 YTD 3Q18 YTD 3Q17 3Q18 (1) (2) (1) (2) Year over Prior Year Rate Volume Change Qtr over Prior Year Qtr Rate Volume Change Truck Revenue 20.7% 9.7% 32.3% Truck Revenue 19.4% 6.7% 27.4% Rail Intermodal Revenue 11.4% 25.7% 40.0% Rail Intermodal Revenue 17.4% 21.1% 42.2% Ocean/Air Revenue - 0.1% 17.1% 17.0% Ocean/Air Revenue - 20.1% 32.4% 5.7% Insurance Premiums NA NA 10.2% Insurance Premiums NA NA 13.7% Total Revenue 32.3% Total Revenue 27.4% (1) Percentage change in rate is calculated on a revenue per load basis. (2) Percentage change in volume is calculated on the number of loads hauled. 6 Date Published: 10/24/2018
Truckload Loadings and Revenue per Load (Excludes LTL) Van Equipment Revenue per Load Number of Loads 380,000 $2,100 360,000 $2,000 340,000 $1,900 320,000 $1,800 300,000 $1,700 280,000 $1,600 260,000 $1,500 240,000 Unsided/Platform Revenue per Load Number of Loads Equipment $2,900 140,000 $2,800 130,000 $2,700 $2,600 120,000 $2,500 $2,400 110,000 $2,300 $2,200 100,000 $2,100 $2,000 90,000 7 Date Published: 10/24/2018 3Q15 3Q15 4Q15 4Q15 1Q16 1Q16 2Q16 2Q16 3Q16 3Q16 4Q16 4Q16 1Q17 1Q17 2Q17 2Q17 3Q17 3Q17 4Q17 4Q17 1Q18 1Q18 2Q18 2Q18 3Q18 3Q18 3Q15 3Q15 4Q15 4Q15 1Q16 1Q16 2Q16 2Q16 3Q16 3Q16 4Q16 4Q16 1Q17 1Q17 2Q17 2Q17 3Q17 3Q17 4Q17 4Q17 1Q18 1Q18 2Q18 2Q18 3Q18 3Q18Truckload Loadings and Revenue per Load (Excludes LTL) Van Equipment Revenue per Load Number of Loads 380,000 $2,100 360,000 $2,000 340,000 $1,900 320,000 $1,800 300,000 $1,700 280,000 $1,600 260,000 $1,500 240,000 Unsided/Platform Revenue per Load Number of Loads Equipment $2,900 140,000 $2,800 130,000 $2,700 $2,600 120,000 $2,500 $2,400 110,000 $2,300 $2,200 100,000 $2,100 $2,000 90,000 7 Date Published: 10/24/2018 3Q15 3Q15 4Q15 4Q15 1Q16 1Q16 2Q16 2Q16 3Q16 3Q16 4Q16 4Q16 1Q17 1Q17 2Q17 2Q17 3Q17 3Q17 4Q17 4Q17 1Q18 1Q18 2Q18 2Q18 3Q18 3Q18 3Q15 3Q15 4Q15 4Q15 1Q16 1Q16 2Q16 2Q16 3Q16 3Q16 4Q16 4Q16 1Q17 1Q17 2Q17 2Q17 3Q17 3Q17 4Q17 4Q17 1Q18 1Q18 2Q18 2Q18 3Q18 3Q18
Industries Served As a Percentage of Revenue Quarter over Prior Year Quarter 3Q17 3Q18 Growth Consumer Durables 21.0 23.2 41% Machinery 14.3 14.3 28% Automotive 7.1 8.3 49% Building Products 10.2 8.7 8% Metals 6.6 6.7 30% AA&E, Hazmat 8.6 8.4 25% Foodstuffs 4.7 5.5 49% Energy 3.2 2.8 11% Other 24.3 22.1 16% Transportation Revenue 100.0 100.0 28% 8 Date Published: 10/24/2018Industries Served As a Percentage of Revenue Quarter over Prior Year Quarter 3Q17 3Q18 Growth Consumer Durables 21.0 23.2 41% Machinery 14.3 14.3 28% Automotive 7.1 8.3 49% Building Products 10.2 8.7 8% Metals 6.6 6.7 30% AA&E, Hazmat 8.6 8.4 25% Foodstuffs 4.7 5.5 49% Energy 3.2 2.8 11% Other 24.3 22.1 16% Transportation Revenue 100.0 100.0 28% 8 Date Published: 10/24/2018
(1) (2) Gross Profit and Gross Profit Margin ($’s in thousands) Year-to-Date Quarter $180,000 $498,255 $500,000 $171,304 $170,000 $470,000 $160,000 $440,000 $150,000 $140,005 $394,156 $410,000 14.5% 14.3% $140,000 15.2% 14.8% $380,000 $130,000 3Q17 YTD 3Q18 YTD 3Q17 3Q18 (3) (3) 3rd Qtr 3rd Qtr YTD Changes in gross profit margin % Changes in gross profit margin % 2017 Period 14.8 2017 Period 15.2 Revenue - fixed gp margin -0.2 Revenue - fixed gp margin -0.1 Revenue - variable gp margin 0.1 Revenue - variable gp margin -0.1 Change in mix and other -0.4 Change in mix and other -0.5 2018 Period 14.3 2018 Period 14.5 (1) Gross profit equals revenue less the cost of purchased transportation and commissions to agents. (2) Gross profit margin equals gross profit divided by revenue. (3) Revenue on transactions with a fixed gross profit margin was 54% and 51% of revenue in the 2017 and 2018 year-to-date periods, respectively, and 53% and 50% of revenue in the 2017 and 2018 third quarters, respectively. 