8-K
LANDSTAR SYSTEM INC (LSTR)
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) July 22, 2020
LANDSTAR SYSTEM, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 021238 | 06-1313069 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (I.R.S. Employer<br> <br>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)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock | LSTR | NASDAQ |
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 July 22, 2020, Landstar System, Inc. (“Landstar” or the “Company”) issued a press release announcing results for the second quarter of fiscal 2020. 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 July 22, 2020, 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 July 23, 2020 in connection with the Company’s release of results for the second quarter of fiscal 2020.
In the slide presentation attached hereto as Exhibit 99.2, the Company provided the following information that may be deemed a non-GAAP financial measure: excluding the impact of the $12.6 million of pandemic relief incentive payments from the 2020 year-to-date and quarterly results, operating margin was 36.8% and 35.6% in the 2020 year-to-date and quarter periods, respectively.
Management believes that it is appropriate to present this financial information 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.
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 July 22, 2020 of Landstar System, Inc. |
|---|---|
| 99.2 | Slide Presentation dated July 22, 2020 of Landstar System, Inc. |
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K |
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: July 23, 2020 | By: | /s/ L. Kevin Stout |
| Name: | L. Kevin Stout | |
| Title: | Vice President and Chief Financial Officer |
EX-99.1
Exhibit 99.1
| For Immediate Release | Contact: Kevin Stout |
|---|---|
| Landstar System, Inc. | |
| www.landstar.com | |
| July 22, 2020 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS SECOND QUARTER
REVENUE OF $824 MILLION AND DILUTED EARNINGS PER SHARE OF $0.63
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $0.63 in the 2020 second quarter on revenue of $824 million. Included in the Company’s 2020 second quarter financial results were:
| • | approximately $12.6 million, or $0.25 per diluted share, in payments made to the Company’s BCOs and<br>agents in April and May under the Company’s previously disclosed pandemic relief incentive program; |
|---|---|
| • | a charge of approximately $2.6 million, or $0.05 per diluted share, due to the impairment of certain assets<br>associated with Landstar’s Mexico operation relating to a decrease of business within Mexico; and |
| --- | --- |
| • | approximately $2.3 million, or $0.05 per diluted share, due to higher third party insurance company premiums<br>incurred in May and June for commercial trucking liability coverage following the Company’s May 1st annual insurance renewal. The higher premiums incurred in the 2020 second quarter reflected a pro rata portion of an annual increase of<br>$14.0 million in the fixed component of the Company’s insurance and claims expense for the period from May 1, 2020 to April 30, 2021, in connection with severe tightening of capacity in insurance markets offering coverage to the<br>truck transportation industry. |
| --- | --- |
Landstar reported diluted earnings per share of $1.53 on revenue of $1.045 billion in the 2019 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $113.1 million in the 2020 second quarter, inclusive of the impact of the special pandemic relief payments made to the Company’s BCOs and agents in April and May of 2020. Gross profit was $158.0 million in the 2019 second quarter.
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Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2020 second quarter was $753.3 million, or 91 percent of revenue, compared to $968.2 million, or 93 percent of revenue, in the 2019 second quarter. Truckload transportation revenue hauled via van equipment in the 2020 second quarter was $483.0 million compared to $605.4 million in the 2019 second quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2020 second quarter was $247.4 million compared to $338.1 million in the 2019 second quarter. Revenue hauled by rail, air and ocean cargo carriers was $53.8 million, or 7 percent of revenue, in the 2020 second quarter compared to $56.8 million, or 5 percent of revenue, in the 2019 second quarter.
