ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 06-1313069 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
13410 Sutton Park Drive South Jacksonville, Florida | 32224 | ||
(Address of principal executive offices) | (Zip Code) | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock | LSTR | NASDAQ |
| Large accelerated filer | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
| Emerging growth company | ☐ | |||||
Document | Part of 10-K Into Which Incorporated | |
Proxy Statement relating to Landstar System, Inc.’s Annual Meeting of Stockholders scheduled to be held on May | ||
| Part III |
LANDSTAR SYSTEM, INC.
2022 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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EX – 31.1 Section 302 CEO Certification | ||||||
EX – 31.2 Section 302 CFO Certification | ||||||
EX – 32.1 Section 906 CEO Certification | ||||||
EX – 32.2 Section 906 CFO Certification | ||||||
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PART I
Item 1.
Introduction
Landstar System, Inc. was incorporated in January 1991 under the laws of the State of Delaware and has been a publicly held company since its initial public offering in March 1993. The principal executive offices of Landstar System, Inc. (collectively with its subsidiaries and other affiliated companies referred to herein as “Landstar” or the “Company,” unless the context otherwise requires) is located at 13410 Sutton Park Drive South, Jacksonville, Florida 32224 and its telephone number is (904)
Description of Business
Landstar, is a worldwide, technology-enabled, asset-light provider of integrated transportation management solutions.solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world. The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of over 1,100 independent commission sales agents and approximately 79,000over 108,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company. The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.
Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport customers’ freight. Landstar’s independent commission sales agents enter into contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers. The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the “BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under
Transportation Logistics Segment
The transportation logistics segment provides a wide range of integrated transportation management solutions. Transportation services are provided by Landstar’s “Operating Subsidiaries”: Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I. de C.V., and as further described below under “
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Truck Services
On May 6, 2020, the Company formed a new subsidiary that was subsequently renamed Landstar Blue.Blue, LLC (“Landstar Blue”). Landstar Blue arranges truckload brokerage services while helpingwith a focus on the contract services market. Landstar Blue also helps the Company to develop and test digital technologies and processes for the benefit of all Landstar independent commission sales agents. On June 15, 2020, Landstar Blue completed the acquisition of an independent agent of the Company whose business focused on truckload brokerage services. The results of operations from Landstar Blue are presented as part of the Company’s transportationstransportation logistics segment. Revenue from Landstar Blue represented less thanapproximately 1% of the Company’s transportation logistics segment revenue in fiscal year 2022 and less than 1% in both fiscal years 2021 and 2020.
Rail Intermodal Services.
Air and Ocean Services.
Insurance Segment
The insurance segment is comprised of Signature Insurance Company (“Signature”), a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc. (“RMCS”). The insurance segment provides risk and claims management services to certain of Landstar’s Operating Subsidiaries. In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s Operating Subsidiaries. Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk of loss is ultimately borne by Signature. Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue in each of fiscal years 2020, 20192022, 2021 and 2018.2020. See “Notes to Consolidated Financial Statements” for the amount of revenue from external customers, measure of profit and total assets attributable to the insurance segment for the last three fiscal years.
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Factors Significant to the Company’s Operations
Management believes the following factors are particularly significant to the Company’s operations:
Agent Network
The Company’s primary
Management believes the Company has more independent commission sales agents than any other asset-light integrated transportation management solutions company in the United States. Landstar’s vast network of independent commission sales agent locations provides the Company regular contact with shippers at the local level and the capability to be highly responsive to shippers’ changing needs. The Company’s large network of available capacity provides independent commission sales agents with the resources needed to service both large and small shippers. Through its agent network, the Company offers smaller shippers a level of service comparable to that typically enjoyed only by larger customers. Examples include the ability to provide transportation services on short notice, multiple
The independent commission sales agents use a variety of digital technologies provided by the Company to service the requirements of shippers. For truckload services, the Company’s independent commission sales agents primarily use Landstar proprietary software which enables agents to enter available freight, dispatch capacity and process most administrative procedurestasks and then communicate that information to Landstar and its capacity providers via the internet.through either web-based or mobile tools. The Company’s
Commissions to agents are based on contractually agreed-upon percentages of (i) revenue, or net revenue, defined as(ii) revenue less the cost of purchased transportation, or net(iii) revenue less a contractually agreed upon percentage of revenue retained by Landstar.Landstar and the cost of purchased transportation (the “retention contracts”). Commissions to agents as a percentage of consolidated revenue will vary directly with fluctuations in the percentage of consolidated revenue generated by the various modes of transportation and reinsurance premiums and, in general, vary inversely with changes in net revenue margin, definedthe amount of purchased transportation as net revenue divided bya percentage of revenue on services provided by Truck Brokerage Carriers, railroads, air cargo carriers and ocean cargo carriers. Commissions to agents are recognized over the freight transit period as the performance obligation to the customer is completed.
The Company had 508625 and 555593 agents whothat each generated at least $1 million in Landstar revenue (the “Million Dollar Agents”) during fiscal years 20202022 and 2019,2021, respectively. Landstar revenue from the Million Dollar Agents in the aggregate represented 92%97% and 93%94% of consolidated revenue in 20202022 and 2019,2021, respectively. Included among the Company’s Million Dollar Agents, the Company had 133 independent sales agencies that generated at least $10 million in Landstar revenue during the 2022 fiscal year, which in aggregate comprised approximately 74% of Landstar’s consolidated revenue. Management believes that the majority of the Million Dollar Agents choose to represent the Company exclusively.
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Third Party Capacity
The Company relies exclusively on independent third parties for its hauling capacity other than for trailing equipment owned or leased by the Company and utilized primarily by the BCO Independent Contractors. These third party transportation capacity providers consist of BCO Independent Contractors, Truck Brokerage Carriers, air and ocean cargo carriers and railroads. Landstar’s use of capacity provided by third parties allows it to maintain a lower level of capital investment, resulting in lower fixed costs. During fiscal year 2020,2022, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 45%35%, 47%54% and 3%2%, respectively, of the Company’s consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 3%8% of the Company’s consolidated revenue during fiscal year 2020.2022. Historically, the gross profitvariable contribution margin (defined as gross profit,variable contribution, which is defined as revenue less the costvariable costs of purchased transportation and commissions to agents,revenue, divided by revenue) generated from freight hauled by BCO Independent Contractors has been greater than that from freight hauled by other third party capacity providers. However, the Company’s insurance and claims costs, depreciation costs and other operating costs are incurred primarily in support of BCO Independent Contractor capacity. In addition, as further described in the “Corporate Services” section that follows, the Company incurs significantly higher selling, general and administrative costs in support of BCO Independent Contractor capacity as compared to the other modes of transportation. Purchased transportation costs are recognized over the freight transit period as the performance obligation to the customer is completed.
BCO Independent Contractors.
The Company’s BCO Independent Contractors are compensated primarily based on a contractually agreed-upon percentage of revenue generated by loads they haul. This percentage generally ranges from 62% to 70% where the BCO Independent Contractor provides only a tractor and 73% to 76% where the BCO Independent Contractor provides both a tractor and trailing equipment. The BCO Independent Contractor must pay substantially all of the expenses of operating his/her equipment, including driver wages and benefits, fuel, physical damage insurance, maintenance, highway use taxes and debt service, if applicable. The Company passes 100% of fuel surcharges billed to customers for freight hauled by BCO Independent Contractors to its BCO Independent Contractors. During fiscal year 2020,2022, the Company billed customers $168.8$445 million in fuel surcharges and passed 100% of such fuel surcharges to the BCO Independent Contractors. These fuel surcharges are excluded from revenue and the cost of purchased transportation.
The Company maintains an ecosystem of digital technologies and applications through which BCO Independent Contractors can view a comprehensive listing of the Company’s available freight, allowing them to consider rate, size, origin and destination when planning trips. The Company’s digital applications also provideLandstarOne™ mobile application provides BCO Independent Contractors information on loading opportunities as well as fueling station locations, retail fuel prices, fuel prices net of Landstar-arranged discounts and applicable state fuel tax credits, and equipment inspection site locations. The Landstar Contractors’ Advantage Purchasing Program (“LCAPP”) leverages Landstar’s purchasing power to provide discounts to eligible BCO Independent Contractors when they purchase equipment, fuel, tires and other items. In addition, Landstar Contractor Financing, Inc. provides a source of funds at competitive interest rates to the BCO Independent Contractors to purchase trailing equipment.
The number of trucks provided to the Company by BCO Independent Contractors was 10,99111,281 at December 26, 2020,31, 2022, compared to 10,24311,864 at December 28, 2019.25, 2021. At December 26, 2020,31, 2022, approximately 97% of the trucks provided by BCO Independent Contractors were provided by BCO Independent Contractors who provided five or fewer trucks to the Company. The number of trucks provided by BCO Independent Contractors fluctuates daily as a result of truck recruiting and truck terminations. MoreLess trucks were recruited in fiscal year 20202022 than in fiscal year 20192021 and trucks terminated were lowerhigher in fiscal year 20202022 than in fiscal year 2019,2021, resulting in an overall net increasedecrease of 748583 trucks during fiscal year 2020.2022. Landstar’s BCO Independent Contractor truck
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to empower them to manage their businesses, the Company’s programs to reduce the operating costs of its BCO Independent Contractors and Landstar’s reputation for quality, service, reliability and financial strength.
In October 2020, the Company announced a new initiative in further support of its network of BCO Independent Contractors. This initiative involved the establishment of multiple field operations centers located in the United States and Canada to further support the Company’s ongoing efforts in recruiting and retaining BCO Independent Contractors. In connection with this initiative, the Company recorded commission program termination costs of $15,494,000 related to buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a truck owner-operator recruitment and retention program formerly involving those agents.
Truck Brokerage Carriers.
The Company maintains an ecosystem of digital technologies and applications through which Truck Brokerage Carriers can view a listing of the Company’s freight that is available to them. The Landstar Savings Plus Program leverages Landstar’s purchasing power to provide discounts to eligible Truck Brokerage Carriers when they purchase fuel and equipment and provides the Truck Brokerage Carriers with an electronic payment option.
Railroads and Air and Ocean Cargo Carriers.
Trailing Equipment
The Company offers its customers a large and diverse fleet of trailing equipment. The following table illustrates the mix of the trailing equipment as of December 26, 2020,31, 2022, either provided by the BCO Independent Contractors or owned or leased by the Company and made available primarily to BCO Independent Contractors. The Company also provides power-only services, as reported in other truck transportation revenue, utilizing trailing equipment generally provided by the shipper or other third party. In general, Truck Brokerage Carriers utilize their own trailing equipment when providing transportation services on behalf of Landstar. Power-only and Truck Brokerage Carrier trailing equipment is not included in the following table:
Trailers by Type | ||||
Van | ||||
Unsided/platform, including flatbeds, step decks, drop decks and low boys | ||||
Temperature-controlled | ||||
Total | ||||
Specialized services offered by the Company include those provided by a large fleet of flatbed trailers and multi-axle trailers capable of hauling extremely heavy or oversized loads. Management believes the Company, along with its network of capacity providers, offers one of the largest fleets of heavy/specialized trailing equipment in North America.
At December 26, 2020, 12,83131, 2022, 14,704 of the trailers available to the BCO Independent Contractors were owned by the Company and 206241 were rented. In addition, at December 26, 2020, 4,02431, 2022, 3,648 trailers were provided by the BCO Independent Contractors. Approximately 32%24% of Landstar’s truck transportation revenue was generated on Landstar providedLandstar-provided trailing equipment during fiscal year 2020.2022.
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Customers
The Company’s customer base is highly diversified and dispersed across many industries, commodities and geographic regions. The Company’s top 100 customers accounted for approximately 46%44% and 42%46%, respectively, of consolidated revenue during fiscal years 20202022 and 2019.2021. Management believes that the Company’s overall size, ecosystem of digital technologies and applications, geographic coverage, access to equipment and diverse service capability offer the Company significant competitive marketing and operating advantages. These advantages allow the Company to meet the needs of even the largest shippers. Larger shippers often consider reducing the number of authorized carriers they use in favor of a small number of “core carriers,” such as the Company, whose size and diverse service capabilities enable these core carriers to satisfy most of the shippers’ transportation needs. The Company’s national account customers include the United States Department of Defense and many of the companies included in the Fortune 500. Large shippers also use third party logistics providers (“3PLs”) to outsource the management and coordination of their transportation needs. 3PLs and other transportation companies also utilize the Company’s available transportation capacity to satisfy their obligations to their shippers. There were 1214 transportation service providers, including 3PLs, included in the Company’s top 25 customers for fiscal year 2020.2022. Management believes the Company’s network of agents and third party capacity providers allows it to efficiently attract and service smaller shippers which may not be as desirable to other large transportation providers (see above under “Agent Network”). No customer accounted for more than 4%3% of the Company’s 20202022 revenue.
Technology
Landstar focuses on providing integrated transportation management solutions which emphasize customer service and information coordination among its independent commission sales agents, customers, capacity providers and employees. The Company continues to focus on identifying, purchasing or developing and implementing software applications and tools which are designed to: (i) assist Landstar independent commission sales agents in efficiently sourcing capacity, pricing transportation services and managing and analyzing the performance of thetheir independent businesses, (ii) assist customers in meeting their transportation needs, (iii) assist third party capacity providers in identifying desirable freight opportunities and operating their independent businesses, and (iv) improve operational and administrative efficiency throughout the Company. Landstar intends to continue to improve its technologies to meet the total needs of its agents, customers and third party capacity providers and remains engaged in various multi-year projects aimed at increasing efficiencies, primarily through technology, at Landstar and across our agent and third party capacity network.
Management believes leadership in the development, operation and support of an ecosystem of digital technologies and applications is an ongoing part of providing high quality service. The Company has engaged in a multi-year effort to implement a comprehensive strategy focused on the long-term development of leading edge digital tools to empower participants in our network to succeed in the technology-driven transportation logistics marketplace. As part of the execution of this strategy, the Company has launched the following tools to participants within our network:
Agent TMS: A cloud-based platform for truckload freight agent workflow.
Analytics: A suite of business intelligence applications powered by Microsoft Power BI for independent sales agents and BCO Independent Contractors to access information and identify trends in their businesses.
Pricing: Landstar-proprietary pricing tools developed with data scientists using historical Company information and third party pricing data to provide independent commission sales agents with near real time market data.
| • | LandstarOne™: Mobile application available to BCO Independent Contractors and third party motor carriers providing a one-stop location for available loading opportunities as well as fueling station locations, retail fuel prices, fuel prices net of Landstar-arranged discounts and applicable state fuel tax credits, and equipment inspection site locations. |
| • | Clarity: Landstar’s proprietary freight tracking exception management tool that incorporates geo-positional data from, among other sources, electronic logging devices, trailer tracking devices and third party data aggregators. |
Trailer Tools: Applications empowering independent commission sales agents through the automation of the Company’s trailer request and trailer pool management processes.
Credit: Application that automates the credit request process for independent commission sales agents.
Since the launch of this initiative in 2016, the Company has invested approximately $123 million in this strategic development effort, including approximately $33 million and $27 million, respectively, in fiscal years 2022 and 2021.
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The Company’s information technology systems used in connection with its operations are located in Jacksonville, Florida and, to a lesser extent, in Rockford, Illinois. In addition, the Company utilizes several third party data centers throughout the U.S. Landstar relies, in the regular course of its business, on the proper operation of its information technology systems.
Corporate Services
The Company provides many administrative support services to its network of independent commission sales agents, third party capacity providers and customers. Management believes that the mobile and digital applications purchased or developed and maintained by the Company and its administrative support services provide operational and financial advantages to its independent commission sales agents, third party capacity providers and customers. These, in turn, enhance the operational and financial efficiency of all aspects of the network.
Administrative support services that provide operational and financial advantages to the network include customer contract administration, customer credit review and approvals, pricing, customer billing, accounts receivable collections, third party capacity settlement, operator and equipment safety and compliance management for our network of BCO Independent Contractors, insurance claims handling, coordination of vendor discount programs and third party capacity sourcing programs. Marketing and advertising strategies are also provided by the Company. The Company’s practices of accepting customer credit risk and paying its agents and carriers promptly provides a significant competitive advantage to the Company in comparison to less capitalized competitors.
Competition
Landstar competes primarily in the transportation and logistics services industry with truckload carriers, third party logistics companies, digital freight brokers, intermodal transportation and logistics service providers, railroads, less-than-truckload carriers and other asset-light transportation and logistics service providers. The transportation and logistics services industry is extremely competitive and fragmented.
Management believes that competition for freight transported by the Company is based on service, efficiency and freight rates, which are influenced significantly by the economic environment, particularly the amount of available transportation capacity and freight demand. Management believes that Landstar’s overall size, service offerings and availability of a wide range of equipment, together with its geographically dispersed local independent agent network, present the Company with significant competitive advantages over many transportation and logistics service providers.
Self-Insured Claims
Potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. For periods prior to May 1, 2019, Landstar retains liability for commercial trucking claims up to $5,000,000$5 million per occurrence and maintains various third party insurance arrangements for liabilities in excess of its $5,000,000$5 million self-insured retention. Effective May 1, 2019, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5,000,000$5 million and $10,000,000$10 million (the “Initial Excess Policy”) with a third party insurance company. The Company subsequently extended the Initial Excess Policy for one additional policy year, from May 1, 2022 through April 30, 2023. For commercial trucking claims incurred on or after May 1, 20192022 through April 30, 2022,2023, the extended Initial Excess Policy provides for a limit for a single loss of $5,000,000,$5 million, with ana remaining aggregate limit of $15,000,000$10 million for eachthe policy year, an aggregate limit of $20,000,000 for the
The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10,000,000.$10 million. These third party arrangements provide coverage on a per occurrence or aggregated basis. In recent years, there has been a significant increase in the occurrence of trials in courts throughout the United States involving catastrophic injury and fatality claims against commercial motor carriers that have resulted in verdicts in excess of $10 million. Within the transportation logistics industry, these verdicts are often referred to as “Nuclear Verdicts.” The increase in Nuclear Verdicts has had a significant impact on the cost of commercial auto liability claims throughout the United States. Due to the increasing cost of commercial auto liability claims, throughout the United States in recent years, the availability of such excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased. Effective May 1, 2020Over the most recent three-year period, with respect to
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the annual policy year ending April 30, 2021,2023, as compared to the annual policy year ended April 30, 2020, the Company experienced an increase of approximately $14$20 million, or over 170%360%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10,000,000.$10 million.