9 Date Published: 10/24/2018(1) (2) Gross Profit and Gross Profit Margin ($’s in thousands) Year-to-Date Quarter $180,000 $498,255 $500,000 $171,304 $170,000 $470,000 $160,000 $440,000 $150,000 $140,005 $394,156 $410,000 14.5% 14.3% $140,000 15.2% 14.8% $380,000 $130,000 3Q17 YTD 3Q18 YTD 3Q17 3Q18 (3) (3) 3rd Qtr 3rd Qtr YTD Changes in gross profit margin % Changes in gross profit margin % 2017 Period 14.8 2017 Period 15.2 Revenue - fixed gp margin -0.2 Revenue - fixed gp margin -0.1 Revenue - variable gp margin 0.1 Revenue - variable gp margin -0.1 Change in mix and other -0.4 Change in mix and other -0.5 2018 Period 14.3 2018 Period 14.5 (1) Gross profit equals revenue less the cost of purchased transportation and commissions to agents. (2) Gross profit margin equals gross profit divided by revenue. (3) Revenue on transactions with a fixed gross profit margin was 54% and 51% of revenue in the 2017 and 2018 year-to-date periods, respectively, and 53% and 50% of revenue in the 2017 and 2018 third quarters, respectively. 9 Date Published: 10/24/2018
(1) Operating Income and Operating Margin ($’s in thousands) Year-to-Date Quarter $92,000 $87,068 $245,647 $250,000 $85,000 $235,000 $220,000 $78,000 $205,000 $71,000 50.8% $190,000 $173,919 49.3% $64,000 48.4% $175,000 $60,567 44.1% 4 43.3% $160,000 $57,000 3Q17 YTD 3Q18 YTD 3Q17 3Q18 3rd Qtr YTD 3rd Qtr Changes in operating margin % Changes in operating margin % 2017 Period 2017 Period 44.1 43.3 Other operating costs Other operating costs 0.9 0.5 Insuran 5c 0e .5% and claims Insurance and claims 0.3 1.9 SG&A SG&A 2.9 4.1 Depreciation and amortization Depreciation and amortization 1.1 1.0 2018 Period 2018 Period 49.3 50.8 (1) Operating margin equals operating income divided by gross profit. 10 Date Published: 10/24/2018(1) Operating Income and Operating Margin ($’s in thousands) Year-to-Date Quarter $92,000 $87,068 $245,647 $250,000 $85,000 $235,000 $220,000 $78,000 $205,000 $71,000 50.8% $190,000 $173,919 49.3% $64,000 48.4% $175,000 $60,567 44.1% 4 43.3% $160,000 $57,000 3Q17 YTD 3Q18 YTD 3Q17 3Q18 3rd Qtr YTD 3rd Qtr Changes in operating margin % Changes in operating margin % 2017 Period 2017 Period 44.1 43.3 Other operating costs Other operating costs 0.9 0.5 Insuran 5c 0e .5% and claims Insurance and claims 0.3 1.9 SG&A SG&A 2.9 4.1 Depreciation and amortization Depreciation and amortization 1.1 1.0 2018 Period 2018 Period 49.3 50.8 (1) Operating margin equals operating income divided by gross profit. 10 Date Published: 10/24/2018
Truck Capacity Data (All information is provided as of the end of the period) Sep 30, Dec 30, Sep 29, (2) (2) 2017 2018 2017 BCO Independent Contractors 8,939 9,087 9,751 Truck Brokerage Carriers: (1) Approved and Active 32,925 3 4,243 40,151 Other Approved 15,138 1 5,691 16,803 4 8,063 4 9,934 56,954 Total Available Truck Capacity Providers 57,002 5 9,021 66,705 Trucks Provided by BCO Independent Contractors 9,548 9,696 1 0,443 (1) Active refers to truck brokerage carriers who hauled freight for Landstar in the 180 day period immediately preceding the period end. (2) Fuel surcharges billed to customers on freight hauled by BCO Independent Contractors, which are paid 100% to the BCO and excluded from revenue, and the cost of purchased transportation were $179.3 million and $122.1 million in the 2018 and 2017 year- to- date periods, respectively, and $62.3 million and $41.4 million in the 2018 and 2017 third quarters, respectively. 