During the 2020 second quarter, Landstar generated $99.2 million in operating cash flow and paid $7.1 million in dividends. Landstar did not purchase any shares of its common stock during the 2020 second quarter and currently is authorized to purchase up to 1,821,030 shares of the Company’s common stock under Landstar’s previously announced share purchase program. As of June 27, 2020, the Company had $282 million in cash and short term investments with undrawn revolver capacity under our senior credit facility of $216 million (with the ability to increase to $366 million with the accordion feature included in our senior credit facility). Landstar also announced today that its Board of Directors has declared a quarterly dividend of $0.21 per share payable on August 28, 2020, to stockholders of record as of the close of business on August 10, 2020. This quarterly dividend includes a $0.025 per share increase, or 13.5 percent, over the amount of the Company’s regular quarterly dividend declared following each of the prior four quarters. The $0.025 per share increase is the largest increase in the Company’s regularly scheduled quarterly dividend in the Company’s history. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
“Overall, the resiliency of Landstar’s variable cost business model performed as expected given the unprecedented economic decline caused by the coronavirus (COVID-19) pandemic,” said Landstar’s President and Chief Executive Officer Jim Gattoni. “We entered the 2020 second quarter knowing we would face a very soft freight demand environment as a result of actions taken by governmental authorities and businesses to
LANDSTAR SYSTEM/ 3
reduce the spread of COVID-19. As anticipated, demand for freight services slowed significantly and capacity became readily available during the Company’s 2020 second quarter, especially in the spot market where the Company primarily operates. The number of loads and revenue per load on loads hauled via truck in the 2020 second quarter decreased 16 percent and 7 percent, respectively, from the 2019 second quarter. The number of loads hauled via truck was below the prior year comparable period by 21 percent, 21 percent and 9 percent for April, May and June, respectively. Revenue per load on loads hauled via truck was below the prior year comparable period by 6 percent, 9 percent and 6 percent in April, May and June, respectively.”
Gattoni further commented, “The 2020 second quarter presented operating conditions and challenges unlike any other quarter in Landstar’s history. Nevertheless, Landstar did not take any drastic cost reduction measures that could have disrupted our ability to service Landstar’s customers, agents, BCOs or other third party capacity providers or slow the progress on our technology initiatives. Also, as previously disclosed, Landstar instituted a pandemic relief incentive program as of the beginning of April for BCOs and agents. Under the program, Landstar paid an extra $50 to each of the BCO hauling the load and the Landstar agent dispatching the load for each load delivered by a BCO with a confirmed delivery date in April. The pandemic relief program was subsequently extended through the month of May. The Company’s 2020 second quarter results included a total of approximately $12.6 million of these pandemic relief incentive payments to BCOs and agents. Revenue decreased 21 percent and gross profit decreased 28 percent in the Company’s 2020 second quarter compared to the 2019 second quarter. Exclusive of the impact of the pandemic relief program, gross profit decreased 20 percent in the 2020 second quarter compared to the prior year period.”
Gattoni continued, “Although the ultimate impact that the coronavirus pandemic will have on the freight transportation industry continues to be unpredictable, we believe Landstar remains in a solid operational and financial position as we enter the third quarter. Through the first few weeks of July, the number of loads and revenue per load on loads hauled via truck have moved beyond the peak declines of April and May. Both the number of loads and revenue per load on loads hauled via truck in the first few weeks of July were below the corresponding period of 2019 in mid single-digit percentage
LANDSTAR SYSTEM/ 4
ranges. Assuming current demand conditions persist, I expect the number of loads hauled via truck in the 2020 third quarter to be below the number of loads hauled by truck in the 2019 third quarter in a mid single-digit percentage range. My expectation is that pricing conditions for truck services in the 2020 third quarter will be slightly improved as compared to the 2020 second quarter with little change in the level of truck capacity available in the marketplace. Assuming those capacity market conditions continue throughout the rest of the third quarter, I expect 2020 third quarter truck revenue per load to be lower than the 2019 third quarter in a mid single-digit percentage range. Based on those expectations, I would anticipate revenue for the 2020 third quarter to be in a range of $885 million to $935 million. Assuming that range of estimated revenue and insurance and claims expense at 4.8 percent of BCO revenue (which reflects the significant increase in insurance premiums previously described), I would anticipate 2020 third quarter diluted earnings per share to be in a range of $1.11 to $1.17 per share.”
