Landstar System Inc. (NASDAQ:LSTR) Q3 2017 Earnings Conference Call Transcript

Oct 26, 2017 • 08:00 am ET


Landstar System Inc. (NASDAQ:LSTR) Q3 2017 Earnings Conference Call Transcript


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Good morning, and welcome to Landstar System Incorporated Third Quarter 2017 Earnings Release Conference Call. All lines will be in listen-only mode, until the formal question-and-answer session. Today's call is being recorded. If you have any objections, you may disconnect at this time.

Joining us today from Landstar are, Jim Gattoni, President and CEO; Kevin Stout, VP and CFO; Pat O'Malley, VP and Chief Commercial and Marketing Officer; Joe Beacom, VP and Chief Safety and Operations Officer.

Now I'd like to turn the call over to Mr. Jim Gattoni. Sir, you may begin.

Jim Gattoni

Thank you, Carey. Good morning, and welcome to Landstar's 2017 third quarter earnings conference call. This conference call will be limited to one hour. When we open the line for questions, I ask that each participant have a two-question limit. Time permitting, we can circle back for additional questions.

(Forward-Looking Cautionary Statements)

Overall, the 2017 third quarter operating environment was outstanding for Landstar. We saw significant increases in both the number of loads being hauled by truck, and revenue per load. We've been experiencing a strong broad-based demand for our services. I expect this environment to continue to strengthen into the end of the fourth quarter with industry-wide growth in e-commerce, and the ELD mandate taking effect towards the back half of the fourth quarter. Recognizing this strong backdrop, for the first time in the company's history, we have issued quarterly revenue guidance that is over $1 billion at the upper end of the range.

Our 2017 third quarter's -- quarter results established numerous Landstar financial records, as the company set all-time quarterly records for revenue, gross profit, operating income and diluted earnings per share from continuing operations. On top of a very strong performance by our core business, the financial results also reflected transportation services provided in support of relief efforts for the storms that impacted Texas, the Southeastern United States and Puerto Rico, and the significant tax benefit from deductions and credits taken for prior-year amended returns.

On the capacity side, we ended the third quarter with a Landstar all-time record number of trucks provided by BCOs, as we continued to work attract high-quality BCO capacity to the network. Landstar also had a very positive quarter, in terms of, executing on its strategic priorities.

In the beginning of 2017, we opened our brand-new transload facility in Laredo, Texas, enabling the company to significantly increase its cross-border transportation opportunities. In September, we announced the opening of Landstar Metro, our new operation inside of Mexico. This new operation provides intra-Mexico truck transportation, and we intend to drive more cross-border service through our 11 cross-border crossings, especially through our new Laredo facility, via both new and expanded relationships with carriers and customers in Mexico.

In addition, on the technology side, we took a number of very positive steps with respect to several of the initiatives we have been working on over the past 18 months. We completed the integration of our new transportation management system to our legacy system,