LSTR Landstar System Inc

Landstar System, Inc. (NASDAQ: LSTR) (“Landstar” or the “Company”) today reported basic and diluted earnings per share (“EPS”) of $1.48 in the 2024 second quarter on revenue of $1.225 billion. “The Landstar network of independent business owners performed admirably in a challenging freight transportation environment,” said Landstar President and Chief Executive Officer Frank Lonegro. “During the second quarter, we were encouraged to see our first sequential quarter-to-quarter revenue increase since the 2022 second quarter. Revenue in the 2024 second quarter grew 5% sequentially following seven quarters of sequential revenue declines. As we look to build on that momentum, we continue to invest in leading-edge technology and new trailing equipment. We are particularly proud of the efforts of the thousands of BCOs, agents and employees in our network, who work each day to improve our safety performance and deliver great service to our customers.”

Landstar continues to return meaningful amounts of capital to stockholders through the Company’s stock purchase program and dividends. During the 2024 second quarter, Landstar purchased approximately 316,000 shares of its common stock at an aggregate cost of $57.0 million. The Company is currently authorized to purchase up to an additional 2,684,000 shares of the Company’s common stock under its longstanding share purchase program. Landstar also announced today that its Board of Directors declared a quarterly dividend of $0.36 per share payable on September 10, 2024, to stockholders of record as of the close of business on August 20, 2024. This quarterly dividend includes a $0.03 per share increase, or 9%, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters.

	2Q 2024				2Q 2023
Revenue	$	1,225,005			$	1,373,857
Gross profit	$	119,996			$	139,706
Variable contribution	$	175,131			$	198,182
Operating income	$	68,059			$	87,950
Basic and diluted earnings per share	$	1.48			$	1.85
(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 below

Total revenue was $1,225 million in the 2024 second quarter, compared to $1,374 million in the 2023 second quarter. Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2024 second quarter was $1,106 million, or 90% of revenue, compared to $1,247 million, or 91% of revenue, in the 2023 second quarter. Truckload transportation revenue hauled via van equipment in the 2024 second quarter was $619 million, compared to $703 million in the 2023 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2024 second quarter was $381 million, compared to $395 million in the 2023 second quarter. Revenue from other truck transportation, which is largely related to power-only services, in the 2024 second quarter was $78 million, compared to $118 million in the 2023 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $94 million, or 8% of revenue, in the 2024 second quarter, compared to $101 million, or 7% of revenue, in the 2023 second quarter.

The number of loads hauled via truck declined 8.9% in the 2024 second quarter as compared to the 2023 second quarter, at the low end of the Company’s guidance included in its 2024 first quarter earnings release slide presentation, dated April 25, 2024. Truck revenue per load declined 2.6% in the 2024 second quarter as compared to the 2023 second quarter, slightly below the mid-point of the Company’s previously provided guidance.

Gross profit in the 2024 second quarter was $120 million and variable contribution (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2024 second quarter was $175 million. Gross profit in the 2023 second quarter was $140 million and variable contribution in the 2023 second quarter was $198 million. Reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin for the 2024 and 2023 second quarters and year-to-date periods 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 $504 million as of June 29, 2024. Trailing twelve-month return on average shareholders’ equity was 22%, and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 20%. 

Landstar will provide a live webcast of its quarterly earnings conference call this evening at 5:00 p.m. ET. To access the webcast, visit www.investor.landstar.com; click on “Webcasts,” then click on “Landstar’s Second Quarter 2024 Earnings Release Conference Call.” A slide presentation to accompany the webcast presentation is also available on Landstar’s investor relations website at https://investor.landstar.com/.

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: 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; 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; 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)
			Twenty-Six Weeks Ended								Thirteen Weeks Ended
			June 29,				July 1,				June 29,				July 1,
			2024				2023				2024				2023
Revenue			$	2,396,048			$	2,809,532			$	1,225,005			$	1,373,857
Investment income				7,066				3,852				3,654				2,484
Costs and expenses:
	Purchased transportation			1,855,579				2,154,491				950,058				1,053,197
	Commissions to agents			197,098				248,153				99,816				122,478
	Other operating costs, net of gains on asset sales/dispositions			28,994				25,840				14,135				13,462
	Insurance and claims			53,432				57,431				27,164				29,784
	Selling, general and administrative			111,361				108,096				54,939				54,529
	Depreciation and amortization			28,630				30,139				14,488				14,941
		Total costs and expenses		2,275,094				2,624,150				1,160,600				1,288,391
Operating income				128,020				189,234				68,059				87,950
Interest and debt (income) expense				(3,286	)			(1,033	)			(1,675	)			(307	)
Income before income taxes				131,306				190,267				69,734				88,257
Income taxes				31,586				45,513				17,110				21,698
Net income			$	99,720			$	144,754			$	52,624			$	66,559
Basic and diluted earnings per share			$	2.79			$	4.03			$	1.48			$	1.85
Average basic and diluted shares outstanding				35,702,000				35,962,000				35,654,000				35,941,000
Dividends per common share			$	0.66			$	0.60			$	0.33			$	0.30