Moreover, in recent years the Company has increased the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage. For example, with respect to a hypothetical claim in the amount of $35 million incurred during the annual policy year ending April 30, 2023, the Company would have an aggregate financial exposure of approximately $10 million. Furthermore, the Company’s third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure. No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels.
Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim. In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims. The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.
Regulation
Certain of the Operating Subsidiaries are considered motor carriers and/or brokers authorized to arrange for transportation services by motor carriers which are regulated by the Federal Motor Carrier Safety Administration (the “FMCSA”) and by various state agencies. The FMCSA has broad regulatory powers with respect to activities such as motor carrier operations, practices, periodic financial reporting and insurance. Subject to federal and state regulatory authorities or regulation, the Company’s capacity providers may transport most types of freight to and from any point in the United States over any route selected.
Interstate motor carrier operations are subject to safety requirements prescribed by the FMCSA. Each truck operator, whether working as a BCO Independent Contractor or for a Truck Brokerage Carrier, is required to have a commercial driver’s license and may be subject to mandatory drug and alcohol testing. The FMCSA’s commercial driver’s license and drug and alcohol testing requirements have not adversely affected the Company’s ability to source the capacity necessary to meet its customers’ transportation needs. However, on January 6, 2020 the FMCSA implemented new requirements applicable to drug and alcohol testing by motor carriers. The new regulation expands motor carrier reporting requirements to include reporting of all operators who test positive and/or refuse to submit to a test as prescribed in the regulation. The new regulation also expands rules relating to the obligation of motor carriers to conduct queries to check if current or prospective operators are prohibited from operating a commercial motor vehicle due to a positive or unresolved drug or alcohol test. The expanded reporting of positive results, or of an operator’s refusal to meet FMCSA testing requirements, to a centralized clearinghouse prescribed by FMCSA has the potential to remove operators from service that may otherwise have been undetected or unreported.
Additionally, certain of the Operating Subsidiaries are licensed as Ocean Transportation Intermediaries by the U.S. Federal Maritime Commission as
The transportation industry is subject to other potential regulatory and legislative changes (such as the possibility of more stringent environmental, climate change and/or safety/security regulations, limits on vehicle weight and size and regulations relating to the health and wellness of commercial truck operators) that may affect the economics of the industry by requiring changes in operating practices, by changing the demand for motor carrier services or the cost of providing truckload or other transportation or logistics services, or by adversely impacting the number of available commercial truck operators.
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For a discussion of the risks associated with these laws and regulations, see Part I, Item 1A, “Risk Factors.”
Seasonality
Landstar’s operations are subject to seasonal trends common to the trucking industry. Truckload volumes for the quarter ending in March are typically lower than for the quarters ending in June, September and December.
Human Capital Resources
We believe our employees are among our most important resources and are critical to our continued success. We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. To attract and retain top talent in our highly competitive industry, we have designed our compensation and benefits programs to provide a balanced and effective reward structure. Our short and long-term incentive programs are aligned with key business objectives and are intended to motivate strong performance. Our employees are eligible for medical, dental and vision insurance, a 401(k) savings/retirement plan, flexible
Landstar seeks to compensate employees in a manner that is fair, consistent, and reflective of the external market and provides recognition for the achievement of individual goals, corporate objectives, and professional competencies while maintaining fiscal responsibility. To help us achieve this goal, in 2021, Landstar completed a review of employee compensation that included the establishment of new pay grades and applicable salary ranges for all exempt positions. This review followed a similar review of employee compensation for all information technology positions completed in 2020 and a review of all non-exempt positions completed in 2019. Based on applicable pay grades, salary ranges and market data, Landstar completed an annual salary review for all positions in 2022 in conjunction with its annual review and salary adjustment process.
As of December 26, 2020,31, 2022, the Company and its subsidiaries employed 1,3201,449 individuals. Three Landstar Ranger drivers (out of a Company total of approximately 10,99111,281 drivers for BCO Independent Contractors) are members of the International Brotherhood of Teamsters. The turnover rate for Landstar employees located in the United States and Canada was 17% in 2022, 13% in 2021 and 9% in 2020. The Company considers relations with its employees to be good.
The Company has identified the following employee-focused goals:
Create and maintain an environment in which continuous improvement is encouraged and expected by everyone within the organization;
Engage each Landstar employee in the Company’s vision to inspire and empower entrepreneurs to succeed in the highly competitive, technology driven freight transportation industry; and
Ensure that all Landstar employees fully understand the requirements of their job and the role their job plays within Landstar.
Landstar formally monitors employee satisfaction and engagement through periodic employee satisfaction and engagement surveys. The Company also uses employee roundtable and focus group discussions as well as exit interviews to monitor engagement and satisfaction.
Landstar also provides comprehensive professional development opportunities to employees at all levels. VariousLandstar’s training and development department offers all employees the opportunity to participate in various learning tracks includeon topics including Leadership, Workplace Safety & Security, Customer Service and other core skills. Courses offered by the training and development department are delivered by Landstar’s team of Association for Talent Development (ATD) certified trainers through both
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At our core, Landstar is about providing opportunity to people regardless of background. We do not tolerate racism or discriminatory behavior and strongly believe thatin diversity and inclusion make us stronger as a company.inclusion. The Company reaffirms its commitment to equal employment opportunity for all people. The Company complies with all applicable federal and state laws pertaining to equal employment opportunity and affirmative action. It is our philosophy to treat our employees and applicants fairly without regard to race, color, sex, religion, national origin, disability, present, past, or future service in a branch of the uniformed services of the United States, citizenship, sexual orientation or gender identity. Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a code of ethics and employee compliance code that set standards for appropriate behavior and includes required annual training.
During 2020, amidst the COVID-19 pandemic, we shifted the vast majority of our employees to a remote work environment and implemented a number of other measures to address the safety and health of our employees, BCO Independent Contractors, and independent commission sales agents amidstagents. In 2022, as the
| Item 1A. | Risk Factors |
Operational Risks
Increased severity or frequency of accidents and other claims or a material unfavorable development of existing claims.
The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10,000,000.$10 million. These third party arrangements provide coverage on a per occurrence or aggregated basis. Landstar retains liability forIn recent years, there has been a significant increase in the occurrence of trials in courts throughout the United States involving catastrophic injury and fatality claims against commercial trucking claimsmotor carriers that have resulted in verdicts in excess of our coverage limits under$10 million. Within the transportation logistics industry, these third party insurance arrangements.verdicts are often referred to as “Nuclear Verdicts.” The increase in Nuclear Verdicts has had a significant impact on the cost of commercial auto liability claims throughout the United States. Due to the increasing cost of commercial auto liability claims, throughout the United States in recent years, the availability of such excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased. Effective May 1, 2020Over the most recent three-year period, with respect to the annual policy year ending April 30, 2021,2023, as compared to the annual policy year ended April 30, 2020, the Company experienced an increase of approximately $14$20 million, or over 170%360%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10,000,000.$10 million.
Moreover, in recent years the Company has increased the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage. For example, with respect to a hypothetical claim in the amount of $35 million incurred during the annual policy year ending April 30, 2023, the Company would have an aggregate financial exposure of approximately $10 million. Furthermore, the Company’s third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure. No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels. If anyMoreover, the occurrence of a Nuclear Verdict, or the settlement of a catastrophic injury and/or fatality claim occurrence were to exceed our excess coverage limits under our third party insurance arrangements, such claimthat could have otherwise resulted in a Nuclear Verdict, could have a material adverse effect on Landstar’s financial conditioncost of insurance and claims and its results of operations.
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Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim. In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims. The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.
Dependence on third party insurance companies.
Dependence on independent commission sales agents.
A number of these larger agencies, including the largest of Landstar’s independent commission sales agents by revenue, maintain administrative operations in countries outside of North America where the risks may be different than in the United States or Canada due to geopolitical, legal or other risks associated with maintaining administrative operations in such foreign jurisdictions. There can be no assurance regarding the potential disruption and impact adverse geopolitical developments in these foreign jurisdictions could have on the ability of certain large independent commission sales agents to generate and maintain administrative operations in support of significant amounts of Landstar revenue. As disclosed in a Current Report on Form 8-K filed by the Company on February 28, 2022, the largest Landstar independent commission sales agency by revenue referenced above, while based in the United States, has significant administrative operations located in eastern Ukraine. The administrative operations of this agency were significantly disrupted during the onset of the Russian invasion of Ukraine. The Company also has another of its largest independent commission sales agencies, as measured by revenue, that is based in the United States but conducts a portion of its administrative operations in western Ukraine. Russian efforts to destroy infrastructure throughout Ukraine
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has impacted the availability of electricity and other basic utilities at various times throughout the country. The priority for Landstar and both of these agencies is the safety and well-being of these agencies’ Ukrainian workforces and their families. No assurances can be provided regarding the conflict between Russia and Ukraine and the extent of potential future operational disruption the conflict may have on either of these Landstar agencies and the related impact of these disruptions on the Company.
Landstar competes with motor carriers and other third parties for the services of these independent commission sales agents. Landstar has historically experienced very limited agent turnover in the number of its Million Dollar Agents. There can be no assurances, however, that Landstar will continue to experience very limited turnover of its Million Dollar Agents in the future. Landstar’s contracts with its agents, including its Million Dollar Agents, are typically terminable without cause upon 10 to 30 days’ notice by either party and generally contain significant but not unqualified
Dependence on third party capacity providers.
The coronavirus (
In connection with the impact of the
Disruptions or failures in the Company’s computer systems; cyber and other information security incidents.
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could significantly disrupt the Company’s operations and impose significant costs on the Company. Moreover, it is critical that the data processed by or stored in the Company’s information technology systems or otherwise in the Company’s possession remain confidential, as it often includes confidential, proprietary and/or competitively sensitive information regarding our customers, employees, agents and third party capacity providers, key financial and operational results and statistics, and our strategic plans, including technology innovations, developments and enhancements. Cyber incidents that impact the security, availability, reliability, speed, accuracy or other proper functioning of these systems and data, including outages, computer viruses,
Although the Company maintains cybersecurity and business interruption insurance, the Company’s insurance may not be adequate to cover all losses that may be incurred in the event of a significant disruption or failure of its information technology systems. In addition, cybersecurity and business interruption insurance could in the future become more expensive and difficult to maintain and may not be available on commercially reasonable terms or at all.
Dependence on key vendors.
Economic, Competitive and Industry Risks
Decreased demand for transportation services; U.S. trade relationships.
In addition, Landstar hauls a significant number of shipments that have either been imported into the United States or are destined for export from the United States. Any decision by the U.S. government to adopt actions such as a border tax on imports, an increase in customs duties or tariffs, the renegotiation of U.S. trade agreements or any other action that could have a negative impact on international trade could cause a reduction in the volume of freight shipped by many Landstar customers. Any changes in tax and trade policies in the United States and corresponding actions by other countries could adversely affect our financial performance.
Substantial industry competition.
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In addition, competition in our industry, historically, has created downward pressure on freight rates. In addition, manyMany large shippers are using third party logistics providers (“3PLs”)use 3PLs other than the Company to outsource the management and coordination of their transportation needs rather than directly arrangingarrange for transportation services with carriers. As noted above, there were 1214 transportation service providers, including 3PLs, included in the Company’s top 25 customers for the fiscal year ended December 26, 2020.31, 2022. Usage by large shippers of 3PLs often provides carriers, such as the Company, with a less direct relationship with the shipper and, as a result, may increase pressure on freight rates while making it more difficult for the Company to compete primarily based on service and efficiency. A decrease in freight rates could have a material adverse effect on Landstar, including its revenue and operating income.
Legal, Tax, Regulatory and Compliance Risks
Status of independent contractors.
There are many different tests and standards that may apply to the determination of whether a relationship is that of an independent contractor or one of employment. For example, different standards may be applied by the Internal Revenue Service, the U.S. Department of Labor, the National Labor Relations Board, state unemployment agencies, state departments of labor, state taxing authorities, the Equal Employment Opportunity Commission, state discrimination or disability benefit administrators and state workers compensation boards, among others. For federal tax purposes, most individuals are classified as employees or independent contractors based on a multi-factor
The Company classifies its BCO Independent Contractors and independent commission sales agents as independent contractors for all purposes, including employment tax and employee benefits. There can be no assurance that legislative, judicial, administrative or regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing rules and regulations that would change the employee/independent contractor classification of BCO Independent Contractors or independent commission sales agents doing business with the Company. On September 18, 2019, California enacted Assembly Bill (AB) 5 into law, codifying the strict “ABC” test for purposes of determining a worker’s status as an independent contractor or employee under
Potential changes, if any, that could impact the legal classification of the independent contractor relationship between the Company and BCO Independent Contractors or independent commission sales agents could have a material adverse effect on Landstar’s operating model. Further, the costs associated with any such potential changes could have a material adverse effect on the Company’s results of operations and financial condition if Landstar were unable to pass through to its customers an increase in price corresponding to such increased costs. Moreover, class action litigation in this area against other transportation companies has resulted in significant damage awards and/or monetary settlements for workers who have been allegedly misclassified as independent contractors and the legal and other related expenses associated with litigating these cases can be substantial.
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Regulatory and legislative changes.
The transportation industry is subject to other potential regulatory and legislative changes (such as the possibility of more stringent environmental, climate change and/or safety/security regulations, limits on vehicle weight and size and regulations relating to the health and wellness of commercial truck operators) that may affect the economics of the industry by requiring changes in operating practices, by changing the demand for motor carrier services or the cost of providing truckload or other transportation or logistics services, or by adversely impacting the number of available commercial truck operators.
In particular, the FMCSA in recent years proposed a number of regulatory changes that affect the operation of commercial motor carriers across the United States. It is difficult to predict in what form FMCSA regulations may be implemented, modified or enforced and what impact any such regulations may have on motor carrier operations or the aggregate number of trucks that provide hauling capacity to the Company. For example, on January 6, 2020, the FMCSA implemented new requirements applicable to drug and alcohol testing by motor carriers. The new regulation expandsexpanded motor carrier reporting requirements to include reporting of all operators who test positive and/or refuse to submit to a test as prescribed in the regulation. The new regulation also expandsexpanded rules relating to the obligation of motor carriers to conduct queries to check if current or prospective operators are prohibited from operating a commercial motor vehicle due to a positive or unresolved drug or alcohol test. The expanded reporting of positive results, or of an operator’s refusal to meet FMCSA testing requirements, to a centralized clearinghouse prescribed by FMCSA has the potential to remove operators from service that may otherwise have been undetected or unreported.
In addition, in December 2010, the FMCSA introduced the Compliance Safety Accountability (“CSA”) motor carrier oversight program. The Company believes the intent of this program is to improve regulatory oversight of motor carriers and commercial drivers using a safety measurement system methodology that is fundamentally different from the methodology that the
Regulations focused on diesel emissions and other air quality matters.
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responsible for implementing those standards within its borders. Specifically, each state must adopt, and submit for the EPA’s approval, a state implementation plan (“SIP”) that provides for the implementation, maintenance, and enforcement of the NAAQS. In connection with its efforts to comply with the NAAQS, the California Air Resources Board (“CARB”) has implemented regulations that restrict the ability of certain tractors and trailers from operating in California and that impose emission standards on nearly all diesel-fueled trucks with gross vehicle weight ratings in excess of 14,000 lbs. that operate in California. Moreover, these emission standards are scheduled tohave become increasingly stringent such that byover time. As of January 1, 2023, nearly all diesel-fueled trucks with gross vehicle weight ratings in excess of 14,000 lbs. that operate in California will beare required to have a 2010 or newer model year engine. In 2012, the EPA formally approved certain CARB regulations as part of California’s SIP, including CARB’s “Regulation to Reduce Emissions of Diesel Particulate Matter, Oxides of Nitrogen and Other Criteria Pollutants from
General Risk Factors
Potential changes in taxes.
On August 16, 2022, the Inflation Reduction Act was signed into law by President Biden. The Inflation Reduction Act establishes a one percent excise tax on stock repurchases made by publicly traded U.S. corporations. This provision is effective for tax years beginning after December 31, 2022. The excise tax could have an adverse effect on the Company’s cash flows.
Intellectual property.
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| Item 1B. | Unresolved Staff Comments |
None.
| Item 2. | Properties |
The Company owns or leases various properties in the U.S., Canada and Mexico for the Company’s operations and administrative staff that support its independent commission sales agents, BCO Independent Contractors and other third party capacity providers. The transportation logistics segment’s primary facilities are located in Jacksonville, Florida and Rockford, Illinois. In addition, the Company’s corporate headquarters are located in Jacksonville, Florida. The Company also maintains a key freight staging and transload facility in Laredo, Texas. The Jacksonville, Florida, Rockford, Illinois and Laredo, Texas facilities are owned by the Company. The Company also maintains a network of owned and leased field operations centers in the United States and Canada in support of the ongoing recruitment and retention of its BCO Independent Contractors. Management believes that Landstar’s owned and leased properties are adequate for its current needs and that leased properties can be retained or replaced at an acceptable cost.
| Item 3. | Legal Proceedings |
See Item 7, “
| Item 4. | Mine Safety Disclosures |
Not applicable.
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PART II
Item 5.
The Common Stock of the Company is listed and traded on the NASDAQ Global Select Market under the symbol “LSTR.”
The reported last sale price per share of the Common Stock as reported on the NASDAQ Global Select Market on January 22, 202127, 2023 was $152.37$172.65 per share. As of such date, Landstar had 38,386,76835,928,383 shares of Common Stock outstanding and had 113131 stockholders of record of its Common Stock. However, the Company estimates that it has a significantly greater number of stockholders because a substantial number of the Company’s shares are held by brokers or dealers for their customers in street name.