11 Date Published: 10/24/2018Truck Capacity Data (All information is provided as of the end of the period) Sep 30, Dec 30, Sep 29, (2) (2) 2017 2018 2017 BCO Independent Contractors 8,939 9,087 9,751 Truck Brokerage Carriers: (1) Approved and Active 32,925 3 4,243 40,151 Other Approved 15,138 1 5,691 16,803 4 8,063 4 9,934 56,954 Total Available Truck Capacity Providers 57,002 5 9,021 66,705 Trucks Provided by BCO Independent Contractors 9,548 9,696 1 0,443 (1) Active refers to truck brokerage carriers who hauled freight for Landstar in the 180 day period immediately preceding the period end. (2) Fuel surcharges billed to customers on freight hauled by BCO Independent Contractors, which are paid 100% to the BCO and excluded from revenue, and the cost of purchased transportation were $179.3 million and $122.1 million in the 2018 and 2017 year- to- date periods, respectively, and $62.3 million and $41.4 million in the 2018 and 2017 third quarters, respectively. 11 Date Published: 10/24/2018
Key Balance Sheet and Cash Flow Statistics ($’s in thousands) YTD YTD Sep 30, Sep 29, 2017 2018 Balance sheet (period end amounts): Debt to Capital 15% 14% Net Cash (1) $ 1 78,026 $ 1 40,330 Cash flow: Cash flow from operations $ 1 32,264 $ 2 04,205 Capital expenditures $ 16,999 $ 7,325 Share repurchases $ - $ 105,488 Dividends paid $ 11,739 $ 82,261 Returns: TTM Return on Equity 26% 37% TTM Return on Invested Capital 22% 32% TTM Return on Assets 13% 19% (1) Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. 12 Date Published: 10/24/2018Key Balance Sheet and Cash Flow Statistics ($’s in thousands) YTD YTD Sep 30, Sep 29, 2017 2018 Balance sheet (period end amounts): Debt to Capital 15% 14% Net Cash (1) $ 1 78,026 $ 1 40,330 Cash flow: Cash flow from operations $ 1 32,264 $ 2 04,205 Capital expenditures $ 16,999 $ 7,325 Share repurchases $ - $ 105,488 Dividends paid $ 11,739 $ 82,261 Returns: TTM Return on Equity 26% 37% TTM Return on Invested Capital 22% 32% TTM Return on Assets 13% 19% (1) Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. 12 Date Published: 10/24/2018
(1) Free Cash Flow / Share Purchases (In Thousands) $250,000 50,000 $200,000 48,000 $150,000 46,000 $100,000 44,000 $50,000 42,000 $- 40,000 2013 2014 2015 2016 2017 Free Cash Flow Share Purchases Common Share Count Third quarter 2018 YTD (000's) Free cash flow (1) $ 1 96,880 Share purchases $ 1 05,488 Ending common share count 41,114 (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide. 13 Date Published: 10/24/2018(1) Free Cash Flow / Share Purchases (In Thousands) $250,000 50,000 $200,000 48,000 $150,000 46,000 $100,000 44,000 $50,000 42,000 $- 40,000 2013 2014 2015 2016 2017 Free Cash Flow Share Purchases Common Share Count Third quarter 2018 YTD (000's) Free cash flow (1) $ 1 96,880 Share purchases $ 1 05,488 Ending common share count 41,114 (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide. 13 Date Published: 10/24/2018
DESIGNED TO RESPOND BUILT TO DELIVER 14 Date Published: 10/24/2018DESIGNED TO RESPOND BUILT TO DELIVER 14 Date Published: 10/24/2018