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 2020 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: the impact of the coronavirus (COVID-19) pandemic; 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
LANDSTAR SYSTEM/ 5
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 2019 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/ 6
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 27, | June 29, | June 27, | June 29, | ||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Revenue | $ | 1,751,080 | $ | 2,078,040 | $ | 823,514 | $ | 1,045,040 | |
| Investment income | 2,002 | 2,421 | 835 | 1,283 | |||||
| Costs and expenses: | |||||||||
| Purchased transportation | 1,344,390 | 1,591,126 | 635,133 | 799,371 | |||||
| Commissions to agents | 150,642 | 173,294 | 75,266 | 87,623 | |||||
| Other operating costs, net of gains on asset sales/dispositions | 15,674 | 18,100 | 7,368 | 9,861 | |||||
| Insurance and claims | 44,708 | 31,279 | 19,751 | 16,286 | |||||
| Selling, general and administrative | 85,928 | 82,565 | 40,601 | 41,297 | |||||
| Depreciation and amortization | 22,972 | 22,350 | 11,467 | 11,034 | |||||
| Impairment of intangible and other assets | 2,582 | — | 2,582 | — | |||||
| Total costs and expenses | 1,666,896 | 1,918,714 | 792,168 | 965,472 | |||||
| Operating income | 86,186 | 161,747 | 32,181 | 80,851 | |||||
| Interest and debt expense | 1,928 | 1,514 | 976 | 709 | |||||
| Income before income taxes | 84,258 | 160,233 | 31,205 | 80,142 | |||||
| Income taxes | 19,109 | 35,833 | 6,951 | 19,042 | |||||
| Net income | 65,149 | 124,400 | 24,254 | 61,100 | |||||
| Less: Net loss attributable to noncontrolling interest | — | (17 | ) | — | — | ||||
| Net income attributable to Landstar System, Inc. and subsidiary | $ | 65,149 | $ | 124,417 | $ | 24,254 | $ | 61,100 | |
| Earnings per common share attributable to Landstar System, Inc. and subsidiary | $ | 1.68 | $ | 3.11 | $ | 0.63 | $ | 1.53 | |
| Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 1.68 | $ | 3.11 | $ | 0.63 | $ | 1.53 | |
| Average number of shares outstanding: | |||||||||
| Earnings per common share | 38,816,000 | 40,053,000 | 38,379,000 | 39,945,000 | |||||
| Diluted earnings per share | 38,816,000 | 40,053,000 | 38,379,000 | 39,945,000 | |||||
| Dividends per common share | $ | 0.370 | $ | 0.330 | $ | 0.185 | $ | 0.165 |
LANDSTAR SYSTEM/ 7
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| December 28, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 245,471 | $ | 319,515 | ||
| Short-term investments | 36,274 | 32,901 | |||
| Trade accounts receivable, less allowance of 8,580 and 7,284 | 489,182 | 588,549 | |||
| Other receivables, including advances to independent contractors, less allowance of 9,241 and<br>7,667 | 27,861 | 35,553 | |||
| Other current assets | 41,564 | 21,370 | |||
| Total current assets | 840,352 | 997,888 | |||
| Operating property, less accumulated depreciation and amortization of 288,055 and<br>280,849 | 284,794 | 285,855 | |||
| Goodwill | 40,071 | 38,508 | |||
| Other assets | 106,893 | 105,460 | |||
| Total assets | 1,272,110 | $ | 1,427,711 | ||
| LIABILITIES AND EQUITY | |||||
| Current liabilities: | |||||
| Cash overdraft | 35,534 | $ | 53,878 | ||
| Accounts payable | 273,324 | 271,996 | |||
| Current maturities of long-term debt | 38,219 | 42,632 | |||
| Insurance claims | 53,764 | 44,532 | |||
| Dividends payable | — | 78,947 | |||
| Contractor escrow | 25,774 | 24,902 | |||
| Other current liabilities | 46,845 | 36,017 | |||
| Total current liabilities | 473,460 | 552,904 | |||
| Long-term debt, excluding current maturities | 60,152 | 70,212 | |||
| Insurance claims | 34,762 | 33,575 | |||
| Deferred income taxes and other non-current<br>liabilities | 54,615 | 49,551 | |||
| Shareholders’ equity: | |||||
| Common stock, 0.01 par value, authorized 160,000,000 shares, issued 68,176,787 and 68,083,419<br>shares | 682 | 681 | |||
| Additional paid-in capital | 225,332 | 226,123 | |||
| Retained earnings | 2,012,173 | 1,962,161 | |||
| Cost of 29,797,328 and 28,609,926 shares of common stock in treasury | (1,581,921 | ) | (1,465,284 | ) | |
| Accumulated other comprehensive loss | (7,145 | ) | (2,212 | ) | |
| Total shareholders’ equity | 649,121 | 721,469 | |||
| Total liabilities and shareholders’ equity | 1,272,110 | $ | 1,427,711 |
All values are in US Dollars.
