Landstar System Reports Fourth Quarter Revenue Of $849 Million And Record Fourth Quarter Diluted Earnings Per Share From Continuing Operations Of $0.88

JACKSONVILLE, Fla., Jan. 28, 2016 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported fourth quarter net income of $37.9 million, or $0.88 per diluted share, on fourth quarter revenue of $849 million. Diluted earnings per share for the 2015 fourth quarter was the highest fourth quarter diluted earnings per share from continuing operations in Landstar history.  Landstar reported net income of $38.5 million, or $0.86 per diluted share, on revenue of $863 million in the 2014 fourth quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $126.4 million in the 2015 fourth quarter compared to $124.7 million in gross profit in the 2014 fourth quarter. Operating income was $62.6 million in the 2015 fourth quarter and operating margin, representing operating income divided by gross profit, was 49.6 percent.

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2015 fourth quarter was $786.4 million, or 93 percent of revenue, compared to $811.2 million, or 94 percent of revenue, in the 2014 fourth quarter.  Truckload transportation revenue hauled via van equipment in the 2015 fourth quarter was $481.4 million compared to $499.7 million in the 2014 fourth quarter.  Truckload transportation revenue hauled via unsided/platform equipment in the 2015 fourth quarter was $285.6 million compared to $289.6 million in the 2014 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $50.6 million, or 6 percent of revenue, in the 2015 fourth quarter compared to $41.0 million, or 5 percent of revenue, in the 2014 fourth quarter. 

Return on average shareholders' equity was 31 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 25 percent in fiscal year 2015.  Landstar purchased approximately 779,000 shares of its common stock during the fiscal quarter ended December 26, 2015 at an aggregate cost of $48.5 million. Landstar purchased approximately 2,498,000 shares of its common stock during the fiscal year ended December 26, 2015 at an aggregate cost of $161.2 million. Currently, there are approximately 1,809,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.  As of December 26, 2015, the Company had $163 million in cash and short term investments and $192 million available for borrowing under the Company's senior credit facility. 

In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.08 per share payable on March 11, 2016 to stockholders of record at the close of business on February 15, 2016.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"Given the backdrop of a low growth macro environment and very difficult year-over-year comparisons, I am very pleased with our 2015 fourth quarter operating performance," said Landstar's President and Chief Executive Officer, Jim Gattoni. "The number of loads hauled via truck in the 2015 fourth quarter increased 7 percent over the 2014 fourth quarter, while the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers increased 35 percent over the 2014 fourth quarter.  The growth in the number of loads hauled via truck was driven by increased volumes from unsided/platform equipment, van equipment and less-than-truckload services of 12 percent, 4 percent, and 6 percent, respectively.   The growth in the number of loads hauled via unsided/platform equipment in the 2015 fourth quarter was entirely due to the continuation of demand from one shipper in the automotive sector for a project that began in April 2015.  Otherwise, unsided/platform volumes were 4 percent lower in the 2015 fourth quarter compared to the 2014 fourth quarter.  We expect the number of loads hauled on behalf of that shipper for this project to be insignificant in the 2016 first quarter.  As expected, revenue per load on loads hauled via truck was lower in the 2015 fourth quarter as compared to the 2014 fourth quarter.   Truck revenue per load in the 2015 fourth quarter was 9 percent lower as compared to the 2014 fourth quarter, mostly due to the impact of lower diesel fuel costs on loads hauled via truck brokerage carriers, the difficult comparison to record truck revenue per load experienced in the 2014 fourth quarter and a somewhat softer freight environment."

Gattoni continued, "In terms of annual performance, 2015 included a number of tremendous achievements.  The Company established a new record for annual revenue, surpassing $3.3 billion for the first time in its history.  Landstar also set new annual records for many other financial metrics including gross profit, operating income, net income and diluted earnings per share.  The Company achieved these milestones against a backdrop of a low growth macro environment, declining fuel prices which impacted top-line growth and very tough comparisons to the previous record performance of fiscal year 2014.  These fiscal year 2015 achievements speak to the continued strength of our variable cost business model and ability to execute in almost any environment.  In particular, I am pleased by our continued organic load volume growth across all of the Company's service offerings with increases in truck, rail, air and ocean shipments of 8 percent, 42 percent, 13 percent and 10 percent, respectively, in fiscal year 2015 compared to fiscal year 2014.  We continue to invest in the agent network and are currently underway in a multi-year project aimed at increasing efficiencies, primarily through technology, at both Landstar and across all of our agent offices that we believe will continue to fuel growth in the years to come.  We expect costs associated with this initiative to impact diluted earnings per share by approximately $0.05 to $0.10 in fiscal year 2016."

Gattoni further stated, "During the first three weeks of the 2016 first quarter, growth in the number of loads hauled via truck has softened somewhat as compared to the quarter over quarter growth rates experienced during 2015.  I expect the number of loads hauled via truck in the 2016 first quarter to increase in a low to mid-single digit range over the 2015 first quarter.  As it pertains to revenue per load on loads hauled via truck, a low growth environment and looser capacity is putting further pressure on rates.  However, I do not expect a significant change in the rate environment over the balance of the 2016 first quarter.  As such, I expect revenue per load on loads hauled via truck in the 2016 first quarter to be below the 2015 first quarter in a mid-single digit percentage range.  Assuming the current environment continues throughout the 2016 first quarter, I anticipate revenue for the 2016 first quarter to be in a range of $720 million to $770 million and, assuming that range of estimated revenue, I would anticipate 2016 first quarter diluted earnings per share to be in a range of $0.70 to $0.75 per share, compared to $0.67 per diluted share in the 2015 first quarter.  From a longer term perspective, recent turmoil in world markets, the impact of a slowing global economy and uncertainty surrounding the 2016 election cycle all contribute to a highly unpredictable environment for our industry.  As such, we will not be providing annual guidance.  Nevertheless, regardless of these challenges, Landstar's variable cost business model performs well in almost any environment and I would expect Landstar to outperform industry fundamentals in the years ahead."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5:00 pm 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 Fourth Quarter 2015 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; substantial industry competition; disruptions or failures in the Company's computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; 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 2014 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 logistics services to a broad range of customers utilizing a network of agents, third-party capacity owners and employees.  All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2013 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.

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SOURCE Landstar System, Inc.

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