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Landstar System Reports Record Quarterly Revenue of $1.183 Billion and Record Second Quarter Diluted Earnings Per Share of $1.51

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JACKSONVILLE, Fla., July 25, 2018 (GLOBE NEWSWIRE) -- Landstar System, Inc. (NASDAQ:LSTR) reported record quarterly revenue of $1.183 billion in the 2018 second quarter, a 36 percent increase over the $870 million revenue reported in the 2017 second quarter. Net income of $62.5 million and diluted earnings per share of $1.51 were each second quarter records and increased 67 percent and 70 percent, respectively, over net income and diluted earnings per share in the 2017 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) in the 2018 second quarter was $171.4 million, 29 percent above the 2017 second quarter, while 2018 second quarter operating income was $83.4 million, 37 percent above the 2017 second quarter. Gross profit and operating income in the 2018 second quarter were both all-time quarterly records.

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2018 second quarter was $1.105 billion, or 93 percent of revenue, compared to $815.6 million, or 94 percent of revenue, in the 2017 second quarter. Truckload transportation revenue hauled via van equipment in the 2018 second quarter was $713.3 million compared to $509.1 million in the 2017 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2018 second quarter was $364.7 million compared to $283.5 million in the 2017 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $60.3 million, or 5 percent of revenue, in the 2018 second quarter compared to $43.1 million, or 5 percent of revenue, in the 2017 second quarter.

Landstar purchased approximately 986,000 shares of its common stock during the 2018 second quarter at an aggregate cost of approximately $104.0 million. 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 June 30, 2018, the Company had $189 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 August 31, 2018, to stockholders of record as of the close of business on August 13, 2018. This quarterly dividend includes a 10 percent increase to the amount of the Company's regular quarterly dividend declared following each of the prior two quarters. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"I am extremely pleased with the financial performance of the Landstar model during the 2018 second quarter," said Landstar's President and Chief Executive Officer Jim Gattoni. "The 2018 second quarter established all-time Landstar quarterly records for revenue, gross profit and operating income while diluted earnings per share was a second quarter record. The Company also set new all-time Landstar records for trucks provided by BCOs with 10,155 as of the end of the quarter and net truck additions in a single quarter with the net addition of 287 trucks in the second quarter."

Gattoni continued, "Demand for our services was strong throughout the 2018 first half. The number of loads hauled via truck in the 2018 second quarter was an all-time quarterly record and increased 11 percent over the 2017 second quarter, driven by a 13 percent increase in the number of loads hauled via van equipment, an 8 percent increase in the number of loads hauled via unsided/platform equipment and an 8 percent increase in less-than-truckload volume. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers was 23 percent higher in the 2018 second quarter compared to the 2017 second quarter, primarily due to a 32 percent increase in rail intermodal volume."

Gattoni further commented, "As expected, the pricing environment for our truckload services continued to be very strong in the 2018 second quarter, as industry-wide truck capacity continued to be very tight. Revenue per load on loads hauled via van equipment increased 25 percent over the 2017 second quarter and revenue per load on loads hauled via unsided/platform equipment increased 19 percent over the 2017 second quarter. As a result, revenue per load on loads hauled via truck was 22 percent higher than the 2017 second quarter."

Gattoni continued, "Through the first few weeks of July our truck load volumes continue to reflect strong demand. I expect that demand to continue through the 2018 third quarter and, therefore, expect the number of loads hauled via truck in the 2018 third quarter to approximate the number of loads hauled in the 2018 second quarter. My expectation is that pricing conditions for truck services in the 2018 third quarter will continue to be very strong with little change in the level of demand or available truck capacity. Assuming those conditions remain, I expect 2018 third quarter truck revenue per load to be higher than the 2017 third quarter in a 19 to 22 percent range.  I anticipate record revenue for the 2018 third quarter in a range of $1.175 billion to $1.225 billion. 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 third quarter in a range of $1.58 to $1.64 per share compared to $1.01 per diluted share in the 2017 third quarter."

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 Second 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.