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
				June 29,				December 30,
				2024				2023
ASSETS
Current assets:
	Cash and cash equivalents			$	438,062			$	481,043
	Short-term investments				65,959				59,661
	Trade accounts receivable, less allowance
		of $11,697 and $11,738			724,479				743,762
	Other receivables, including advances to independent
		contractors, less allowance of $15,974 and $14,010			42,117				43,339
	Other current assets				44,568				24,936
		Total current assets			1,315,185				1,352,741
Operating property, less accumulated depreciation
			and amortization of $449,364 and $436,682		285,995				284,300
Goodwill					41,607				42,275
Other assets					112,417				122,530
Total assets				$	1,755,204			$	1,801,846
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Cash overdraft			$	58,358			$	61,541
	Accounts payable				401,535				395,980
	Current maturities of long-term debt				27,980				27,876
	Insurance claims				42,677				41,825
	Dividends payable				-				71,433
	Other current liabilities				75,168				76,569
		Total current liabilities			605,718				675,224
Long-term debt, excluding current maturities					45,397				43,264
Insurance claims					59,862				58,922
Deferred income taxes and other non-current liabilities					43,415				40,513
Shareholders' equity:
	Common stock, $0.01 par value, authorized 160,000,000
		shares, issued 68,553,927 and 68,497,324			686				685
	Additional paid-in capital				256,084				254,642
	Retained earnings				2,859,786				2,783,645
	Cost of 33,102,276 and 32,780,651 shares of common
		stock in treasury			(2,106,266	)			(2,048,184	)
	Accumulated other comprehensive loss				(9,478	)			(6,865	)
		Total shareholders' equity			1,000,812				983,923
Total liabilities and shareholders' equity				$	1,755,204			$	1,801,846

Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
				Twenty-Six Weeks Ended									Thirteen Weeks Ended
				June 29,				July 1,					June 29,				July 1,
				2024				2023					2024				2023
Revenue generated through (in thousands):
	Truck transportation
		Truckload:
			Van equipment	$	1,247,244			$	1,458,124				$	618,940			$	703,041
			Unsided/platform equipment		723,995				772,336					380,950				394,772
		Less-than-truckload			53,707				62,673					28,090				31,115
		Other truck transportation(1)			149,675				277,520					77,709				118,017
			Total truck transportation		2,174,621				2,570,653					1,105,689				1,246,945
	Rail intermodal				45,002				50,889					22,307				25,232
	Ocean and air cargo carriers				125,380				136,534					71,306				75,441
	Other(2)				51,045				51,456					25,703				26,239
				$	2,396,048			$	2,809,532				$	1,225,005			$	1,373,857
	Revenue on loads hauled via BCO Independent Contractors(3)
		included in total truck transportation		$	918,071			$	1,034,881				$	465,510			$	515,355
Number of loads:
	Truck transportation
		Truckload:
			Van equipment		599,973				655,036					300,959				323,082
			Unsided/platform equipment		244,407				263,185					126,460				135,613
		Less-than-truckload			82,850				93,066					42,617				46,874
		Other truck transportation(1)			71,440				110,373					37,914				52,311
			Total truck transportation		998,670				1,121,660					507,950				557,880
	Rail intermodal				14,380				15,390					7,230				7,630
	Ocean and air cargo carriers				17,240				16,750					8,520				8,310
					1,030,290				1,153,800					523,700				573,820
	Loads hauled via BCO Independent Contractors(3)
		included in total truck transportation			422,300				463,910					213,560				231,360
Revenue per load:
	Truck transportation
		Truckload:
			Van equipment	$	2,079			$	2,226				$	2,057			$	2,176
			Unsided/platform equipment		2,962				2,935					3,012				2,911
		Less-than-truckload			648				673					659				664
		Other truck transportation(1)			2,095				2,514					2,050				2,256
			Total truck transportation		2,178				2,292					2,177				2,235
	Rail intermodal				3,129				3,307					3,085				3,307
	Ocean and air cargo carriers				7,273				8,151					8,369				9,078
	Revenue per load on loads hauled via BCO Independent Contractors(3)			$	2,174			$	2,231				$	2,180			$	2,228
Revenue by capacity type (as a % of total revenue):
	Truck capacity providers:
		BCO Independent Contractors(3)			38	%			37	%				38	%			38	%
		Truck Brokerage Carriers			52	%			55	%				52	%			53	%
	Rail intermodal				2	%			2	%				2	%			2	%
	Ocean and air cargo carriers				5	%			5	%				6	%			5	%
	Other				2	%			2	%				2	%			2	%
													June 29,				July 1,
													2024				2023
Truck Capacity Providers
	BCO Independent Contractors(3)													8,385				9,748
	Truck Brokerage Carriers:
		Approved and active(4)												45,382				58,303
		Other approved												25,450				29,503
														70,832				87,806
	Total available truck capacity providers													79,217				97,554
	Trucks provided by BCO Independent Contractors(3)													9,180				10,548
(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)
			Twenty-Six Weeks Ended								Thirteen Weeks Ended
			June 29,				July 1,				June 29,				July 1,
			2024				2023				2024				2023
Revenue			$	2,396,048			$	2,809,532			$	1,225,005			$	1,373,857
Costs of revenue:
		Purchased transportation		1,855,579				2,154,491				950,058				1,053,197
		Commissions to agents		197,098				248,153				99,816				122,478
	Variable costs of revenue			2,052,677				2,402,644				1,049,874				1,175,675
		Trailing equipment depreciation		13,834				16,519				6,937				8,150
		Information technology costs (1)		11,986				13,493				6,182				6,742
		Insurance-related costs (2)		54,659				58,382				27,881				30,122
		Other operating costs		28,994				25,840				14,135				13,462
	Other costs of revenue			109,473				114,234				55,135				58,476
	Total costs of revenue			2,162,150				2,516,878				1,105,009				1,234,151
Gross profit			$	233,898			$	292,654			$	119,996			$	139,706
Gross profit margin				9.8	%			10.4	%			9.8	%			10.2	%
	Plus: other costs of revenue			109,473				114,234				55,135				58,476
Variable contribution			$	343,371			$	406,888			$	175,131			$	198,182
Variable contribution margin				14.3	%			14.5	%			14.3	%			14.4	%
(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:
Jim Todd
Chief Financial Officer
904-398-9400