Purchases of Equity Securities by the Company
The Company did not purchase any shares of its Common Stock during the period from September 27, 202025, 2022 to December 26, 2020,31, 2022, the Company’s fourth fiscal quarter.
On December 9, 2019,7, 2021, the Landstar System, Inc. Board of Directors authorized the Company to purchase up to 1,849,0681,912,824 shares of the Company’s Common Stock from time to time in the open market and in privately negotiated transactions. On December 6, 2022, the Landstar System, Inc. Board of Directors authorized the Company to purchase up to 1,900,826 additional shares of the Company’s Common Stock from time to time in the open market and in privately negotiated transactions. As of December 26, 2020,31, 2022, the Company had authorization to purchase in the aggregate up to 1,821,0303,000,000 shares of its Common Stock under this program.these programs. No specific expiration date has been assigned to the December 9, 2019 authorization.
Equity Compensation Plan Information
The Company maintains a stock compensation plan for members of its Board of Directors, the 2022 Directors Stock Compensation Plan (the “2022 DSCP”), and twoan employee equity incentive plans.plan, the 2011 Equity Incentive Plan (the “2011 EIP”). The following table presents information related to securities authorized for issuance under these plans at December 26, 2020:
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity Compensation Plans Approved by Security Holders | 17,650 | $ | 54.16 | 3,732,872 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | 0 | 0 | 0 | |||||||||
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity Compensation Plans Approved by Security Holders | 1,900 | $ | 56.40 | 3,435,525 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | 0 | 0 | 0 | |||||||||
Under the 2011 Equity Incentive Plan (the “2011 EIP”),EIP, the issuance of (i) a
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Financial Model Shareholder Returns
The following graph illustrates the return that would have been realized, assuming reinvestment of dividends, by an investor who invested $100 in each of the Company’s Common Stock, the Standard and Poor’s 500 Stock Index and the Dow Jones Transportation Stock Index for the period commencing December 26, 201530, 2017 through December 26, 2020.31, 2022.
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Item 6.
Item 7.
Forward-Looking Statements
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this document that are not based on historical facts are “forward-looking statements.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form
Introduction
Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc. (collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), is a worldwide, technology-enabled, asset-light provider of integrated transportation management solutions.solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third party capacity providers and employees. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world. The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of over 1,100 independent commission sales agents and approximately 79,000over 108,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company. The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.
Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport customers’ freight. Landstar’s independent commission sales agents enter into contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers. The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the “BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under
The transportation logistics segment provides a wide range of integrated transportation management solutions. Transportation services are provided by Landstar’s “Operating Subsidiaries”: Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., Landstar Metro, S.A.P.I. de C.V., and as further described below, Landstar Metro, Landstar Servicios and Landstar Blue.Blue, LLC. Transportation services offered by the Company include truckload, less-than-truckload and less-than-truckloadother truck transportation, rail intermodal, air cargo, ocean cargo, expedited
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expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage. Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment. In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers. Each of theThe independent commission sales agents has the opportunity to market all of the services provided by the transportation logistics segment. Billings for freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue. During fiscal year 2020,2022, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 45%35%, 47%54% and 3%2%, respectively, of the Company’s consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 3%8% of the Company’s consolidated revenue during fiscal year 2020.
On May 6, 2020, the Company formed a new subsidiary that was subsequently renamed Landstar Blue, LLC (“Landstar Blue”). Landstar Blue arranges truckload brokerage services while helpingwith a focus on the contract services market. Landstar Blue also helps the Company to develop and test digital technologies and processes for the benefit of all Landstar independent commission sales agents. On June 15, 2020, Landstar Blue completed the acquisition of an independent agent of the Company whose business focused on truckload brokerage services. The results of operations from Landstar Blue are presented as part of the Company’s transportationstransportation logistics segment. Revenue from Landstar Blue represented less thanapproximately 1% of the Company’s transportation logistics segment revenue during fiscal year 2020.
The insurance segment is comprised of Signature Insurance Company (“Signature”), a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc. The insurance segment provides risk and claims management services to certain of Landstar’s Operating Subsidiaries. In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s Operating Subsidiaries. Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk is ultimately borne by Signature. Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for fiscal year 2020.
Changes in Financial Condition and Results of Operations
Management believes the Company’s success principally depends on its ability to generate freight through its network of independent commission sales agents and to deliver freight safely and efficiently deliver that freight utilizing third party capacity providers. Management believes the most significant factors to the Company’s success include increasing revenue, sourcing capacity, empowering its network through technology-based tools and controlling costs, including insurance and claims.
Revenue
While customer demand, which is subject to overall economic conditions, ultimately drives increases or decreases in revenue, the Company primarily relies on its independent commission sales agents to establish customer relationships and generate revenue opportunities. Management’s emphasis with respect to revenue growth is on revenue generated by independent commission sales agents who on an annual basis generate $1 million or more of Landstar revenue. Management believes future revenue growth is primarily dependent on its ability to increase both the revenue generated by Million Dollar Agents and the number of Million Dollar Agents through a combination of recruiting new agents, increasing the revenue opportunities generated by existing independent commission sales agents and providing its independent commission sales agents with digital technologies they may use to grow revenue and increase efficiencies at their businesses. The following table shows the number of Million Dollar Agents, the average revenue generated by these agents and the percent of consolidated revenue generated by these agents during the past three fiscal years:
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Number of Million Dollar Agents | 508 | 555 | 608 | |||||||||
Average revenue generated per Million Dollar Agent | $ | 7,489,000 | $ | 6,880,000 | $ | 7,150,000 | ||||||
Percent of consolidated revenue generated by Million Dollar Agents | 92 | % | 93 | % | 94 | % | ||||||
| Fiscal Years | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
Number of Million Dollar Agents | 625 | 593 | 508 | |||||||||
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Average revenue generated per Million Dollar Agent | $ | 11,499,000 | $ | 10,371,000 | $ | 7,489,000 | ||||||
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Percent of consolidated revenue generated by Million Dollar Agents | 97 | % | 94 | % | 92 | % | ||||||
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The change in the number of Million Dollar Agents on a year-over-year basis is influenced by many factors and is not solely the result of terminations of contractual relationships between agents and the Company, whether such terminations are initiated by the agent or the Company. Such other factors include consolidations among agencies or transactions in connection with ownership changes often due to retirement planning, estate planning or similar transitional issues.matters. The change in the number of Million Dollar
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Agents on a year-over-year basis may also be affected by agents that remain with the Company yet experienced lower year-over-year revenue that resulted in such agent moving below the Million Dollar Agent category. Revenue from accounts formerly handled by terminated Million Dollar Agents is often retained by the Company as the customer may choose to transfer its account to an existing Landstar agent.
In fiscal year 2020,2022, the change in the number of Million Dollar Agents was entirely attributable to new agents generating under $5 million of Landstar revenue perand existing agents who were not formerly Million Dollar Agents. Included among the Company’s Million Dollar Agents in the 2022 fiscal year, as the Company experienced nohad 133 independent sales agencies that generated at least $10 million in Landstar revenue. In fiscal year 2021, the change in the number of Million Dollar Agents was attributable to growth in existing agents who were former Million Dollar Agents whose businesses were temporarily impacted in fiscal year 2020 compared toby the COVID-19 pandemic as well as new agents and existing agents who were not formerly Million Dollar Agents. Included among the Company’s Million Dollar Agents in the 2021 fiscal year, 2019 in the number ofCompany had 115 independent sales agents generating $5agencies that generated at least $10 million or more ofin Landstar revenue. During fiscal year 2020, the
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Management monitors business activity by tracking the number of loads (volume) and revenue per load by mode of transportation. Revenue per load can be influenced by many factors other than a change in price. Those factors include the average length of haul, freight type, special handling and equipment requirements, fuel costs and delivery time requirements. For shipments involving two or more modes of transportation, revenue is generally classified by the mode of transportation having the highest cost for the load. The following table summarizes this information by trailer type for truck transportation and by mode for all others for the past three fiscal years:
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue generated through (in thousands) : | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 2,515,940 | $ | 2,371,188 | $ | 2,791,494 | ||||||
Unsided/platform equipment | 1,202,295 | 1,295,817 | 1,386,387 | |||||||||
Less-than-truckload | 97,546 | 98,324 | 102,531 | |||||||||
Total truck transportation | 3,815,781 | 3,765,329 | 4,280,412 | |||||||||
Rail intermodal | 114,313 | 118,305 | 128,976 | |||||||||
Ocean and air cargo carriers | 132,180 | 121,485 | 134,577 | |||||||||
Other (1) | 70,707 | 79,458 | 71,179 | |||||||||
| $ | 4,132,981 | $ | 4,084,577 | $ | 4,615,144 | |||||||
Revenue on loads hauled via BCO Independent Contractors included in total truck transportation | $ | 1,866,526 | $ | 1,831,752 | $ | 2,001,665 | ||||||
Number of loads : | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | 1,318,768 | 1,337,089 | 1,398,388 | |||||||||
Unsided/platform equipment | 487,348 | 513,579 | 516,613 | |||||||||
Less-than-truckload | 163,024 | 155,592 | 145,269 | |||||||||
Total truck transportation | 1,969,140 | 2,006,260 | 2,060,270 | |||||||||
Rail intermodal | 46,280 | 47,590 | 53,030 | |||||||||
Ocean and air cargo carriers | 31,900 | 30,110 | 28,970 | |||||||||
| 2,047,320 | 2,083,960 | 2,142,270 | ||||||||||
Loads hauled via BCO Independent Contractors included in total truck transportation | 945,210 | 954,990 | 949,330 | |||||||||
Revenue per load : | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 1,908 | $ | 1,773 | $ | 1,996 | ||||||
Unsided/platform equipment | 2,467 | 2,523 | 2,684 | |||||||||
Less-than-truckload | 598 | 632 | 706 | |||||||||
Total truck transportation | 1,938 | 1,877 | 2,078 | |||||||||
Rail intermodal | 2,470 | 2,486 | 2,432 | |||||||||
Ocean and air cargo carriers | 4,144 | 4,035 | 4,645 | |||||||||
Revenue per load on loads hauled via BCO Independent Contractors | $ | 1,975 | $ | 1,918 | $ | 2,109 | ||||||
Revenue by capacity type (as a % of total revenue) : | ||||||||||||
Truck capacity providers: | ||||||||||||
BCO Independent Contractors | 45 | % | 45 | % | 43 | % | ||||||
Truck Brokerage Carriers | 47 | % | 47 | % | 49 | % | ||||||
Rail intermodal | 3 | % | 3 | % | 3 | % | ||||||
Ocean and air cargo carriers | 3 | % | 3 | % | 3 | % | ||||||
Other | 2 | % | 2 | % | 2 | % | ||||||
| Fiscal Years | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
Revenue generated through (in thousands): | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 3,892,085 | $ | 3,525,830 | $ | 2,192,254 | ||||||
Unsided/platform equipment | 1,760,357 | 1,549,037 | 1,119,272 | |||||||||
Less-than-truckload | 142,438 | 117,505 | 97,546 | |||||||||
Other truck transportation (1) | 835,959 | 770,846 | 406,709 | |||||||||
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Total truck transportation | 6,630,839 | 5,963,218 | 3,815,781 | |||||||||
Rail intermodal | 145,017 | 159,974 | 114,313 | |||||||||
Ocean and air cargo carriers | 558,986 | 327,160 | 132,180 | |||||||||
Other (2) | 101,720 | 87,216 | 70,707 | |||||||||
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| $ | 7,436,562 | $ | 6,537,568 | $ | 4,132,981 | |||||||
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Revenue on loads hauled via BCO Independent Contractors included in total truck transportation | $ | 2,636,036 | $ | 2,612,188 | $ | 1,866,526 | ||||||
Number of loads: | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | 1,496,247 | 1,422,734 | 1,141,261 | |||||||||
Unsided/platform equipment | 558,530 | 521,891 | 458,550 | |||||||||
Less-than-truckload | 191,233 | 183,975 | 163,024 | |||||||||
Other truck transportation (1) | 320,790 | 300,710 | 206,305 | |||||||||
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Total truck transportation | 2,566,800 | 2,429,310 | 1,969,140 | |||||||||
Rail intermodal | 40,710 | 52,310 | 46,280 | |||||||||
Ocean and air cargo carriers | 41,850 | 41,450 | 31,900 | |||||||||
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| 2,649,360 | 2,523,070 | 2,047,320 | ||||||||||
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Loads hauled via BCO Independent Contractors included in total truck transportation | 1,027,480 | 1,039,630 | 945,210 | |||||||||
Revenue per load: | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 2,601 | $ | 2,478 | $ | 1,921 | ||||||
Unsided/platform equipment | 3,152 | 2,968 | 2,441 | |||||||||
Less-than-truckload | 745 | 639 | 598 | |||||||||
Other truck transportation (1) | 2,606 | 2,563 | 1,971 | |||||||||
Total truck transportation | 2,583 | 2,455 | 1,938 | |||||||||
Rail intermodal | 3,562 | 3,058 | 2,470 | |||||||||
Ocean and air cargo carriers | 13,357 | 7,893 | 4,144 | |||||||||
Revenue per load on loads hauled via BCO Independent Contractors | $ | 2,566 | $ | 2,513 | $ | 1,975 | ||||||
Revenue by capacity type (as a % of total revenue): | ||||||||||||
Truck capacity providers: | ||||||||||||
BCO Independent Contractors | 35 | % | 40 | % | 45 | % | ||||||
Truck Brokerage Carriers | 54 | % | 51 | % | 47 | % | ||||||
Rail intermodal | 2 | % | 2 | % | 3 | % | ||||||
Ocean and air cargo carriers | 8 | % | 5 | % | 3 | % | ||||||
Other | 1 | % | 1 | % | 2 | % | ||||||
| (1) | Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation logistics segment. Power-only refers to shipments where the Company furnishes a power unit and an operator but not trailing equipment, which is typically provided by the shipper or consignee. |
| (2) | Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro. |
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Expenses
Purchased transportation
Also critical to the Company’s success is its ability to secure capacity, particularly truck capacity, at rates that allow the Company to profitably transport customers’ freight. The following table summarizes the number of available truck capacity providers as of the end of the three most recent fiscal years:
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | ||||||||||
BCO Independent Contractors | 10,242 | 9,554 | 9,884 | |||||||||
Truck Brokerage Carriers: | ||||||||||||
Approved and active (1) | 46,053 | 39,497 | 41,069 | |||||||||
Other approved | 22,972 | 16,820 | 17,985 | |||||||||
| 69,025 | 56,317 | 59,054 | ||||||||||
Total available truck capacity providers | 79,267 | 65,871 | 68,938 | |||||||||
Trucks provided by BCO Independent Contractors | 10,991 | 10,243 | 10,599 | |||||||||
| Dec. 31, 2022 | Dec. 25, 2021 | Dec. 26, 2020 | ||||||||||
BCO Independent Contractors | 10,393 | 11,057 | 10,242 | |||||||||
Truck Brokerage Carriers: | ||||||||||||
Approved and active (1) | 66,745 | 64,476 | 46,053 | |||||||||
Other approved | 30,999 | 25,870 | 22,972 | |||||||||
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| 97,744 | 90,346 | 69,025 | ||||||||||
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Total available truck capacity providers | 108,137 | 101,403 | 79,267 | |||||||||
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Trucks provided by BCO Independent Contractors | 11,281 | 11,864 | 10,991 | |||||||||
| (1) | Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal year end. |
Purchased transportation represents the amount a BCO Independent Contractor or other third party capacity provider is paid to haul freight. The amount of purchased transportation paid to a BCO Independent Contractor is primarily based on a contractually agreed-upon percentage of revenue generated by loads hauled by the BCO Independent Contractor. Purchased transportation paid to a Truck Brokerage Carrier is based on either a negotiated rate for each load hauled or, to a lesser extent, a contractually agreed-upon fixed rate per load. Purchased transportation paid to railroads and ocean cargo carriers is based on either a negotiated rate for each load hauled or a contractually agreed-upon fixed rate per load. Purchased transportation paid to air cargo carriers is generally based on a negotiated rate for each load hauled and purchased transportation paid to ocean cargo carriers is generally based on contractually agreed-upon fixed rates per load.hauled. Purchased transportation as a percentage of revenue for truck brokerage, rail intermodal and ocean cargo services is normally higher than that of BCO Independent Contractor and air cargo services. Purchased transportation is the largest component of costs and expenses and, on a consolidated basis, increases or decreases as a percentage of consolidated revenue in proportion to changes in the percentage of consolidated revenue generated through BCO Independent Contractors and other third party capacity providers and external revenue from the insurance segment, consisting of reinsurance premiums. Purchased transportation as a percent of revenue also increases or decreases in relation to the availability of truck brokerage capacity and with changes in the price of fuel on revenue generated from shipments hauled by Truck Brokerage Carriers. The Company passes 100% of fuel surcharges billed to customers for freight hauled by BCO Independent Contractors to its BCO Independent Contractors. These fuel surcharges are excluded from revenue and the cost of purchased transportation. Purchased transportation costs are recognized over the freight transit period as the performance obligation to the customer is completed.
Commissions to agents
Commissions to agents are based on contractually agreed-upon percentages of (i) revenue, or net revenue, defined as(ii) revenue less the cost of purchased transportation, or net(iii) revenue less a contractually agreed upon percentage of revenue retained by Landstar.Landstar and the cost of purchased transportation (the “retention contracts”). Commissions to agents as a percentage of consolidated revenue will vary directly with fluctuations in the percentage of consolidated revenue generated by the various modes of transportation and reinsurance premiums and, in general, vary inversely with changes in net revenue margin, definedthe amount of purchased transportation as net revenue divided bya percentage of revenue on services provided by Truck Brokerage Carriers, railroads, air cargo carriers and ocean cargo carriers. Commissions to agents are recognized over the freight transit period as the performance obligation to the customer is completed.
Other operating costs, net of purchased transportation and commissions to agents. Gross profit divided by revenue is referred to as gross profit margin. The Company’s operating margin is defined as operating income divided by gross profit.