About Landstar:
Landstar System, Inc. is a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees. Landstar transportation services companies are certified to ISO 9001:2015 quality management system standards and RC14001:2015 environmental, health, safety and security management system standards.  Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

(Tables follow)


Landstar System, Inc. and Subsidiary  
Consolidated Statements of Income  
(Dollars in thousands, except per share amounts)  
(Unaudited)  
                           
                           
            Twenty Six Weeks Ended   Thirteen Weeks Ended  
            June 30,   July 1,   June 30,   July 1,  
            2018    2017   2018    2017  
                           
Revenue       $   2,230,712     $   1,651,342   $   1,182,786     $   870,434  
Investment income         1,752         1,022       891         608  
                           
Costs and expenses:                    
  Purchased transportation       1,727,237         1,263,111       916,940         667,588  
  Commissions to agents       176,524         134,080       94,399         70,282  
  Other operating costs, net of gains on asset sales/dispositions       15,210         14,400       7,606         7,503  
  Insurance and claims         38,899         28,406       21,539         13,893  
  Selling, general and administrative       94,249         79,184       48,998         40,861  
  Depreciation and amortization       21,766         19,831       10,769         9,897  
                           
    Total costs and expenses       2,073,885         1,539,012       1,100,251         810,024  
                           
Operating income         158,579         113,352       83,426         61,018  
Interest and debt expense         1,639         1,902       839         819  
                           
Income before income taxes       156,940         111,450       82,587         60,199  
Income taxes           36,975         41,557       20,095         22,689  
                           
Net income           119,965         69,893       62,492         37,510  
Less: Net loss attributable to noncontrolling interest       (75 )       -       (31 )       -  
Net income attributable to Landstar System,                  
  Inc. and subsidiary     $   120,040     $   69,893   $   62,523     $   37,510  
                           
Earnings per common share attributable to                  
  Landstar System, Inc. and subsidiary   $   2.88     $   1.67   $   1.51     $   0.89  
                           
Diluted earnings per share attributable to                  
  Landstar System, Inc. and subsidiary   $   2.87     $   1.66   $   1.51     $   0.89  
                           
Average number of shares outstanding:                  
  Earnings per common share        41,744,000         41,907,000       41,450,000         41,935,000  
  Diluted earnings per share       41,795,000         42,004,000       41,491,000         42,010,000  
                           
Dividends per common share   $   0.30     $   0.18   $   0.15     $   0.09  
                           


Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
                   
                   
              June 30,   December 30,
              2018    2017 
ASSETS            
Current assets:            
  Cash and cash equivalents     $   148,641     $   242,416  
  Short-term investments         40,323         48,928  
  Trade accounts receivable, less allowance      
    of $6,549 and $6,131         688,961         631,164  
  Other receivables, including advances to independent      
    contractors, less allowance of $6,495 and $6,012     20,737         24,301  
  Other current assets         29,553         14,394  
    Total current assets         928,215         961,203  
                   
Operating property, less accumulated depreciation      
    and amortization of $232,760 and $218,700     256,096         276,011  
Goodwill             38,704         39,065  
Other assets           85,880         76,181  
Total assets       $   1,308,895     $   1,352,460  
                   
LIABILITIES AND EQUITY          
Current liabilities:            
  Cash overdraft       $   45,365     $   42,242  
  Accounts payable         311,768         285,132  
  Current maturities of long-term debt       38,869         42,051  
  Insurance claims         42,546         38,919  
  Dividends payable         -          62,985  
  Accrued compensation         19,041         30,103  
  Other current liabilities         51,285         47,211  
    Total current liabilities         508,874         548,643  
                   
Long-term debt, excluding current maturities     65,093         83,062  
Insurance claims           30,205         30,141  
Deferred income taxes and other non-current liabilities     43,790         36,737  
                   