LANDSTAR SYSTEM/ 8
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Twenty Six Weeks Ended | Thirteen Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 27, | June 29, | June 27, | June 29, | |||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenue generated through (in thousands): | ||||||||||||
| Truck transportation | ||||||||||||
| Truckload: | ||||||||||||
| Van equipment | $ | 1,028,334 | $ | 1,224,379 | $ | 483,027 | $ | 605,365 | ||||
| Unsided/platform equipment | 533,716 | 648,828 | 247,388 | 338,107 | ||||||||
| Less-than-truckload | 45,859 | 48,108 | 22,918 | 24,732 | ||||||||
| Total truck transportation | 1,607,909 | 1,921,315 | 753,333 | 968,204 | ||||||||
| Rail intermodal | 51,315 | 58,585 | 23,186 | 28,570 | ||||||||
| Ocean and air cargo carriers | 57,250 | 58,893 | 30,663 | 28,224 | ||||||||
| Other ^(1)^ | 34,606 | 39,247 | 16,332 | 20,042 | ||||||||
| $ | 1,751,080 | $ | 2,078,040 | $ | 823,514 | $ | 1,045,040 | |||||
| Revenue on loads hauled via BCO Independent Contractors ^(2)^included in total truck transportation | $ | 809,779 | $ | 923,928 | $ | 378,500 | $ | 474,620 | ||||
| Number of loads: | ||||||||||||
| Truck transportation | ||||||||||||
| Truckload: | ||||||||||||
| Van equipment | 600,519 | 686,901 | 285,174 | 345,080 | ||||||||
| Unsided/platform equipment | 231,122 | 260,920 | 110,533 | 135,750 | ||||||||
| Less-than-truckload | 78,079 | 74,549 | 39,723 | 39,240 | ||||||||
| Total truck transportation | 909,720 | 1,022,370 | 435,430 | 520,070 | ||||||||
| Rail intermodal | 21,510 | 23,880 | 9,970 | 11,420 | ||||||||
| Ocean and air cargo carriers | 14,430 | 14,810 | 7,360 | 7,300 | ||||||||
| 945,660 | 1,061,060 | 452,760 | 538,790 | |||||||||
| Loads hauled via BCO Independent Contractors ^(2)^included in total truck transportation | 443,830 | 483,660 | 210,430 | 248,810 | ||||||||
| Revenue per load: | ||||||||||||
| Truck transportation | ||||||||||||
| Truckload: | ||||||||||||
| Van equipment | $ | 1,712 | $ | 1,782 | $ | 1,694 | $ | 1,754 | ||||
| Unsided/platform equipment | 2,309 | 2,487 | 2,238 | 2,491 | ||||||||
| Less-than-truckload | 587 | 645 | 577 | 630 | ||||||||
| Total truck transportation | 1,767 | 1,879 | 1,730 | 1,862 | ||||||||
| Rail intermodal | 2,386 | 2,453 | 2,326 | 2,502 | ||||||||
| Ocean and air cargo carriers | 3,967 | 3,977 | 4,166 | 3,866 | ||||||||
| Revenue per load on loads hauled via BCO Independent Contractors ^(2)^ | $ | 1,825 | $ | 1,910 | $ | 1,799 | $ | 1,908 | ||||
| Revenue by capacity type (as a % of total revenue); | ||||||||||||
| Truck capacity providers: | ||||||||||||
| BCO Independent Contractors ^(2)^ | 46 | % | 44 | % | 46 | % | 45 | % | ||||
| Truck Brokerage Carriers | 46 | % | 48 | % | 46 | % | 47 | % | ||||
| Rail intermodal | 3 | % | 3 | % | 3 | % | 3 | % | ||||
| Ocean and air cargo carriers | 3 | % | 3 | % | 4 | % | 3 | % | ||||
| Other | 2 | % | 2 | % | 2 | % | 2 | % | ||||
| June 27, | June 29, | |||||||||||
| 2020 | 2019 | |||||||||||
| Truck Capacity Providers | ||||||||||||
| BCO Independent Contractors ^(2)^ | 9,632 | 9,879 | ||||||||||
| Truck Brokerage Carriers: | ||||||||||||
| Approved and active ^(3)^ | 37,600 | 40,097 | ||||||||||
| Other approved | 16,365 | 17,790 | ||||||||||
| 53,965 | 57,887 | |||||||||||
| Total available truck capacity providers | 63,597 | 67,766 | ||||||||||
| Trucks provided by BCO Independent Contractors<br>^(2)^ | 10,299 | 10,587 | ||||||||||
| (1) | Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico<br>transportation services revenue generated by Landstar Metro. | |||||||||||
| --- | --- | |||||||||||
| (2) | BCO Independent Contractors are independent contractors who provide truck capacity to the Company under<br>exclusive lease arrangements. | |||||||||||
| --- | --- | |||||||||||
| (3) | Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the<br>fiscal quarter end. | |||||||||||
| --- | --- |
EX-99.2
July 22, 2020 Landstar System, Inc. Earnings Conference Call Second Quarter 2020 Date Published: 07/22/2020 Exhibit 99.2