Maintenance costs for Company-provided trailing equipment and BCO Independent Contractor recruiting and qualification costs are the largest components of other operating costs. Also included in other operating costs are trailer rental costs, the provision for uncollectible advances and other receivables due from BCO Independent Contractors and independent commission sales agents and gains/losses, if any, on sales of Company-owned trailing equipment.
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Insurance and claims
With respect to insurance and claims cost, potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable.
For periods prior to May 1, 2019, Landstar retains liability for commercial trucking claims up to $5 million per occurrence and maintains various third party insurance arrangements for liabilities in excess of its $5 million self-insured retention. Effective May 1, 2019, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5,000,000$5 million and $10,000,000$10 million (the “Initial Excess Policy”) with a third party insurance company. The Company subsequently extended the Initial Excess Policy for one additional policy year, from May 1, 2022 through April 30, 2023. For commercial trucking claims incurred on or after May 1, 20192022 through April 30, 2022,2023, the extended Initial Excess Policy provides for a limit for a single loss of $5,000,000,$5 million, with ana remaining aggregate limit of $15,000,000$10 million for eachthe policy year, an aggregate limit of $20,000,000 for the
The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10,000,000.$10 million. These third party arrangements provide coverage on a per occurrence or aggregated basis. In recent years, there has been a significant increase in the occurrence of trials in courts throughout the United States involving catastrophic injury and fatality claims against commercial motor carriers that have resulted in verdicts in excess of $10 million. Within the transportation logistics industry, these verdicts are often referred to as “Nuclear Verdicts.” The increase in Nuclear Verdicts has had a significant impact on the cost of commercial auto liability claims throughout the United States. Due to the increasing cost of commercial auto liability claims, throughout the United States in recent years, the availability of such excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased. Effective May 1, 2020Over the most recent three-year period, with respect to the annual policy year ending April 30, 2021,2023, as compared to the annual policy year ended April 30, 2020, the Company experienced an increase of approximately $14$20 million, or over 170%360%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10,000,000.$10 million.
Moreover, in recent years the Company has increased the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage. For example, with respect to a hypothetical claim in the amount of $35 million incurred during the annual policy year ending April 30, 2023, the Company would have an aggregate financial exposure of approximately $10 million. Furthermore, the Company’s third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure. No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels.
Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim. In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims. The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.
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Selling, general and administrative
During the 20202022 fiscal year, employee compensation and benefits accounted for approximately
Depreciation and amortization
Depreciation and amortization primarily relate to depreciation of trailing equipment and information technology hardware and software.
The following table sets forthCompany incurs costs of revenue related to the percentage relationshiptransportation of freight and, to a much lesser extent, to reinsurance premiums received by Signature. Costs of revenue include variable costs of revenue and other costs of revenue. Variable costs of revenue include purchased transportation and commissions to agents, both being directas these costs are entirely variable on a shipment-by-shipment basis. Other costs of revenue include fixed costs of revenue and semi-variable costs of revenue, where such costs may vary over time based on certain economic factors or operational metrics such as the number of Company-controlled trailers, the number of BCO Independent Contractors, the frequency and severity of insurance claims, the number of miles traveled by BCO Independent Contractors, or the number and/or scale of information technology projects in process or in-service to support revenue generating activities, rather than on a shipment-by-shipment basis. Other costs of revenue associated with the transportation of freight include: (i) other operating costs, primarily consisting of trailer maintenance and BCO Independent Contractor recruiting and qualification costs, as reported in the Company’s Consolidated Statements of Income, (ii) transportation-related insurance premiums paid and claim costs incurred, included as a portion of insurance and claims in the Company’s Consolidated Statements of Income, (iii) costs incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support our independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income; and (iv) depreciation on Company-owned trailing equipment, included as a portion of depreciation and amortization in the Company’s Consolidated Statements of Income. Other costs of revenue associated with reinsurance premiums received by Signature are comprised of broker commissions and other fees paid related to the administration of insurance programs to BCO Independent Contractors and are included in selling, general and administrative in the Company’s Consolidated Statements of Income. In addition to costs of revenue, the Company incurs various other costs relating to its business, including most selling, general and administrative costs and portions of costs attributable to insurance and claims and depreciation and amortization. Management continually monitors all components of the costs incurred by the Company and establishes annual cost budgets that, in general, are used to benchmark costs incurred on a monthly basis.
Gross Profit, Variable Contribution, Gross Profit Margin and Variable Contribution Margin
The following table sets forth calculations of gross profit, defined as revenue less costs of revenue, and gross profit margin defined as gross profit divided by revenue, for the periods indicated. The Company refers to revenue less variable costs of revenue as “variable contribution” and indirectvariable contribution divided by revenue as “variable contribution margin”. Variable contribution and variable contribution margin are each non-GAAP financial measures. The closest comparable GAAP financial measures to variable contribution and variable contribution margin are, respectively, gross profit and gross profit margin. The Company believes variable contribution and variable contribution margin are useful measures of the variable costs that we incur at a shipment-by-shipment level attributable to our transportation network of third-party capacity providers and independent commission sales agents in order to provide services to our customers. The Company believes variable contribution and variable contribution margin are important performance measurements and management considers variable contribution and variable contribution margin in evaluating the Company’s financial performance and in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs.
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The reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin are each presented below:
| Fiscal Year | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
Revenue | $ | 7,436,562 | $ | 6,537,568 | $ | 4,132,981 | ||||||
Costs of revenue: | ||||||||||||
Purchased transportation | 5,804,017 | 5,114,667 | 3,192,850 | |||||||||
Commissions to agents | 614,865 | 507,209 | 340,780 | |||||||||
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Variable costs of revenue | 6,418,882 | 5,621,876 | 3,533,630 | |||||||||
Trailing equipment depreciation | 36,653 | 35,204 | 34,892 | |||||||||
Information technology costs | 19,834 | 13,560 | 9,791 | |||||||||
Insurance-related costs (1) | 127,605 | 109,387 | 90,778 | |||||||||
Other operating costs | 45,192 | 36,531 | 30,463 | |||||||||
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Other costs of revenue | 229,284 | 194,682 | 165,924 | |||||||||
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Total costs of revenue | 6,648,166 | 5,816,558 | 3,699,554 | |||||||||
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Gross profit | $ | 788,396 | $ | 721,010 | $ | 433,427 | ||||||
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Gross profit margin | 10.6 | % | 11.0 | % | 10.5 | % | ||||||
Plus: other costs of revenue | 229,284 | 194,682 | 165,924 | |||||||||
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Variable contribution | $ | 1,017,680 | $ | 915,692 | $ | 599,351 | ||||||
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Variable contribution margin | 13.7 | % | 14.0 | % | 14.5 | % | ||||||
| (1) | Insurance-related costs in the table above include (i) other costs of revenue related to the transportation of freight that are included as a portion of insurance and claims in the Company’s Consolidated Statements of Income and (ii) certain other costs of revenue related to reinsurance premiums received by Signature that are included as a portion of selling, general and administrative in the Company’s Consolidated Statements of Income. Insurance and claims costs included in other costs of revenue relating to the transportation of freight primarily consist of insurance premiums paid for commercial auto liability, general liability, cargo and other lines of coverage related to the transportation of freight and the related cost of claims incurred under those programs, and, to a lesser extent, the cost of claims incurred under insurance programs available to BCO Independent Contractors that are reinsured by Signature. Other insurance and claims costs included in costs of revenue that are included in selling, general and administrative in the Company’s Consolidated Statements of Income consist of brokerage commissions and other fees incurred by Signature relating to the administration of insurance programs available to BCO Independent Contractors that are reinsured by Signature. |
In general, variable contribution margin on revenue generated by BCO Independent Contractors represents a fixed percentage due to the nature of the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. For revenue generated by Truck Brokerage Carriers, variable contribution margin may be either a fixed or variable percentage, depending on the contract with each individual independent commission sales agent. Variable contribution margin on revenue generated from shipments hauled by railroads, air cargo carriers, ocean cargo carriers and Truck Brokerage Carriers, other than those under retention contracts, is variable in nature, as the Company’s contracts with independent commission sales agents provide commissions to agents at a contractually agreed upon percentage of the amount represented by revenue less purchased transportation for these types of shipments. Approximately 40% of the Company’s consolidated revenue in fiscal year 2022 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 60% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.
Operating income as a percentage of gross profit for the periods indicated:
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Purchased transportation | 77.3 | 76.6 | 77.4 | |||||||||
Commissions to agents | 8.2 | 8.4 | 8.2 | |||||||||
Gross profit margin | 14.5 | % | 15.1 | % | 14.5 | % | ||||||
Gross profit | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Investment income | 0.6 | 0.8 | 0.6 | |||||||||
Indirect costs and expenses: | ||||||||||||
Other operating costs, net of gains on asset sales/dispositions | 5.1 | 6.1 | 4.8 | |||||||||
Insurance and claims | 14.6 | 13.1 | 11.3 | |||||||||
Selling, general and administrative | 28.0 | 25.9 | 28.2 | |||||||||
Depreciation and amortization | 7.7 | 7.2 | 6.5 | |||||||||
Impairment of intangible and other assets | 0.4 | — | — | |||||||||
Commission program termination costs | 2.6 | — | — | |||||||||
Total costs and expenses | 58.4 | 52.2 | 50.9 | |||||||||
Operating margin | 42.2 | % | 48.6 | % | 49.7 | % | ||||||
The following table presents operating income as a percentage of gross profit and operating income as a percentage of variable contribution. The Company’s operating income as a percentage of variable contribution is a non-GAAP financial measure calculated as operating income divided by variable contribution. The Company believes that operating income as a percentage of variable contribution is useful and meaningful to investors for the following principal reasons: (1)(i) the variable costs of revenue for a significant portion of the business are highly influenced by short-term market-based trends in the freight transportation industry, whereas other costs, including other costs of revenue, are much less impacted by short-term freight market trends; (ii) disclosure of these relative measures (i.e., each indirect operating cost line item as a percentage of gross profit)this measure allows investors to better understand the underlying trends in the Company’s results of operations; (2) due to the generally fixed nature of these indirect costs (other than insurance and claims costs), these relative measures are(iii) this measure is meaningful to
29
investors’ evaluations of the Company’s management of its indirect costs attributable to operations; (3)operations other than the purely variable costs associated with purchased transportation and commissions to agents that the Company incurs to provide services to our customers; and (iv) management considers this financial information in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs;costs.
| Fiscal Year | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
Gross profit | $ | 788,396 | $ | 721,010 | $ | 433,427 | ||||||
Operating income | $ | 571,083 | $ | 505,668 | $ | 252,950 | ||||||
Operating income as % of gross profit | 72.4 | % | 70.1 | % | 58.4 | % | ||||||
Variable contribution | $ | 1,017,680 | $ | 915,692 | $ | 599,351 | ||||||
Operating income | $ | 571,083 | $ | 505,668 | $ | 252,950 | ||||||
Operating income as % of variable contribution | 56.1 | % | 55.2 | % | 42.2 | % | ||||||
The increases in operating income as a percentage of gross profit from fiscal year 2021 to fiscal year 2022 and (4) this information facilitates comparisons by investorsfrom fiscal year 2020 to fiscal year 2021 each resulted from operating income increasing at a more rapid percentage rate than the increase in gross profit, as the Company was able to scale our fixed cost infrastructure, primarily certain components of selling, general and administrative costs, across a larger gross profit base.
The increases in operating income as a percentage of variable contribution from fiscal year 2021 to fiscal year 2022 and fiscal year 2020 to fiscal year 2021 each resulted from operating income increasing at a more rapid percentage rate than the Company’s resultsincrease in variable contribution, as the Company was able to the resultsscale our fixed cost infrastructure, primarily certain components of other
Also, as previously mentioned, the Company reports two operating segments: the transportation logistics segment and the insurance segment. External revenue at the insurance segment, representing reinsurance premiums, has historically been relatively consistent on an annual basis at 2% or less of consolidated revenue and generally corresponds directly with the number of trucks provided by BCO Independent Contractors. The discussion of indirect cost line items in Management’s Discussion and Analysis of Financial Condition and Results of Operations considers the Company’s costs on a consolidated basis rather than on a segment basis. Management believes this presentation format is the most appropriate to assist users of the financial statements in understanding the Company’s business for the following reasons: (1) the insurance segment has no other operating costs; (2) discussion of insurance and claims at either segment without reference to the other may create confusion amongst investors and potential investors due to intercompany arrangements and specific deductible programs that affect comparability of financial results by segment between various fiscal periods but that have no effect on the Company from a consolidated reporting perspective; (3) selling, general and administrative costs of the insurance segment comprise less than 10% of consolidated selling, general and administrative costs and have historically been relatively consistent on a year-over-year basis; and (4) the insurance segment has no depreciation and amortization.
Fiscal Year Ended December��26, 2020December 31, 2022 Compared to Fiscal Year Ended December 28, 2019
Revenue for fiscal year 20202022 was $4,132,981,000,$7,436,562,000, an increase of $48,404,000,$898,994,000, or 1%14%, compared to fiscal year 2019.2021. Transportation revenue increased $48,183,000,$892,297,000, or 1%14%. The increase in transportation revenue was attributable to an increased revenue per load of approximately 3%, partially offset by a decreased8% and an increased number of loads hauled of approximately 2% in fiscal year 20205% compared to fiscal year 2019.2021. During the Company’s 2022 fiscal year, demand for the Company’s truck transportation services was at all-time high levels during the 2022 first quarter, as supply chains exhibited significant disruption. The macroeconomic environment subsequently began to slow and supply chain congestion began to ease as year-over-year revenue growth decelerated during the 2022 second and third quarters as compared to the 2021 second and third quarters before turning negative in the 2022 fourth quarter as compared to the 2021 fourth quarter. Reinsurance premiums were $56,462,000$78,554,000 and $56,241,000$71,857,000 for fiscal years 20202022 and 2019,2021, respectively. The increase in revenue from reinsurance premiums was primarily attributable to (i) an increase in the aggregate value of equipment insured by BCO Independent Contractors under a physical damage program reinsured by Signature; (ii) participation levels among BCO Independent
30
Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for fiscal year 20202022 was $3,815,781,000,$6,630,839,000, representing 92%89% of total revenue, an increase of $50,452,000,$667,621,000, or 1%11%, compared to fiscal year 2019. Revenue2021. The number of loads hauled by third party truck capacity providers increased approximately 6% in fiscal year 2022 compared to fiscal year 2021, and revenue per load on loads hauled by third party truck capacity providers increased approximately 3% in fiscal year 20205% compared to fiscal year 2019, while2021.
The increase in the number of loads hauled by third partyvia truck capacity providers decreased approximately 2% in fiscal year 2020 compared to fiscal year 2019.
The increase in revenue per load on loads hauled via truck was entirely due to a comparatively tighter market for van truckloadtight truck capacity environment experienced during fiscal year 2022, in particular during the second halffirst fiscal quarter of 2020. The decrease infiscal year 2022, and the numberimpact of higher diesel fuel costs on loads hauled via truckTruck Brokerage Carrier, partially offset by a decreased average length of haul during fiscal year 2022. As compared to fiscal year 2019 was due to the unfavorable impact of the
Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $60,118,000$211,770,000 and $79,486,000$107,776,000 in fiscal years 20202022 and 2019,2021, respectively. It should be noted that billings to many customers of the Company’s truck brokerage services include a single
Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for fiscal year 20202022 was $246,493,000,$704,003,000, or 6%9% of total revenue, an increase of $6,703,000,$216,869,000, or 3%45%, compared to fiscal year 2019.2021. Revenue per load on revenue generated by multimode capacity providers increased approximately 2%64% in fiscal year 2022 compared to fiscal year 2021, while the number of loads hauled by multimode capacity providers decreased approximately 12% over the same period. Revenue per load on loads hauled by multimode capacity providers increased for all modes. Revenue per load on loads hauled via air, ocean and rail intermodal increased 118%, 56% and 16%, respectively, during fiscal year 2022 as compared to fiscal year 2021. The increase in revenue per load on loads hauled via air cargo carriers and ocean cargo carriers, in particular, was primarily related to ongoing disruptions in domestic and global supply chains and strong consumer demand. Revenue per load on revenue generated by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity. The decrease in the number of loads hauled by multimode capacity providers was due to a 22% decrease in rail loadings and a 13% decrease in air loadings, partially offset by a 7% increase in ocean loadings. The 22% decrease in rail loadings was broad-based across several agencies and customers, and the 13% decrease in air loadings was entirely attributable to decreased loadings at one specific customer. The 7% increase in ocean loadings was due to a broad-based increase in demand across many customers for the Company’s ocean services.
Purchased transportation was 78.0% and 78.2% of revenue in fiscal years 2022 and 2021, respectively. The decrease in purchased transportation as a percentage of revenue was primarily due to a decreased rate of purchased transportation on revenue generated by Truck Brokerage Carriers, partially offset by (i) an increased percentage of revenue generated by Truck Brokerage Carriers, which
31
typically has a higher rate of purchased transportation than revenue generated by BCO Independent Contractors and (ii) an increased percentage of revenue generated by multimode capacity providers, which typically has a higher rate of purchased transportation than third party truck capacity providers. Commissions to agents were 8.3% and 7.8% of revenue in fiscal years 2022 and 2021, respectively. The increase in commissions to agents as a percentage of revenue was primarily attributable to a decreased cost of purchased transportation as a percentage of revenue on revenue generated by Truck Brokerage Carriers during fiscal year 2022.
Investment income was $3,162,000 and $2,857,000 in fiscal years 2022 and 2021, respectively. The increase in investment income was primarily attributable to higher average rates of return on investments during fiscal year 2022, partially offset by a lower average investment balance held by the insurance segment during fiscal year 2022.
Other operating costs increased $8,661,000 in fiscal year 2022 compared to fiscal year 2021. The increase in other operating costs compared to the prior year was primarily due to (i) increased trailing equipment maintenance costs as a result of (x) increased labor and parts costs charged by the Company’s network of third party trailer maintenance facilities; and (y) an increased average trailer fleet size during fiscal year 2022 and (ii) an increased provision for contractor bad debt, partially offset by increased gains on sales of operating property.
