Landstar System Inc. (NASDAQ:LSTR) Q2 2018 Earnings Conference Call - Final Transcript

Jul 26, 2018 • 08:00 am ET

Previous

Landstar System Inc. (NASDAQ:LSTR) Q2 2018 Earnings Conference Call - Final Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Operator
Operator

Good morning, and welcome to Landstar System Incorporation Second Quarter 2018 Earnings Release Conference Call. All lines will be in a 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 would like to turn the call over to Mr. Jim Gattoni. Sir, you may begin.

Executive
Jim Gattoni

Thank you, Prema (ph). Good morning and welcome to Landstar's 2018 second quarter earnings conference call.

(Forward-Looking Cautionary Statements)

Our 2018 second quarter financial performance continued to build on the outstanding record results Landstar achieved in our 2018 first quarter. Second quarter revenue, gross profit, operating income and income before income taxes each set all time quarterly records, while second quarter diluted earnings per share set a second quarter record. During our first quarter earnings conference call, we provided 2018 second quarter revenue guidance to be in a range of $1.115 billion to $1.165 billion. Our revenue guidance anticipated the number of loads hauled via truck in the 2018 second quarter to exceed the 2017 second quarter in a 10% to 12% range, and revenue per load on loads hauled via truck to exceed prior year in a range of 19% to 22%.

Revenue in 2018 second quarter was $1.183 billion approximate 36% above our 2017 second quarter, and slightly above the high-end of our second quarter guidance. The number of loads hauled via truck in the 2018 second quarter increased 11% over the 2017 second quarter, while revenue per load on loads hauled via truck increased 22% over the 2017 second quarter. Our second quarter guidance called for diluted earnings per share to be in the range of $1.48 to $1.54. Actual second quarter diluted earnings per share was $1.51. Our second quarter guidance assumed insurance and claims costs would approximate 3.5% of anticipated BCO revenue in the quarter.

Insurance and claims costs were 4.1% of BCO revenue in the quarter, negatively impacting diluted earnings per share by $0.06 when comparing to our actual results to our guidance. Kevin will speak more about insurance in a minute. As it retains to the number of loads hauled via truck, we experienced consistent growth each month of the quarter with truck loadings increasing over the prior month by 11%, 10% and 11% in April, May and June, respectively. The increase was broad-based amongst many customers and industries. Demand for our truck services continues to be strong.

I expect the growth in load volumes in July and August to be similar to the growth rate experienced in the second quarter, with year-over-year comparisons becoming more difficult in September due to approximately 16,000 loads hauled by Landstar in September 2017 related to the storms that impact the Southeastern US and Texas. Revenue per load on loads hauled via truck