The following is a “safe harbor” 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 to Landstar’s business objectives, plans, strategies and expectations. Such statements are by nature subject to uncertainties and risks, including but not limited to: the impact of coronavirus (COVID-19) pandemic and the operational, financial and legal risks detailed in Landstar’s Form 10-K for the 2019 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. In this slide presentation, the Company provides the following information that may be deemed a non-GAAP financial measure: operating margin in the 2020 year-to-date and second quarter periods, excluding the impact of pandemic relief incentive payments from each period. Management believes that it is appropriate to present this financial information 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. Date Published: 07/22/2020
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. Date Published: 07/22/2020
The Network Landstar Employees Approx. 1,300 Agents Approx. 1,200 Customers 25,000+ Capacity 65,000+ 2019 Results $4.1 billion in revenue 2.1 million loadings 555 million dollar agents 10,243 BCO trucks (2019 year-end) 56,317 Carriers (2019 year-end) 17,000+ Trailers (2019 year-end) Date Published: 07/22/2020
Percentage of Revenue 2Q19 2Q20 Truck Transportation Truckload Van equipment 58% 59% Unsided/platform equipment 32% 30% Less-than-truckload 2% 3% Rail intermodal 3% 3% Ocean and air cargo 3% 4% Transportation Management Services Date Published: 07/22/2020
Percentage change in rate is calculated on a revenue per load basis. Percentage change in volume is calculated on the number of loads hauled. Revenue ($’s in thousands) Date Published: 07/22/2020 Quarter Year-to-Date
Van Equipment Unsided/Platform Equipment Truckload Loadings and Revenue per Load (Excludes LTL) Date Published: 07/22/2020
As a Percentage of Revenue 2Q19 2Q20 Quarter over Prior Year Quarter Growth Consumer Durables 24.6 24.3 -22% Machinery 14.7 13.0 -30% Automotive 7.2 4.3 -53% Building Products 9.6 9.7 -21% Metals 6.5 5.3 -35% AA&E, Hazmat 9.2 9.6 -18% Foodstuffs 3.8 5.8 22% Energy 3.0 3.7 -2% Other 21.4 24.3 -12% Transportation Revenue 100.0 100.0 -21% Industries Served Date Published: 07/22/2020
15.1% 13.7% Gross profit equals revenue less the cost of purchased transportation and commissions to agents. Gross profit margin equals gross profit divided by revenue. Revenue on transactions with a fixed gross profit margin was 51% and 52% of revenue in the 2019 and 2020 year-to-date periods, respectively, and 51% of revenue in both the 2019 and 2020 second quarters. Includes the impact of approximately $12.6 million related to BCO and agent pandemic relief incentive payments made in April and May 2020. The Company paid both the hauling BCO and agent dispatching the load an extra $50 for each BCO load delivered during these months. Gross Profit (1) and Gross Profit Margin (2) ($’s in thousands) Date Published: 07/22/2020 Quarter (4) Year-to-Date (4) 15.1% 14.6%
50.5% Operating margin equals operating income divided by gross profit. Excluding the impact of the $12.6 million of pandemic relief incentive payments from the 2020 year-to-date and quarterly results, operating margin was 36.8% and 35.6% in the 2020 year-to-date and quarter periods, respectively. Operating Income and Operating Margin (1) ($’s in thousands) Date Published: 07/22/2020 Quarter Year-to-Date 51.2% 28.4% 51.6% 10 33.7%
Date Published: 07/22/2020 Truck Capacity Data (All information is provided as of the end of the period)
Net cash is defined as cash and cash equivalents plus short term investments less outstanding debt. Capital expenditures includes cash capital expenditures of $17.7 million and approximately $2.7 million for the acquisition of a business during the 2020 year-to-date period. Date Published: 07/22/2020 Key Balance Sheet and Cash Flow Statistics ($’s in thousands)
Free Cash Flow (1) , Stock Purchases and Dividends Date Published: 07/22/2020 (In Thousands) (1) Free cash flow is defined as cash flow from operations less capital expenditures, each set forth on the prior slide.
Date Published: 07/22/2020