Insurance and claims increased $20,372,000 in fiscal year 2022 compared to fiscal year 2021. The increase in insurance and claims expense compared to the prior year was primarily due to increased severity of current year trucking claims during fiscal year 2022, increased insurance premiums, primarily for commercial auto and excess liability coverage, and increased net unfavorable development of prior years’ claims in the 2022 fiscal year. During fiscal years 2022 and 2021, insurance and claims costs included $11,331,000 and $9,708,000 of net unfavorable adjustments to prior years’ claims estimates, respectively.
Selling, general and administrative costs were essentially the same in fiscal year 2022 as compared to fiscal year 2021. In the 2022 fiscal year as compared to the 2021 fiscal year, the Company experienced increased wages, an increased provision for customer bad debt, increased travel and entertainment costs and the return of the Company’s annual agent convention held in April 2022. These increases were offset by decreased stock-based compensation expense and a decreased provision for incentive compensation. Included in selling, general and administrative costs was stock-based compensation expense of $12,399,000 and $27,537,000 for fiscal years 2022 and 2021, respectively, and incentive compensation expense of $16,507,000 and $29,361,000 for fiscal years 2022 and 2021, respectively.
Depreciation and amortization increased $7,844,000 in fiscal year 2022 compared to fiscal year 2021. The increase in depreciation and amortization expense was primarily due to increased depreciation on new and updated digital tools deployed for use by the Company’s network of agents, capacity providers and employees, and to a lesser extent, in connection with increased trailing equipment depreciation.
Interest and debt expense in fiscal year 2022 decreased $356,000 compared to fiscal year 2021. The decrease in interest and debt expense was primarily attributable to increased interest income earned on cash balances held by the transportation logistics segment, partially offset by increased average borrowings on the Company’s revolving credit facility during fiscal year 2022, as the Company had no borrowings under its revolving credit facility during the 2021 period, and increased interest expense related to finance lease obligations. The Company had no borrowings under its revolving credit facility as of the end of fiscal year 2022.
The provisions for income taxes for fiscal years 2022 and 2021 were based on estimated annual effective income tax rates of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The actual effective income tax rate for fiscal year 2022 was 24.1%, which was higher than the statutory federal income tax rate of 21%, primarily attributable to state taxes and nondeductible executive compensation, partially offset by excess tax benefits realized on stock-based awards. The actual effective income tax rate for fiscal year 2021 was 24.0%, higher than the statutory federal income tax rate of 21% primarily due to state taxes and nondeductible executive compensation, partially offset by excess tax benefits realized on stock-based awards. The actual effective income tax rate in fiscal year 2022 of 24.1% was lower than the estimated annual effective income tax rate of 24.5%, primarily due to excess tax benefits recognized on stock-based awards in fiscal year 2022. The actual effective income tax rate in fiscal year 2021 of 24.0% was lower than the 24.4% estimated annual effective income tax rate primarily due to excess tax benefits recognized on stock-based compensation arrangements in fiscal year 2021.
Net income was $430,914,000, or $11.76 per diluted share, in fiscal year 2022. Net income was $381,524,000, or $9.98 per diluted share, in fiscal year 2021.
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Fiscal Year Ended December 25, 2021 Compared to Fiscal Year Ended December 26, 2020
Revenue for fiscal year 2021 was $6,537,568,000, an increase of $2,404,587,000, or 58%, compared to fiscal year 2020. Transportation revenue increased $2,389,192,000, or 59%. The increase in transportation revenue was attributable to increased revenue per load of approximately 29% and an increased number of loads hauled of approximately 23% compared to fiscal year 2020. The significant increase in revenue in 2021 from 2020 was primarily related to two factors: (1) consumer demand for durable goods and e-commerce drove revenue during the 2021 period to record levels; and (2) ongoing supply chain disruptions in connection with the impact of the COVID-19 pandemic on the U.S. economy. In particular, the adverse impact of the COVID-19 pandemic on demand for the Company’s truck transportation services significantly accelerated during the last week of the Company’s 2020 first fiscal quarter. However, following the demand lows experienced by the Company in April and May 2020, demand for the Company’s truck transportation services sequentially increased throughout the remainder of the 2020 fiscal year and significantly accelerated in fiscal year 2021. This significant, rapid decrease in demand early in the pandemic was followed by a substantially longer and greater sequential increase in demand that was unprecedented in the history of the Company. Reinsurance premiums were $71,857,000 and $56,462,000 for fiscal years 2021 and 2020, respectively. The increase in revenue from reinsurance premiums was primarily attributable to increased premiums from a third party insurance company relating to unladen insurance provided to certain BCO Independent Contractors and an increase in the average number of trucks provided by BCO Independent Contractors in fiscal year 2021 compared to the 2019 fiscal year 2020.
Truck transportation revenue generated by third party truck capacity providers for fiscal year 2021 was $5,963,218,000, representing 91% of total revenue, an increase of $2,147,437,000, or 56%, compared to fiscal year 2020. Revenue per load on loads hauled by third party truck capacity providers increased approximately 27% compared to fiscal year 2020, and the number of loads hauled by third party truck capacity providers increased approximately 23% over the same period.
The increase in revenue per load on loads hauled via truck was primarily due to an extremely tight truck capacity environment experienced during fiscal year 2021. During fiscal year 2021, the demand for truck capacity, particularly with respect to van capacity, increased more rapidly than the supply of available truck capacity in the marketplace as the U.S. economy recovered from the impact of the COVID-19 pandemic coupled with the impact of domestic supply chain disruptions. Revenue per load on loads hauled via van equipment increased 29%, revenue per load on loads hauled via unsided/platform equipment increased 22%, revenue per load on less-than-truckload loadings increased 7% and revenue per load on loads hauled via other truck transportation increased 30% as compared to fiscal year 2020.
The increase in the number of loads hauled via truck compared to fiscal year 2020 was due to a broad-based increase in demand for the Company’s truck transportation services during fiscal year 2021, particularly those services provided via van equipment and other truck transportation loadings, primarily power-only, compared to fiscal year 2020. Loads hauled via van equipment increased 25%, loads hauled via unsided/platform equipment increased 14%, loads hauled via less-than-truckload increased 13% and loads hauled via other truck transportation increased 46% as compared to fiscal year 2020.
Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $107,776,000 and $60,118,000 in fiscal years 2021 and 2020, respectively. It should be noted that billings to many customers of the Company’s truck brokerage services include a single all-in rate that does not separately identify fuel surcharges on loads hauled via Truck Brokerage Carriers. Accordingly, the overall impact of changes in fuel prices on revenue and revenue per load on loads hauled via truck is likely to be greater than that indicated.
Transportation revenue generated by multimode capacity providers for fiscal year 2021 was $487,134,000, or 7% of total revenue, an increase of $240,641,000, or 98%, compared to fiscal year 2020. Revenue per load on revenue generated by multimode capacity providers increased approximately 65% in fiscal year 2021 compared to fiscal year 2020, and the number of loads hauled by multimode capacity providers increased approximately 1%20% over the same period. The increase in revenueRevenue per load of 2% on loads hauled by multimode capacity providers wasincreased for all modes, primarily attributabledue to increased revenuestrong U.S. and global economic recoveries coupled with the impact of global supply chain disruptions which were particularly acute with respect to international ocean and air freight. Revenue per load on loads hauled via ocean, shipments.air and rail intermodal increased 86%, 54% and 24%, respectively, during fiscal year 2021 as compared to fiscal year 2020. Revenue per load on revenue generated by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity. The increase in the number of loads hauled by multimode capacity providers was primarily due to a 14%broad-based increase in demand across many customers for the Company’s rail, air loadings, primarily attributable to increased loadings at two specific agencies.and ocean service offerings during fiscal year 2021.
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Purchased transportation was 77.3%78.2% and 76.6%77.3% of revenue in fiscal years 20202021 and 2019,2020, respectively. The increase in purchased transportation as a percentage of revenue was primarily due to an increased percentage of revenue contributed by Truck Brokerage Carriers, which typically has a higher rate of purchased transportation than revenue generated by BCO Independent Contractors, and an increased rate of purchased transportation on revenue generated by Truck Brokerage Carriers, partially offset by a decreased rate of purchased transportation paid on Truck Brokerage Carrier revenue generated by BCO Independent Contractors due to (i) an increased percentage of revenue generated by BCO Independent Contractors who use Landstar-owned trailers and
Investment income was $3,399,000$2,857,000 and $5,041,000$3,399,000 in fiscal years 20202021 and 2019,2020, respectively. The decrease in investment income was primarily attributable to lower average rates of return on investments during fiscal year 2020,2021, partially offset by a slightly higher average investment balance held by the insurance segment during fiscal year 2020.
Other operating costs decreased $6,811,000increased $6,068,000 in fiscal year 20202021 compared to fiscal year 2019 and represented 5.1% of gross profit in fiscal year 2020 compared to 6.1% in fiscal year 2019.2020. The decreaseincrease in other operating costs compared to the prior year was primarily due to aincreased trailing equipment maintenance costs, increased BCO recruiting and qualification costs, decreased provision for contractor bad debt,gains on sales of used trailing equipment, the impact of the cancellationresumption of an event for the Company’s BCO Independent Contractors due to the
Insurance and claims increased $7,454,000$17,690,000 in fiscal year 20202021 compared to fiscal year 2019 and represented 14.6% of gross profit in fiscal year 2020 compared to 13.1% in fiscal year 2019.2020. The increase in insurance and claims expense compared to the prior year was primarily due to an increase in insurance premiums, primarily for commercial trucking liability coverage, in fiscal year 2021, increased severity of current year trucking claims during the 2021 period and an increase in BCO miles traveled in fiscal year 2021, partially offset by a $5,000,000 charge for the Company’s self-insured retention with respect to a tragic vehicular accident involving a fatality during fiscal year 2020 and a $3,500,000 charge relating to additional premium the Company paidwas required to pay under the Initial Excess Policy in connection with certain aggregated losses increased insurance premiums incurred for commercial trucking liability coverage following the Company’s May 1, 2020 insurance renewal and increased severity of currentduring fiscal year claims, partially offset by decreased net unfavorable development of prior years’ claims in the 2020 period.2020. During fiscal years 20202021 and 2019,2020, insurance and claims costs included $9,196,000$9,708,000 and $16,679,000$9,196,000 of net unfavorable adjustments to prior years’ claims estimates, respectively. The increase in insurance and claims as a percentage of gross profit was caused by the increase in insurance and claims costs and the effect of decreased gross profit.
Selling, general and administrative costs increased $8,680,000$53,645,000 in fiscal year 20202021 compared to fiscal year 2019 and represented 28.0% of gross profit in fiscal year 2020 compared to 25.9% of gross profit in fiscal year 2019.2020. The increase in selling, general and administrative costs compared to prior year was attributable to increased stock-based compensation expense, an increased provision for incentive compensation and increased information technology costs and an increasedwages, partially offset by a decreased provision for customer bad debt, partially offset by decreased travel and entertainment costs related to the impact of the
Depreciation and amortization increased $1,387,000$3,754,000 in fiscal year 20202021 compared to fiscal year 2019 and represented 7.7% of gross profit in fiscal year 2020 compared to 7.2% of gross profit in fiscal year 2019.2020. The increase in depreciation and amortization expenses was primarily due to increased depreciation on information technology assets, partially offset by a decrease in trailing equipment depreciation. The increase in depreciation and amortization as a percentage of gross profit was due to increased depreciation and the effect of decreased gross profit.
During the 2020 second fiscal quarter, the Company recorded a
During the 2020 fourth fiscal quarter, the Company recorded commission program termination costs of $15,494,000 representing 2.6% of gross profit, related to buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a truck owner-operator recruitment and retention program formerly involving those agents.
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Interest and debt expense in fiscal year 20202021 increased $812,000$23,000 compared to fiscal year 2019. The increase in interest and debt expense was primarily attributable to decreased interest income earned on cash balances held by the transportation logistics segment.
The provisions for income taxes for both the 2020 and 2019 fiscal years 2021 and 2020 were based on estimated annual effective income tax rates of 24.4% and 24.2%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The increase in the estimated annual effective income tax rate was primarily attributable to an increased provision for nondeductible executive compensation during the 2021 period. The actual effective income tax rate for fiscal year 2021 was 24.0%, which was higher than the statutory federal income tax rate of 21% primarily attributable to state taxes and nondeductible executive compensation, partially offset by excess tax benefits realized on stock-based awards. The actual effective income tax rate for fiscal year 2020 was 22.8%, which was higher than the statutory federal income tax rate of 21%, primarily attributable to state taxes
Net income tax ratewas $381,524,000, or $9.98 per diluted share, in the 2019 fiscal year of 23.0% was lower than the 24.2% estimated effective income tax rate primarily due to excess tax benefits recognized on stock-based compensation arrangements in the 2019 fiscal year.
Capital Resources and Liquidity
Working capital and the ratio of current assets to current liabilities were $561,255,000 and 1.6 to 1, respectively, at December 31, 2022, compared with $512,917,000 and 1.5 to 1, respectively, at December 25, 2021, and $402,038,000 and 1.5 to 1, respectively, at December 26, 2020, compared with $444,984,000 and 1.8 to 1, respectively, at December 28, 2019, and $435,611,000 and 1.8 to 1, respectively, at December 29, 2018.2020. Landstar has historically operated with current ratios within the range of 1.5 to 1 to 2.0 to 1. Cash provided by operating activities was $210,717,000, $307,840,000,$622,659,000, $276,740,000, and $297,901,000$210,717,000 in fiscal years 2022, 2021 and 2020, 2019 and 2018, respectively. The decrease in cash flow provided by operating activities for fiscal year 2020 was primarily attributable to the increase in trade and other accounts receivable as of the end of the 2020 fiscal year as compared to as of the end of the 2019 fiscal year driven by the significant growth in revenue during the fourth fiscal quarter of 2020. The increase in cash flow provided by operating activities for fiscal year 20192022 was primarily attributable to favorable net working capital impacts in connection with the timing of collections of trade receivables.
The Company declared and paid $1.10 per share, or $40,284,000 in the aggregate, in cash dividends during fiscal year 2022. During fiscal year 2022, the Company also paid $75,387,000 of dividends payable which were declared during fiscal year 2021 and included in current liabilities in the consolidated balance sheet at December 25, 2021. In addition, on December 6, 2022, the Company announced that its Board of Directors declared a special cash dividend of $2.00 per share, or $71,854,000 in the aggregate, payable on January 20, 2023 to stockholders of record of its Common Stock as of January 6, 2023. Dividends payable of $71,854,000 related to this special dividend were included in current liabilities in the consolidated balance sheet at December 31, 2022. The Company declared and paid $0.92 per share, or $35,191,000 in the aggregate, in cash dividends during fiscal year 2021 and, during such period, also paid $76,770,000 of dividends payable which were declared during fiscal year 2020 and included in current liabilities in the consolidated balance sheet at December 26, 2020. The Company declared and paid $0.79 per share, or $30,557,000 in the aggregate, in cash dividends during fiscal year 2020 and, during such period, also paid $78,947,000 of dividends payable which were declared during fiscal year 2019 and included in current liabilities in the consolidated balance sheet at December 28, 2019. In addition, on December 8, 2020, the Company announced that its Board of Directors declared a special cash dividend of $2.00 per share, or $76,770,000 in the aggregate, payable on January 22, 2021 to stockholders of record of its Common Stock as of January 8, 2021. Dividends payable of $76,770,000 related to this special dividend were included in current liabilities in the consolidated balance sheet at December 26, 2020. The Company declared and paid $0.70 per share, or $27,891,000 in the aggregate, in cash dividends during fiscal year 2019. The Company declared and paid $0.63 per share, or $25,933,000 in the aggregate, in cash dividends during fiscal year 2018 and, during such period, also paid $62,985,000 of dividends payable which were declared during fiscal year 2017 and included in current liabilities in the consolidated balance sheet at December 30, 2017. Since paying its first cash dividend in August 2005, the Company has paid approximately $506,000,000$728,000,000 in cash dividends in the aggregate to its stockholders, inclusive of the $2.00 per share special dividend paid on January 22, 2021.
During fiscal year 2022, the Company purchased 1,900,826 shares of its Common Stock at a total cost of $285,983,000. During fiscal year 2021, the Company purchased 733,854 shares of its Common Stock at a total cost of $122,722,000. During fiscal year 2020, the Company purchased 1,178,970 shares of its Common Stock at a total cost of $115,962,000. During fiscal year 2019, the Company purchased 849,068 shares of its Common Stock at a total cost of $88,578,000. During fiscal year 2018, the Company purchased 2,000,000 shares of its Common Stock at a total cost of $208,087,000. The Company has used cash provided by operating activities to fund the purchases. Since January 1997, the Company has purchased approximately $1,791,000,000$2,200,000,000 of its Common Stock under programs authorized by the Board of Directors of the Company in open market and private block transactions. As of December 26, 2020,31, 2022, the Company may purchase in the aggregate up to 1,821,0303,000,000 shares of its Common Stock under its authorized stock purchase programs. Long-term debt, including current maturities, was $103,400,000 at December 31, 2022, compared to $111,804,000 at December 25, 2021 and $100,774,000 at December 26, 2020, compared to $112,844,000 at December 28, 2019 and $128,425,000 at December 29, 2018.2020.
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Shareholders’ equity was $691,835,000,$887,221,000, or 87%90% of total capitalization (defined as long-term debt including current maturities plus equity), at December 26, 2020,31, 2022, compared to $721,469,000,$862,010,000, or 86%89% of total capitalization at December 28, 201925, 2021 and $689,133,000,$691,835,000, or 84%87% of total capitalization at December 29, 2018.26, 2020. The decreaseincrease in shareholders’ equity in fiscal year 2020 was primarily the result of net income, almost entirely offset by purchases of shares of the Company’s Common Stock and dividends declared by the Company in fiscal year 2020, partially offset by net income.2022. The increase in shareholders’ equity in fiscal year 20192021 was primarily the result of net income, partially offset by purchases of shares of the Company’s Common Stock and dividends declared by the Company in fiscal year 2019.