Equity              
Landstar System, Inc. and subsidiary shareholders' equity      
  Common stock, $0.01 par value, authorized 160,000,000      
    shares, issued 67,847,692 and 67,740,380 shares     678         677  
  Additional paid-in capital         216,328         209,599  
  Retained earnings         1,719,475         1,611,158  
  Cost of 26,754,810 and 25,749,493 shares of common      
    stock in treasury         (1,273,489 )       (1,167,600 )
  Accumulated other comprehensive loss     (5,284 )       (3,162 )
    Total Landstar System, Inc. and subsidiary shareholders'      
     equity           657,708         650,672  
Noncontrolling interest         3,225         3,205  
    Total equity           660,933         653,877  
Total liabilities and equity     $   1,308,895     $   1,352,460  
                   


  Landstar System, Inc. and Subsidiary
  Supplemental Information
  (Unaudited)
                           
                           
          Twenty Six Weeks Ended     Thirteen Weeks Ended  
          June 30,   July 1,     June 30,   July 1,  
          2018    2017      2018    2017   
Revenue generated through (in thousands):                    
                           
  Truck transportation                    
    Truckload:                    
      Van equipment   $   1,369,476     $   978,918       $   713,341     $   509,135    
      Unsided/platform equipment       664,045         520,658           364,676         283,481    
    Less-than-truckload       50,948         42,799           27,364         22,942    
      Total truck transportation       2,084,469         1,542,375           1,105,381         815,558    
  Rail intermodal       61,587         44,357           32,295         21,515    
  Ocean and air cargo carriers       51,506         41,185           28,029         21,595    
  Other (1)        33,150         23,425           17,081         11,766    
          $   2,230,712     $   1,651,342       $   1,182,786     $   870,434    
                           
  Revenue on loads hauled via BCO Independent Contractors (2)                    
    included in total truck transportation   $   998,953     $   776,085       $   527,803     $   411,177    
                           
Number of loads:                    
                           
  Truck transportation                    
    Truckload:                    
      Van equipment     691,866       613,565         354,947       315,499    
      Unsided/platform equipment     255,334       236,427         135,543       125,242    
    Less-than-truckload     70,670       64,508         37,250       34,589    
      Total truck transportation     1,017,870       914,500         527,740       475,330    
  Rail intermodal     26,840       20,960         13,560       10,310    
  Ocean and air cargo carriers     13,030       11,940         6,700       6,210    
            1,057,740       947,400         548,000       491,850    
                           
  Loads hauled via BCO Independent Contractors (2)                    
    included in total truck transportation     480,890       453,860         247,710       235,630    
                           
Revenue per load:                    
                           
  Truck transportation                    
    Truckload:                    
      Van equipment   $   1,979     $   1,595       $   2,010     $   1,614    
      Unsided/platform equipment       2,601         2,202           2,690         2,263    
    Less-than-truckload       721         663           735         663    
      Total truck transportation       2,048         1,687           2,095         1,716    
  Rail intermodal       2,295         2,116           2,382         2,087    
  Ocean and air cargo carriers       3,953         3,449           4,183         3,477    
                           
  Revenue per load on loads hauled via BCO Independent Contractors (2)   $   2,077     $   1,710       $   2,131     $   1,745    
                           
Revenue by capacity type (as a % of total revenue);                    
                           
  Truck capacity providers:                    
    BCO Independent Contractors (2)     45 %     47 %       45 %     47 %  
    Truck Brokerage Carriers     49 %     46 %       49 %     46 %  
  Rail intermodal     3 %     3 %       3 %     2 %  
  Ocean and air cargo carriers     2 %     2 %       2 %     2 %  
  Other       1 %     1 %       1 %     1 %  
                           
                    June 30,   July 1,  
                     2018     2017   
Truck Capacity Providers                    
                           
  BCO Independent Contractors (2)                 9,501         8,818    
  Truck Brokerage Carriers:                    
  Approved and active (3)                 37,045         31,636    
  Other approved                 15,406         15,381    
                        52,451         47,017    
  Total available truck capacity providers                 61,952         55,835    
                           
  Trucks provided by BCO Independent Contractors (2)                 10,155         9,404    
                           
(1) Includes primarily reinsurance premium revenue generated by the insurance segment and, during the 2018 fiscal year and quarter, 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.      


Contact:  Kevin Stout
Landstar System, Inc.
www.landstar.com
904-398-9400

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