On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit“First Amended and Restated Credit Agreement”). As previously disclosed in a Form 8-K filed with the SEC on July 8, 2022, Landstar entered into a second amended and restated credit agreement, dated July 1, 2022, with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”) that superseded and replaced the First Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement which matures on August 18, 2023,July 1, 2027, provides $250,000,000 offor borrowing capacity in the form of a revolving credit facility $35,000,000of $300,000,000, $45,000,000 of which may be utilized in the form of letters of credit. The Second Amended and Restated Credit Agreement also includes an “accordion” feature providing for a possible increase of up to an aggregate amount of borrowing capacity of $400,000,000.
The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio,fixed charge coverage ratio, as defineddescribed in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock to the extent there is a default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash
At December 26, 2020,31, 2022, the Company had no borrowings outstanding and $33,618,000$33,493,000 of letters of credit outstanding under the Credit Agreement. At December 26, 2020,31, 2022, there was $216,382,000$266,507,000 available for future borrowings under the Credit Agreement. In addition, the Company has $64,934,000$76,567,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments totaling $72,149,000$85,074,000 at December 26, 2020.31, 2022. Investments, all of which are carried at fair value, include primarily investment-grade bonds and U.S. Treasury obligationsasset-backed securities having maturities of up to five years. Fair value of investments is based primarily on quoted market prices. See “Notes to Consolidated Financial Statements” included herein for further discussion on measurement of fair value of investments.
Historically, the Company has generated sufficient operating cash flow to meet its debt service requirements, fund continued growth, both organic and through acquisitions, complete or execute share purchases of its Common Stock under authorized share purchase programs, pay dividends and meet working capital needs. As an asset-light provider of integrated transportation management solutions, the Company’s annual capital requirements for operating property are generally for trailing equipment and information technology hardware and software. In addition, a significant portion of the trailing equipment used by the Company is provided by third party capacity providers, thereby reducing the Company’s capital requirements. During fiscal years 2020, 20192022, 2021 and 2018,2020, the Company acquired $31,633,000, $29,054,000$30,659,000, $48,674,000 and $46,595,000,$31,633,000, respectively, of trailing equipment by entering into finance leases. During fiscal years 2020, 20192022, 2021 and 2018,2020, the Company also purchased $30,626,000, $19,416,000$26,005,000, $23,261,000 and $9,747,000,$30,626,000, respectively, of operating property. Included in the $9,747,000$23,261,000 of purchases of operating property during the 20182021 fiscal year was $2,162,000 related to the completion of its Laredo, Texas facility for which the Company accrued a corresponding liability in accounts payable as of December 30, 2017. During fiscal year 2020, Landstar acquired $500,000 of operating property for which the Company accrued a corresponding liability in accounts payable as of December 26, 2020. Landstar anticipates acquiring either by purchase or lease financing approximately $77,000,000$78,000,000 in new trailing equipment, primarily to replace older trailing equipment in fiscal 2021.year 2023. Landstar anticipates spending approximately $23,000,000$19,000,000 on information technology hardware and software in fiscal 2021, $16,000,000year 2023, $14,000,000 of which relates to either building or buying software applications that enhance or add to the Company’s technology ecosystem. In addition, Landstar anticipates spending approximately $13,000,000 on buildings and improvements.
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On April 1, 2022, Landstar acquired all of the remaining equity interests in Landstar MetroInvestment Holdco, LLC, a newly formed Delaware LLC and Landstar Servicios held by their former minority equityholders. As of such date, Landstar Metro and Landstar Servicios each became wholly owned subsidiariessubsidiary of Landstar System Holdings, Inc., purchased Class A units of Cavnue, LLC for approximately $4,999,000 in cash consideration. Cavnue, LLC is a privately held company focused on combining technology and road infrastructure to unlock the Company. Cash consideration paid in the 2019 fiscal year to purchase these remaining equity interests was $600,000.full potential of connected and autonomous vehicles. Further, on June 15, 2020, Landstar Blue completed the acquisition of an independent agent of the Company. CashTotal cash consideration paid for the acquisition was approximately $2,766,000.
Management believes that cash flow from operations combined with the Company’s borrowing capacity under the Credit Agreement will be adequate to meet Landstar’s debt service requirements, fund continued growth, both internal and through acquisitions, pay dividends, complete the authorized share purchase programsprogram and meet working capital needs.
Legal Proceedings
The Company is involved in certain claims and pending litigation arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.
Critical Accounting Policies and Estimates
Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by management. The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim. Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates. During fiscal
Significant variances from management’s estimates for the ultimate resolution of self-insured claims could be expected to positively or negatively affect Landstar’s earnings in a given quarter or year. However, management believes that the ultimate resolution of these items, given a range of reasonably likely outcomes, will not significantly affect the long-term financial condition of Landstar or its ability to fund its continuing operations.
Item 7A.
The Company is exposed to changes in interest rates as a result of its financing activities, primarily its borrowings on its revolving credit facility, if any, and investing activities with respect to investments held by the insurance segment.
On August 18, 2020, Landstar entered into an amendedthe First Amended and restated credit agreementRestated Credit Agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (theagent. As previously disclosed in a Form 8-K filed with the SEC on July 8, 2022, Landstar entered into the Second Amended and Restated Credit Agreement, dated July 1, 2022, with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent. The Second Amended and Restated Credit Agreement, which superseded and replaced the First Amended and Restated Credit Agreement, is referred to herein as the “Credit Agreement”).Agreement.” The Second Amended and Restated Credit Agreement which matures on August 18, 2023,July 1, 2027, provides $250,000,000 offor borrowing capacity in the form of a revolving credit facility $35,000,000of $300,000,000, $45,000,000 of which may be utilized in the form of letters of credit. The Second Amended and Restated Credit Agreement also includes an “accordion” feature providing for a possible increase of up to an aggregate amount of borrowing capacity of $400,000,000.$600,000,000.
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The revolving credit loans under the Credit Agreement as of December 31, 2022, at the option of Landstar, bear interest at (i) a forward-looking term rate based on the Eurocurrencysecured overnight financing rate plus 0.10% and an applicable margin ranging from 1.25% to 2.00%, or (ii) an alternate base rate plus an applicable margin ranging from 0.25% to 1.00%, in each case with the applicable margin determined based upon the Company’s Leverage Ratio, as defined in the Credit Agreement, at the end of the most recent applicable fiscal quarter for which financial statements have been delivered. The revolving credit facility bears a commitment fee, payable in arrears, of 0.25%0.20% to 0.35%0.30%, based on the Company’s Leverage Ratio at the end of the most recent applicable fiscal quarter for which financial statements have been delivered. As of both December 26, 202031, 2022 and December 28, 201925, 2021 and during the entire fourth quarter of 2022 and all of fiscal years 2020 and 2019,year 2021, the Company had no borrowings outstanding under the Credit Agreement.
Long-term investments, all of which are
Assets and liabilities of the Company’s Canadian and Mexican operations are translated from their functional currency to U.S. dollars using exchange rates in effect at the balance sheet date and revenue and expense accounts are translated at average monthly exchange rates during the period. Adjustments resulting from the translation process are included in accumulated other comprehensive income. Transactional gains and losses arising from receivable and payable balances, including intercompany balances, in the normal course of business that are denominated in a currency other than the functional currency of the operation are recorded in the statements of income when they occur. The assets held at the Company’s Canadian and Mexican subsidiaries at December at 26, 202031, 2022 were collectively, as translated to U.S. dollars, approximately 4% of total consolidated assets. Accordingly, translation gains or losses of 25%35% or less related to the Canadian and Mexican operations would not be material.
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Dec. 26, 2020 | Dec. 28, 2019 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 249,354 | $ | 319,515 | ||||
Short-term investments | 41,375 | 32,901 | ||||||
Trade accounts receivable, less allowance of $8,670 and $7,284 | 764,169 | 588,549 | ||||||
Other receivables, including advances to independent contractors, less allowance of $7,239 and $7,667 | 134,757 | 35,553 | ||||||
Other current assets | 18,520 | 21,370 | ||||||
Total current assets | 1,208,175 | 997,888 | ||||||
Operating property, less accumulated depreciation and amortization of $299,407 and $280,849 | 296,996 | 285,855 | ||||||
Goodwill | 40,949 | 38,508 | ||||||
Other assets | 107,679 | 105,460 | ||||||
Total assets | $ | 1,653,799 | $ | 1,427,711 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Cash overdraft | $ | 74,748 | $ | 53,878 | ||||
Accounts payable | 380,505 | 271,996 | ||||||
Current maturities of long-term debt | 35,415 | 42,632 | ||||||
Insurance claims | 149,774 | 44,532 | ||||||
Dividends payable | 76,770 | 78,947 | ||||||
Other current liabilities | 88,925 | 60,919 | ||||||
Total current liabilities | 806,137 | 552,904 | ||||||
Long-term debt, excluding current maturities | 65,359 | 70,212 | ||||||
Insurance claims | 38,867 | 33,575 | ||||||
Deferred income taxes and other noncurrent liabilities | 51,601 | 49,551 | ||||||
Shareholders’ Equity | ||||||||
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,183,702 and 68,083,419 shares | 682 | 681 | ||||||
Additional paid-in capital | 228,875 | 226,123 | ||||||
Retained earnings | 2,046,238 | 1,962,161 | ||||||
Cost of 29,797,639 and 28,609,926 shares of common stock in treasury | (1,581,961 | ) | (1,465,284 | ) | ||||
Accumulated other comprehensive loss | (1,999 | ) | (2,212 | ) | ||||
Total shareholders’ equity | 691,835 | 721,469 | ||||||
Total liabilities and equity | $ | 1,653,799 | $ | 1,427,711 | ||||
Dec. 31, 2022 | Dec. 25, 2021 | |||||||
ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 339,581 | $ | 215,522 | ||||
| Short-term investments | 53,955 | 35,778 | ||||||
| Trade accounts receivable, less allowance of $12,121 and $7,074 | 967,793 | 1,154,314 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $10,579 and $8,125 | 56,235 | 101,124 | ||||||
| Other current assets | 21,826 | 16,162 | ||||||
| Total current assets | 1,439,390 | 1,522,900 | ||||||
| Operating property, less accumulated depreciation and amortization of $393,274 and $344,099 | 314,990 | 317,386 | ||||||
| Goodwill | 41,220 | 40,768 | ||||||
| Other assets | 136,279 | 164,411 | ||||||
| Total assets | $ | 1,931,879 | $ | 2,045,465 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Cash overdraft | $ | 92,953 | $ | 116,478 | ||||
| Accounts payable | 527,372 | 604,130 | ||||||
| Current maturities of long-term debt | 36,175 | 36,561 | ||||||
| Insurance claims | 50,836 | 46,896 | ||||||
| Dividends payable | 71,854 | 75,387 | ||||||
| Other current liabilities | 98,945 | 130,531 | ||||||
| Total current liabilities | 878,135 | 1,009,983 | ||||||
| Long-term debt, excluding current maturities | 67,225 | 75,243 | ||||||
| Insurance claims | 58,268 | 49,509 | ||||||
| Deferred income taxes and other noncurrent liabilities | 41,030 | 48,720 | ||||||
| Shareholders’ Equity | ||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,382,310 and 68,232,975 shares | 684 | 682 | ||||||
Additional paid-in capital | 258,487 | 255,148 | ||||||
| Retained earnings | 2,635,960 | 2,317,184 | ||||||
| Cost of 32,455,300 and 30,539,235 shares of common stock in treasury | (1,992,886 | ) | (1,705,601 | ) | ||||
| Accumulated other comprehensive loss | (15,024 | ) | (5,403 | ) | ||||
| Total shareholders’ equity | 887,221 | 862,010 | ||||||
| Total liabilities and shareholders’ equity | $ | 1,931,879 | $ | 2,045,465 | ||||
Fiscal Years Ended | ||||||||||||
December 26, 2020 | December 28, 2019 | December 29, 2018 | ||||||||||
Revenue | $ | 4,132,981 | $ | 4,084,577 | $ | 4,615,144 | ||||||
Investment income | 3,399 | 5,041 | 3,816 | |||||||||
Costs and expenses: | ||||||||||||
Purchased transportation | 3,192,850 | 3,127,474 | 3,569,961 | |||||||||
Commissions to agents | 340,780 | 342,226 | 378,002 | |||||||||
| Other operating costs, net of gains/losses on asset sales/dispositions | 30,463 | 37,274 | 31,803 | |||||||||
Insurance and claims | 87,773 | 80,319 | 75,677 | |||||||||
Selling, general and administrative | 167,633 | 158,953 | 188,212 | |||||||||
Depreciation and amortization | 45,855 | 44,468 | 43,570 | |||||||||
Impairment of intangible and other assets | 2,582 | — | — | |||||||||
Commission program termination costs | 15,494 | — | — | |||||||||
Total costs and expenses | 3,883,430 | 3,790,714 | 4,287,225 | |||||||||
Operating income | 252,950 | 298,904 | 331,735 | |||||||||
Interest and debt expense | 3,953 | 3,141 | 3,354 | |||||||||
Income before income taxes | 248,997 | 295,763 | 328,381 | |||||||||
Income taxes | 56,891 | 68,060 | 73,168 | |||||||||
Net income | 192,106 | 227,703 | 255,213 | |||||||||
Less: Net loss attributable to noncontrolling interest | — | (17 | ) | (68 | ) | |||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 192,106 | $ | 227,720 | $ | 255,281 | ||||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary | $ | 4.98 | $ | 5.72 | $ | 6.19 | ||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 4.98 | $ | 5.72 | $ | 6.18 | ||||||
Average number of shares outstanding: | ||||||||||||
Earnings per common share | 38,602,000 | 39,786,000 | 41,273,000 | |||||||||
Diluted earnings per share | 38,602,000 | 39,786,000 | 41,310,000 | |||||||||
Dividends per common share | $ | 2.79 | $ | 2.70 | $ | 0.63 | ||||||
Fiscal Years Ended | ||||||||||||
December 31, 2022 | December 25, 2021 | December 26, 2020 | ||||||||||
| Revenue | $ | 7,436,562 | $ | 6,537,568 | $ | 4,132,981 | ||||||
| Investment income | 3,162 | 2,857 | 3,399 | |||||||||
| Costs and expenses: | ||||||||||||
| Purchased transportation | 5,804,017 | 5,114,667 | 3,192,850 | |||||||||
| Commissions to agents | 614,865 | 507,209 | 340,780 | |||||||||
| Other operating costs, net of gains on asset sales/dispositions | 45,192 | 36,531 | 30,463 | |||||||||
| Insurance and claims | 125,835 | 105,463 | 87,773 | |||||||||
| Selling, general and administrative | 221,279 | 221,278 | 167,633 | |||||||||
| Depreciation and amortization | 57,453 | 49,609 | 45,855 | |||||||||
| Impairment of intangible and other assets | — | — | 2,582 | |||||||||
| Commission program termination costs | — | — | 15,494 | |||||||||
| Total costs and expenses | 6,868,641 | 6,034,757 | 3,883,430 | |||||||||
| Operating income | 571,083 | 505,668 | 252,950 | |||||||||
| Interest and debt expense | 3,620 | 3,976 | 3,953 | |||||||||
| Income before income taxes | 567,463 | 501,692 | 248,997 | |||||||||
| Income taxes | 136,549 | 120,168 | 56,891 | |||||||||
| Net income | $ | 430,914 | $ | 381,524 | $ | 192,106 | ||||||
| Diluted earnings per share | $ | 11.76 | $ | 9.98 | $ | 4.98 | ||||||
| Average diluted shares outstanding | 36,633,000 | 38,235,000 | 38,602,000 | |||||||||
| Dividends per common share | $ | 3.10 | $ | 2.92 | $ | 2.79 | ||||||
Fiscal Years Ended | ||||||||||||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | ||||||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 192,106 | $ | 227,720 | $ | 255,281 | ||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized holding gains (losses) on available-for-sale | 1,688 | 2,050 | (786 | ) | ||||||||
Foreign currency translation (losses) gains | (1,475 | ) | 1,613 | (1,927 | ) | |||||||
Other comprehensive income (loss) | 213 | 3,663 | (2,713 | ) | ||||||||
Comprehensive income attributable to Landstar System, Inc. and subsidiary | $ | 192,319 | $ | 231,383 | $ | 252,568 | ||||||
Fiscal Years Ended | ||||||||||||
Dec. 31, 2022 | Dec. 25, 2021 | Dec. 26, 2020 | ||||||||||
| Net income | $ | 430,914 | $ | 381,524 | $ | 192,106 | ||||||
| Other comprehensive (loss) income: | ||||||||||||
Unrealized holding (losses) gains on available-for-sale | (8,562 | ) | (2,695 | ) | 1,688 | |||||||
| Foreign currency translation losses | (1,059 | ) | (709 | ) | (1,475 | ) | ||||||
| Other comprehensive (loss) income | (9,621 | ) | (3,404 | ) | 213 | |||||||
| Comprehensive income | $ | 421,293 | $ | 378,120 | $ | 192,319 | ||||||
Fiscal Years Ended | ||||||||||||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 192,106 | $ | 227,703 | $ | 255,213 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization of operating property and intangible assets | 45,855 | 44,468 | 43,570 | |||||||||
Non-cash interest charges | 334 | 253 | 253 | |||||||||
Provisions for losses on trade and other accounts receivable | 9,415 | 9,831 | 7,415 | |||||||||
Gains on sales/disposals of operating property | (2,576 | ) | (1,016 | ) | (979 | ) | ||||||
Impairment of intangible and other assets | 2,582 | — | — | |||||||||
Deferred income taxes, net | 1,130 | 4,767 | 2,115 | |||||||||
Stock-based compensation | 4,639 | 4,236 | 18,256 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) decrease in trade and other accounts receivable | (285,169 | ) | 81,415 | (57,419 | ) | |||||||
Increase in other assets | (4,719 | ) | (11,395 | ) | (2,962 | ) | ||||||
Increase (decrease) in accounts payable | 108,090 | (42,138 | ) | 22,527 | ||||||||
Increase (decrease) in other liabilities | 28,496 | (17,786 | ) | 8,367 | ||||||||
Increase in insurance claims | 110,534 | 7,502 | 1,545 | |||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 210,717 | 307,840 | 297,901 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Net change in other short-term investments | 131 | (131 | ) | — | ||||||||
Sales and maturities of investments | 22,632 | 62,922 | 51,576 | |||||||||
Purchases of investments | (25,550 | ) | (65,922 | ) | (54,041 | ) | ||||||
Purchases of operating property | (30,626 | ) | (19,416 | ) | (9,747 | ) | ||||||
Proceeds from sales of operating property | 7,760 | 3,991 | 4,018 | |||||||||
Consideration paid for acquisition | (2,766 | ) | — | — | ||||||||
NET CASH USED BY INVESTING ACTIVITIES | (28,419 | ) | (18,556 | ) | (8,194 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Increase (decrease) in cash overdraft | 20,870 | (1,461 | ) | 13,097 | ||||||||
Dividends paid | (109,504 | ) | (27,891 | ) | (88,918 | ) | ||||||
Payment for debt issue costs | (1,132 | ) | — | — | ||||||||
Proceeds from exercises of stock options | 725 | 1,056 | 1,435 | |||||||||
Taxes paid in lieu of shares issued related to stock-based compensation plans | (3,326 | ) | (8,456 | ) | (3,938 | ) | ||||||
Purchases of common stock | (115,962 | ) | (88,578 | ) | (208,087 | ) | ||||||
Principal payments on finance lease obligations | (43,703 | ) | (44,635 | ) | (43,283 | ) | ||||||
Purchase of noncontrolling interest | — | (600 | ) | — | ||||||||
Payment of contingent consideration | — | — | (985 | ) | ||||||||
NET CASH USED BY FINANCING ACTIVITIES | (252,032 | ) | (170,565 | ) | (330,679 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (427 | ) | 1,060 | (1,708 | ) | |||||||
(Decrease) increase in cash and cash equivalents | (70,161 | ) | 119,779 | (42,680 | ) | |||||||
Cash and cash equivalents at beginning of period | 319,515 | 199,736 | 242,416 | |||||||||
Cash and cash equivalents at end of period | $ | 249,354 | $ | 319,515 | $ | 199,736 | ||||||
Fiscal Years Ended | ||||||||||||
Dec. 31, 2022 | Dec. 25, 2021 | Dec. 26, 2020 | ||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net income | $ | 430,914 | $ | 381,524 | $ | 192,106 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 57,453 | 49,609 | 45,855 | |||||||||
Non-cash interest charges | 355 | 447 | 334 | |||||||||
| Provisions for losses on trade and other accounts receivable | 12,220 | 5,722 | 9,415 | |||||||||
| Gains on sales/disposals of operating property | (2,944 | ) | (1,830 | ) | (2,576 | ) | ||||||
| Impairment of intangible and other assets | — | — | 2,582 | |||||||||
| Deferred income taxes, net | (5,360 | ) | (3,790 | ) | 1,130 | |||||||
| Stock-based compensation | 12,399 | 27,537 | 4,639 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Decrease (increase) in trade and other accounts receivable | 219,190 | (362,234 | ) | (285,169 | ) | |||||||
| (Increase) decrease in other assets | (5,938 | ) | 4,444 | (4,719 | ) | |||||||
| (Decrease) increase in accounts payable | (76,758 | ) | 224,125 | 108,090 | ||||||||
| (Decrease) increase in other liabilities | (31,571 | ) | 43,422 | 28,496 | ||||||||
| Increase (decrease) in insurance claims | 12,699 | (92,236 | ) | 110,534 | ||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 622,659 | 276,740 | 210,717 | |||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Net change in other short-term investments | — | — | 131 | |||||||||
| Sales and maturities of investments | 41,198 | 31,938 | 22,632 | |||||||||
| Purchases of investments | (40,202 | ) | (84,992 | ) | (25,550 | ) | ||||||
| Purchases of operating property | (26,005 | ) | (23,261 | ) | (30,626 | ) | ||||||
| Proceeds from sales of operating property | 5,236 | 2,971 | 7,760 | |||||||||
| Consideration paid for acquisition | — | — | (2,766 | ) | ||||||||
Purchase of non-marketable securities | (4,999 | ) | — | — | ||||||||
| NET CASH USED BY INVESTING ACTIVITIES | (24,772 | ) | (73,344 | ) | (28,419 | ) | ||||||
| FINANCING ACTIVITIES | ||||||||||||
| (Decrease) increase in cash overdraft | (23,525 | ) | 41,730 | 20,870 | ||||||||
| Dividends paid | (115,671 | ) | (111,961 | ) | (109,504 | ) | ||||||
| Payment for debt issue costs | (1,080 | ) | — | (1,132 | ) | |||||||
| Proceeds from exercises of stock options | 68 | 160 | 725 | |||||||||
| Taxes paid in lieu of shares issued related to stock-based compensation plans | (10,428 | ) | (2,342 | ) | (3,326 | ) | ||||||
| Purchases of common stock | (285,983 | ) | (122,722 | ) | (115,962 | ) | ||||||
| Principal payments on finance lease obligations | (39,063 | ) | (37,644 | ) | (43,703 | ) | ||||||
| Payment of deferred consideration | — | (168 | ) | — | ||||||||
| NET CASH USED BY FINANCING ACTIVITIES | (475,682 | ) | (232,947 | ) | (252,032 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (2,195 | ) | (232 | ) | (427 | ) | ||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | 120,010 | (29,783 | ) | (70,161 | ) | |||||||
| Cash, cash equivalents and restricted cash at beginning of period | 219,571 | 249,354 | 319,515 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 339,581 | $ | 219,571 | $ | 249,354 | ||||||
Landstar System, Inc. and Subsidiary Shareholders | ||||||||||||||||||||||||||||||||||||
Additional | Accumulated Other | Non- | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Retained | Treasury Stock at Cost | Comprehensive | controlling | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | (Loss) Income | Interests | Total | ||||||||||||||||||||||||||||
Balance December 30, 2017 | 67,740,380 | $ | 677 | $ | 209,599 | $ | 1,611,158 | 25,749,493 | $ | (1,167,600 | ) | $ (3,162) | $ | 3,205 | $ | 653,877 | ||||||||||||||||||||
Adoption of accounting standards (Note 1) | 773 | 773 | ||||||||||||||||||||||||||||||||||
Net income (loss) | 255,281 | (68 | ) | 255,213 | ||||||||||||||||||||||||||||||||
Dividends ($0.63 per share) | (25,933 | ) | (25,933 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 2,000,000 | (208,087 | ) | (208,087 | ) | |||||||||||||||||||||||||||||||
Transaction with noncontrolling interests | 1,078 | (1,078 | ) | — | ||||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 130,582 | 2 | (2,081 | ) | 5,508 | (424 | ) | (2,503 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 18,256 | 18,256 | ||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | (2,713 | ) | 250 | (2,463 | ) | |||||||||||||||||||||||||||||||
Balance December 29, 2018 | 67,870,962 | $ | 679 | $ | 226,852 | $ | 1,841,279 | 27,755,001 | $ | (1,376,111 | ) | $ | (5,875 | ) | $ | 2,309 | $ | 689,133 | ||||||||||||||||||
Net income (loss) | 227,720 | (17 | ) | 227,703 | ||||||||||||||||||||||||||||||||
Dividends ($2.70 per share) | (106,838 | ) | (106,838 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 849,068 | (88,578 | ) | (88,578 | ) | |||||||||||||||||||||||||||||||
Purchase noncontrolling interests | 1,842 | (2,442 | ) | (600 | ) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 212,457 | 2 | (6,807 | ) | 5,857 | (595 | ) | (7,400 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 4,236 | 4,236 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | 3,663 | 150 | 3,813 | |||||||||||||||||||||||||||||||||
Balance December 28, 2019 | 68,083,419 | $ | 681 | $ | 226,123 | $ | 1,962,161 | 28,609,926 | $ | (1,465,284 | ) | $ | (2,212 | ) | $ | — | $ | 721,469 | ||||||||||||||||||
Adoption of accounting standards (Note 1 6 ) | (702 | ) | (702 | ) | ||||||||||||||||||||||||||||||||
Net income | 192,106 | �� | 192,106 | |||||||||||||||||||||||||||||||||
Dividends ($2.79 per share) | (107,327 | ) | (107,327 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 1,178,970 | (115,962 | ) | (115,962 | ) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 100,283 | 1 | (1,887 | ) | 8,743 | (715 | ) | (2,601 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 4,639 | 4,639 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | 213 | — | 213 | |||||||||||||||||||||||||||||||||
Balance December 26, 2020 | 68,183,702 | $ | 682 | $ | 228,875 | $ | 2,046,238 | 29,797,639 | $ | (1,581,961 | ) | $ | (1,999 | ) | $ | — | $ | 691,835 | ||||||||||||||||||
Common Stock | Additional Paid-In | Retained | Treasury Stock at Cost | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | (Loss) Income | Total | |||||||||||||||||||||||||
| Balance December 28, 2019 | 68,083,419 | $ | 681 | $ | 226,123 | $ | 1,962,161 | 28,609,926 | $ | (1,465,284 | ) | $ | (2,212 | ) | $ | 721,469 | ||||||||||||||||
| Adoption of accounting standards (Note 17) | (702 | ) | (702 | ) | ||||||||||||||||||||||||||||
| Net income | 192,106 | 192,106 | ||||||||||||||||||||||||||||||
| Dividends ($2.79 per share) | (107,327 | ) | (107,327 | ) | ||||||||||||||||||||||||||||
| Purchases of common stock | 1,178,970 | (115,962 | ) | (115,962 | ) | |||||||||||||||||||||||||||
| Issuance of stock related to stock-based compensation plans | 100,283 | 1 | (1,887 | ) | 8,743 | (715 | ) | (2,601 | ) | |||||||||||||||||||||||
| Stock-based compensation | 4,639 | 4,639 | ||||||||||||||||||||||||||||||
| Other comprehensive income | 213 | 213 | ||||||||||||||||||||||||||||||
| Balance December 26, 2020 | 68,183,702 | $ | 682 | $ | 228,875 | $ | 2,046,238 | 29,797,639 | $ | (1,581,961 | ) | $ | (1,999 | ) | $ | 691,835 | ||||||||||||||||
| Net income | 381,524 | 381,524 | ||||||||||||||||||||||||||||||
| Dividends ($2.92 per share) | (110,578 | ) | (110,578 | ) | ||||||||||||||||||||||||||||
| Purchases of common stock | 733,854 | (122,722 | ) | (122,722 | ) | |||||||||||||||||||||||||||
| Issuance of stock related to stock-based compensation plans | 49,273 | — | (1,264 | ) | 7,742 | (918 | ) | (2,182 | ) | |||||||||||||||||||||||
| Stock-based compensation | 27,537 | 27,537 | ||||||||||||||||||||||||||||||
| Other comprehensive loss | (3,404 | ) | (3,404 | ) | ||||||||||||||||||||||||||||
| Balance December 25, 2021 | 68,232,975 | $ | 682 | $ | 255,148 | $ | 2,317,184 | 30,539,235 | $ | (1,705,601 | ) | $ | (5,403 | ) | $ | 862,010 | ||||||||||||||||
| Net income | 430,914 | 430,914 | ||||||||||||||||||||||||||||||
| Dividends ($3.10 per share) | (112,138 | ) | (112,138 | ) | ||||||||||||||||||||||||||||
| Purchases of common stock | 1,900,826 | (285,983 | ) | (285,983 | ) | |||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 149,335 | 2 | (9,060 | ) | 15,239 | (1,302 | ) | (10,360 | ) | |||||||||||||||||||||||
| Stock-based compensation | 12,399 | 12,399 | ||||||||||||||||||||||||||||||
| Other comprehensive loss | (9,621 | ) | (9,621 | ) | ||||||||||||||||||||||||||||
| Balance December 31, 2022 | 68,382,310 | $ | 684 | $ | 258,487 | $ | 2,635,960 | 32,455,300 | $ | (1,992,886 | ) | $ | (15,024 | ) | $ | 887,221 | ||||||||||||||||
Fiscal Years Ended | ||||||||||||
| Mode | December 31, 2022 | December 25, 2021 | December 26, 2020 | |||||||||
| Truck – BCO Independent Contractors | 35 | % | 40 | % | 45 | % | ||||||
| Truck – Truck Brokerage Carriers | 54 | % | 51 | % | 47 | % | ||||||
| Rail intermodal | 2 | % | 2 | % | 3 | % | ||||||
| Ocean and air cargo carriers | 8 | % | 5 | % | 3 | % | ||||||
Truck Equipment Type | ||||||||||||
| Van equipment | $ | 3,892,085 | $ | 3,525,830 | $ | 2,192,254 | ||||||
| Unsided/platform equipment | $ | 1,760,357 | $ | 1,549,037 | $ | 1,119,272 | ||||||
| Less-than-truckload | $ | 142,438 | $ | 117,505 | $ | 97,546 | ||||||
| Other truck transportation (1) | $ | 835,959 | $ | 770,846 | $ | 406,709 | ||||||
Fiscal Years Ended | ||||||||||||
Mode | December 26, 2020 | December 28, 2019 | December 29, 2018 | |||||||||
| Truck – BCO Independent Contractors | 45 | % | 45 | % | 43 | % | ||||||
| Truck – Truck Brokerage Carriers | 47 | % | 47 | % | 49 | % | ||||||
Rail intermodal | 3 | % | 3 | % | 3 | % | ||||||
Ocean and air cargo carriers | 3 | % | 3 | % | 3 | % | ||||||
Truck Equipment Type | ||||||||||||
Van equipment | $ | 2,515,940 | $ | 2,371,188 | $ | 2,791,494 | ||||||
Unsided/platform equipment | $ | 1,202,295 | $ | 1,295,817 | $ | 1,386,387 | ||||||
Less-than-truckload | $ | 97,546 | $ | 98,324 | $ | 102,531 | ||||||
| (1) | Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation logistics segment. Power-only refers to shipments where the Company furnishes a power unit and an operator but not trailing equipment, which is typically provided by the shipper or consignee. |
Balance at Beginning of Period | Charged to Costs and Expenses | Write-offs, Net of Recoveries | Balance at End of Period | |||||||||||||
For the Fiscal Year Ended December 31, 2022 | ||||||||||||||||
| Trade receivables | $ | 7,074 | $ | 7,354 | $ | (2,307 | ) | $ | 12,121 | |||||||
| Other receivables | 9,511 | 4,863 | (2,629 | ) | 11,745 | |||||||||||
Other non-current receivables | 200 | 3 | — | 203 | ||||||||||||
| $ | 16,785 | $ | 12,220 | $ | (4,936 | ) | $ | 24,069 | ||||||||
For the Fiscal Year Ended December 25, 2021 | ||||||||||||||||
| Trade receivables | $ | 8,670 | $ | 1,735 | $ | (3,331 | ) | $ | 7,074 | |||||||
| Other receivables | 8,399 | 4,050 | (2,938 | ) | 9,511 | |||||||||||
Other non-current receivables | 264 | (63 | ) | (1 | ) | 200 | ||||||||||
| $ | 17,333 | $ | 5,722 | $ | (6,270 | ) | $ | 16,785 | ||||||||
For the Fiscal Year Ended December 26, 2020 | ||||||||||||||||
| Trade receivables | $ | 7,284 | $ | 6,121 | $ | (4,735 | ) | $ | 8,670 | |||||||
| Other receivables | 8,806 | 3,291 | (3,698 | ) | 8,399 | |||||||||||
Other non-current receivables | 260 | 3 | 1 | 264 | ||||||||||||
| $ | 16,350 | $ | 9,415 | $ | (8,432 | ) | $ | 17,333 | ||||||||
Balance at Beginning of Period | Charged to Costs and Expenses | Write-offs, Net of Recoveries | Balance at End of Period | |||||||||||||
For the Fiscal Year Ended December 26, 2020 | ||||||||||||||||
Trade receivables | $ | 7,284 | $ | 6,121 | $ | (4,735 | ) | $ | 8,670 | |||||||
Other receivables | 8,806 | 3,291 | (3,698 | ) | 8,399 | |||||||||||
Other non-current receivables | 260 | 3 | 1 | 264 | ||||||||||||
| $ | 16,350 | $ | 9,415 | $ | (8,432 | ) | $ | 17,333 | ||||||||
For the Fiscal Year Ended December 28, 2019 | ||||||||||||||||
Trade receivables | $ | 6,413 | $ | 4,309 | $ | (3,438 | ) | $ | 7,284 | |||||||
Other receivables | 7,211 | 5,518 | (3,923 | ) | 8,806 | |||||||||||
Other non-current receivables | 256 | 4 | — | 260 | ||||||||||||
| $ | 13,880 | $ | 9,831 | $ | (7,361 | ) | $ | 16,350 | ||||||||
For the Fiscal Year Ended December 29, 2018 | ||||||||||||||||
Trade receivables | $ | 6,131 | $ | 3,886 | $ | (3,604 | ) | $ | 6,413 | |||||||
Other receivables | 6,952 | 3,520 | (3,261 | ) | 7,211 | |||||||||||
Other non-current receivables | 251 | 9 | (4 | ) | 256 | |||||||||||
| $ | 13,334 | $ | 7,415 | $ | (6,869 | ) | $ | 13,880 | ||||||||
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Average number of common shares outstanding | 38,602 | 39,786 | 41,273 | |||||||||
Incremental shares from assumed exercises of stock options | — | — | 37 | |||||||||
Average number of common shares and common share equivalents outstanding | 38,602 | 39,786 | 41,310 | |||||||||
Unrealized Holding (Losses) Gains on Available-for-Sale Securities | Foreign Currency Translation | Total | ||||||||||||||||||||||
Balance as of December 30, 2017 | $ | (144 | ) | $ | (3,018 | ) | $ | (3,162 | ) | |||||||||||||||
Other comprehensive loss | (786 | ) | (1,927 | ) | (2,713 | ) | ||||||||||||||||||
Balance as of December 29, 2018 | (930 | ) | (4,945 | ) | (5,875 | ) | ||||||||||||||||||
Other comprehensive income | 2,050 | 1,613 | 3,663 | |||||||||||||||||||||
Unrealized Holding (Losses) on Available-for-Sale Securities | Foreign Currency Translation | Total | ||||||||||||||||||||||
Balance as of December 28, 2019 | 1,120 | (3,332 | ) | (2,212 | ) | $ | 1,120 | $ | (3,332 | ) | $ | (2,212 | ) | |||||||||||
Other comprehensive income (loss) | 1,688 | (1,475 | ) | 213 | 1,688 | (1,475 | ) | 213 | ||||||||||||||||
Balance as of December 26, 2020 | $ | 2,808 | $ | (4,807 | ) | $ | (1,999 | ) | 2,808 | (4,807 | ) | (1,999 | ) | |||||||||||
Other comprehensive loss | (2,695 | ) | (709 | ) | (3,404 | ) | ||||||||||||||||||
Balance as of December 25, 2021 | 113 | $ | (5,516 | ) | $ | (5,403 | ) | |||||||||||||||||
Other comprehensive loss | (8,562 | ) | (1,059 | ) | (9,621 | ) | ||||||||||||||||||
Balance as of December 31, 2022 | $ | (8,449 | ) | $ | (6,575 | ) | $ | (15,024 | ) | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||
December 26, 2020 | ||||||||||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||
Money market investments | $ | 17,867 | $ | — | $ | — | $ | 17,867 | $ | 21,910 | $ | — | $ | — | $ | 21,910 | ||||||||||||||||
Asset-backed securities | 567 | — | 26 | 541 | 18,905 | — | 2,889 | 16,016 | ||||||||||||||||||||||||
Corporate bonds and direct obligations of government agencies | 98,241 | 3,551 | 72 | 101,720 | 126,134 | 1 | 7,775 | 118,360 | ||||||||||||||||||||||||
U.S. Treasury obligations | 2,338 | 125 | — | 2,463 | 2,344 | — | 100 | 2,244 | ||||||||||||||||||||||||
Total | $ | 119,013 | $ | 3,676 | $ | 98 | $ | 122,591 | $ | 169,293 | $ | 1 | $ | 10,764 | $ | 158,530 | ||||||||||||||||
December 28, 2019 | ||||||||||||||||||||||||||||||||
December 25, 2021 | ||||||||||||||||||||||||||||||||
Money market investments | $ | 15,691 | $ | — | $ | — | $ | 15,691 | $ | 8,750 | $ | — | $ | — | $ | 8,750 | ||||||||||||||||
Asset-backed securities | 572 | — | 1 | 571 | 22,441 | — | 346 | 22,095 | ||||||||||||||||||||||||
Corporate bonds and direct obligations of government agencies | 97,583 | 1,465 | 44 | 99,004 | 137,916 | 1,406 | 966 | 138,356 | ||||||||||||||||||||||||
U.S. Treasury obligations | 2,335 | 12 | 5 | 2,342 | 2,342 | 50 | — | 2,392 | ||||||||||||||||||||||||
Total | $ | 116,181 | $ | 1,477 | $ | 50 | $ | 117,608 | $ | 171,449 | $ | 1,456 | $ | 1,312 | $ | 171,593 | ||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
December 26, 2020 | ||||||||||||||||||||||||
Asset-backed securities | $ | 541 | $ | 26 | $ | — | $ | — | $ | 541 | $ | 26 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 2,681 | 72 | — | — | 2,681 | 72 | ||||||||||||||||||
Total | $ | 3,222 | $ | 98 | $ | — | $ | — | $ | 3,222 | $ | 98 | ||||||||||||
December 28, 2019 | ||||||||||||||||||||||||
Asset-backed securities | $ | 571 | $ | 1 | $ | — | $ | — | $ | 571 | $ | 1 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 8,728 | 41 | 4,260 | 3 | 12,988 | 44 | ||||||||||||||||||
U.S. Treasury obligations | 1,226 | 5 | — | — | 1,226 | 5 | ||||||||||||||||||
Total | $ | 10,525 | $ | 47 | $ | 4,260 | $ | 3 | $ | 14,785 | $ | 50 | ||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||
Asset-backed securities | $ | — | $ | — | $ | 16,016 | $ | 2,889 | $ | 16,016 | $ | 2,889 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 54,031 | 1,516 | 62,390 | 6,259 | 116,421 | 7,775 | ||||||||||||||||||
U.S. Treasury obligations | 2,244 | 100 | — | — | 2,244 | 100 | ||||||||||||||||||
Total | $ | 56,275 | $ | 1,616 | $ | 78,406 | $ | 9,148 | $ | 134,681 | $ | 10,764 | ||||||||||||
December 25, 2021 | ||||||||||||||||||||||||
Asset-backed securities | $ | 22,095 | $ | 346 | $ | — | $ | — | $ | 22,095 | $ | 346 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 72,526 | 966 | — | — | 72,526 | 966 | ||||||||||||||||||
Total | $ | 94,621 | $ | 1,312 | $ | — | $ | — | $ | 94,621 | $ | 1,312 | ||||||||||||
Fiscal Years | Fiscal Years | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2022 | 2021 | 2020 | |||||||||||||||||||
Current: | ||||||||||||||||||||||||
Federal | $ | 47,955 | $ | 52,422 | $ | 60,650 | $ | 116,642 | $ | 104,640 | $ | 47,955 | ||||||||||||
State | 7,249 | 10,367 | 9,410 | 23,309 | 18,462 | 7,249 | ||||||||||||||||||
Foreign | 557 | 504 | 993 | 1,958 | 856 | 557 | ||||||||||||||||||
Total current | $ | 55,761 | $ | 63,293 | $ | 71,053 | $ | 141,909 | $ | 123,958 | $ | 55,761 | ||||||||||||
Deferred: | ||||||||||||||||||||||||
Federal | $ | 1,523 | $ | 4,212 | $ | 1,730 | $ | (3,945 | ) | $ | (3,278 | ) | $ | 1,523 | ||||||||||
State | (393 | ) | 555 | 385 | (1,415 | ) | (512 | ) | (393 | ) | ||||||||||||||
Total deferred | $ | 1,130 | $ | 4,767 | $ | 2,115 | $ | (5,360 | ) | $ | (3,790 | ) | $ | 1,130 | ||||||||||
Income taxes | $ | 56,891 | $ | 68,060 | $ | 73,168 | $ | 136,549 | $ | 120,168 | $ | 56,891 | ||||||||||||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 31, 2022 | Dec. 25, 2021 | |||||||||||||
Deferred tax assets: | ||||||||||||||||
Receivable valuations | $ | 4,286 | $ | 4,004 | $ | 5,838 | $ | 4,112 | ||||||||
Share-based payments | 2,020 | 2,923 | 5,021 | 7,000 | ||||||||||||
Self-insured claims | 3,613 | 3,565 | 3,205 | 3,696 | ||||||||||||
Other | 6,056 | 2,935 | 11,381 | 10,354 | ||||||||||||
Total deferred tax assets | $ | 15,975 | $ | 13,427 | $ | 25,445 | $ | 25,162 | ||||||||
Deferred tax liabilities: | ||||||||||||||||
Operating property | $ | 52,014 | $ | 49,669 | $ | 49,092 | $ | 57,903 | ||||||||
Goodwill | 3,772 | 4,223 | 3,892 | 3,958 | ||||||||||||
Other | 3,087 | 1,531 | 3,895 | 2,409 | ||||||||||||
Total deferred tax liabilities | $ | 58,873 | $ | 55,423 | $ | 56,879 | $ | 64,270 | ||||||||
Net deferred tax liability | $ | 42,898 | $ | 41,996 | $ | 31,434 | $ | 39,108 | ||||||||
Fiscal Years | Fiscal Years | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2022 | 2021 | 2020 | |||||||||||||||||||
Income taxes at federal income tax rate | $ | 52,289 | $ | 62,110 | $ | 68,960 | $ | 119,167 | $ | 105,355 | $ | 52,289 | ||||||||||||
State income taxes, net of federal income tax benefit | 5,375 | 8,876 | 7,713 | 16,596 | 14,260 | 5,375 | ||||||||||||||||||
Non-deductible executive compensation | 96 | — | 1,012 | 3,552 | 2,946 | 96 | ||||||||||||||||||
Meals and entertainment exclusion | 326 | 644 | 719 | 200 | — | 326 | ||||||||||||||||||
Share-based payments | (977 | ) | (3,093 | ) | (2,138 | ) | (2,958 | ) | (1,070 | ) | (977 | ) | ||||||||||||
Section 199 deductions and R&D credits | (717 | ) | (714 | ) | (3,309 | ) | ||||||||||||||||||
Research and development credits | (1,526 | ) | (2,069 | ) | (717 | ) | ||||||||||||||||||
Other, net | 499 | 237 | 211 | 1,518 | 746 | 499 | ||||||||||||||||||
Income taxes | $ | 56,891 | $ | 68,060 | $ | 73,168 | $ | 136,549 | $ | 120,168 | $ | 56,891 | ||||||||||||
Fiscal Years | Fiscal Years | |||||||||||||||
2020 | 2019 | 2022 | 2021 | |||||||||||||
Gross unrecognized tax benefits – beginning of the year | $ | 3,014 | $ | 3,519 | $ | 2,845 | $ | 2,585 | ||||||||
Gross increases related to current year tax positions | 349 | 468 | 789 | 782 | ||||||||||||
Gross increases related to prior year tax positions | 232 | 469 | 792 | 315 | ||||||||||||
Gross decreases related to prior year tax positions | — | (295 | ) | (83 | ) | (17 | ) | |||||||||
Settlements | — | (356 | ) | |||||||||||||
Lapse of statute of limitations | (1,010 | ) | (791 | ) | (617 | ) | (820 | ) | ||||||||
Gross unrecognized tax benefits – end of the year | $ | 2,585 | $ | 3,014 | $ | 3,726 | $ | 2,845 | ||||||||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 31, 2022 | Dec. 25, 2021 | |||||||||||||
Land | $ | 16,328 | $ | 15,834 | $ | 16,328 | $ | 16,328 | ||||||||
Buildings and improvements | 64,314 | 58,484 | 69,160 | 65,034 | ||||||||||||
Trailing equipment | 433,400 | 425,595 | 502,322 | 479,300 | ||||||||||||
Information technology hardware and software | 110,626 | 91,115 | ||||||||||||||
Other equipment | 82,361 | 66,791 | 9,828 | 9,708 | ||||||||||||
Total operating property, gross | 596,403 | 566,704 | 708,264 | 661,485 | ||||||||||||
Less accumulated depreciation and amortization | 299,407 | 280,849 | 393,274 | 344,099 | ||||||||||||
Total operating property, net | $ | 296,996 | $ | 285,855 | $ | 314,990 | $ | 317,386 | ||||||||
Finance leases: | ||||||||
Amortization of right-of-use | $ | 24,589 | $ | 22,071 | ||||
Interest on lease liability | 3,155 | 2,908 | ||||||
Total finance lease cost | 27,744 | 24,979 | ||||||
Operating leases: | ||||||||
Lease cost | 3,075 | 3,495 | ||||||
Variable lease cost | — | — | ||||||
Sublease income | (4,695 | ) | (5,616 | ) | ||||
Total net operating lease income | (1,620 | ) | (2,121 | ) | ||||
Total net lease cost | $ | 26,124 | $ | 22,858 | ||||
Operating lease right-of-use | Other assets | $ | 2,595 | Other assets | $ | 2,044 | ||||||
Finance lease assets | Operating property, less accumulated depreciation and amortization | 139,259 | Operating property, less accumulated depreciation and amortization | 137,087 | ||||||||
Total lease assets | $ | 141,854 | $ | 139,131 | ||||||||
Finance Leases | Operating Leases | |||||||
2021 | $ | 37,917 | $ | 762 | ||||
2022 | 28,774 | 697 | ||||||
2023 | 21,759 | 612 | ||||||
2024 | 11,827 | 528 | ||||||
2025 | 5,580 | 216 | ||||||
Thereafter | — | — | ||||||
Total future minimum lease payments | 105,857 | 2,815 | ||||||
Less amount representing interest (1.9% to 4.4%) | 5,083 | 220 | ||||||
Present value of minimum lease payments | $ | 100,774 | $ | 2,595 | ||||
Current maturities of long-term debt | 35,415 | |||||||
Long-term debt, excluding current maturities | 65,359 | |||||||
Other current liabilities | 739 | |||||||
Deferred income taxes and other noncurrent liabilities | 1,856 | |||||||
Finance Leases | Operating Leases | |||||||
2023 | $ | 39,032 | $ | 801 | ||||
2024 | 29,795 | 680 | ||||||
2025 | 23,126 | 419 | ||||||
2026 | 15,807 | 127 | ||||||
2027 | 4,312 | 127 | ||||||
Thereafter | — | 49 | ||||||
Total future minimum lease payments | 112,072 | 2,203 | ||||||
Less amount representing interest (1.6% to 5.6%) | 8,672 | 159 | ||||||
Present value of minimum lease payments | $ | 103,400 | $ | 2,044 | ||||
Current maturities of long-term debt | 36,175 | |||||||
Long-term debt, excluding current maturities | 67,225 | |||||||
| Other current liabilities | 782 | |||||||
Deferred income taxes and other noncurrent liabilities | 1,262 |
Finance Leases | Operating Leases | Finance Leases | Operating Leases | |||||||||||||
Weighted average remaining lease term (years) | 3.4 | 4.0 | 3.5 | 3.3 | ||||||||||||
Weighted average discount rate | 3.0 | % | 4.0 | % | 3.0 | % | 4.5 | % | ||||||||
Fiscal Years | Fiscal Years | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2022 | 2021 | 2020 | |||||||||||||||||||
Total cost of the Plans during the period | $ | 4,639 | $ | 4,236 | $ | 18,256 | $ | 12,399 | $ | 27,537 | $ | 4,639 | ||||||||||||
Amount of related income tax benefit recognized during the period | (2,114 | ) | (4,130 | ) | (6,610 | ) | (5,199 | ) | (7,063 | ) | (2,114 | ) | ||||||||||||
Net cost of the Plans during the period | $ | 2,525 | $ | 106 | $ | 11,646 | $ | 7,200 | $ | 20,474 | $ | 2,525 | ||||||||||||
Number of RSUs | Weighted Average Grant Date Fair Value | Number of RSUs | Weighted Average Grant Date Fair Value | |||||||||||||
Outstanding at December 30, 2017 | 387,372 | $ | 55.75 | |||||||||||||
Granted | 65,824 | $ | 95.94 | |||||||||||||
Vested | (67,971 | ) | $ | 53.92 | ||||||||||||
Forfeited | (92,880 | ) | $ | 52.36 | ||||||||||||
Outstanding at December 29, 2018 | 292,345 | $ | 66.31 | |||||||||||||
Outstanding at December 28, 2019 | 198,875 | $ | 84.37 | |||||||||||||
Granted | 68,820 | $ | 89.34 | 59,967 | $ | 102.58 | ||||||||||
Shares earned in excess of target (1) | 71,172 | $ | 54.78 | 11,648 | $ | 77.00 | ||||||||||
Vested shares, including shares earned in excess of target | (226,981 | ) | $ | 53.27 | (76,290 | ) | $ | 73.44 | ||||||||
Forfeited | (6,481 | ) | $ | 86.60 | (10,987 | ) | $ | 100.55 | ||||||||
Outstanding at December 28, 2019 | 198,875 | $ | 84.37 | |||||||||||||
Outstanding at December 26, 2020 | 183,213 | $ | 93.44 | |||||||||||||
Granted | 59,967 | $ | 102.58 | 46,342 | $ | 128.64 | ||||||||||
Shares earned in excess of target (2) | 11,648 | $ | 77.00 | 7,132 | $ | 31.97 | ||||||||||
Vested shares, including shares earned in excess of target | (76,290 | ) | $ | 73.44 | (24,600 | ) | $ | 59.85 | ||||||||
Forfeited | (10,987 | ) | $ | 100.55 | (2,688 | ) | $ | 107.76 | ||||||||
Outstanding at December 26, 2020 | 183,213 | $ | 93.44 | |||||||||||||
Outstanding at December 25, 2021 | 209,399 | $ | 102.90 | |||||||||||||
Granted | 50,019 | $ | 139.44 | |||||||||||||
Shares earned in excess of target (3) | 91,497 | $ | 92.58 | |||||||||||||
Vested shares, including shares earned in excess of target | (177,146 | ) | $ | 95.48 | ||||||||||||
Forfeited | (21,989 | ) | $ | 113.85 | ||||||||||||
Outstanding at December 31, 2022 | 151,780 | $ | 115.80 | |||||||||||||
(1) |
Represents additional shares earned under the February 2, 2017 RSU awards as fiscal year 2019 financial results exceeded target performance level. |
(2) | Represents shares earned in excess of target under the May 1, 2015 RSU award as total shareholder return exceeded the target under the award. |
(3) | Represents additional shares earned under each of the February 2, 2017, February 2, 2018 and February 1, 2019 RSU awards, as fiscal year 2021 financial results exceeded target performance level under each such award. |
Number of Shares and Deferred Stock Units | Weighted Average Grant Date Fair Value | |||||||||||||||
Non-vested at December 30, 2017 | 54,755 | $ | 78.02 | |||||||||||||
Granted | 22,803 | $ | 113.35 | |||||||||||||
Vested | (19,814 | ) | $ | 75.11 | ||||||||||||
Forfeited | (1,757 | ) | $ | 71.12 | ||||||||||||
Non-vested at December 29, 2018 | 55,987 | $ | 93.66 | |||||||||||||
Granted | 30,338 | $ | 102.76 | |||||||||||||
Vested | (21,517 | ) | $ | 92.70 | ||||||||||||
Number of Shares and Deferred Stock Units | Weighted Average Grant Date Fair Value | |||||||||||||||
Non-vested at December 28, 2019 | 64,808 | $ | 98.24 | 64,808 | $ | 98.24 | ||||||||||
Granted | 26,604 | $ | 111.88 | 26,604 | $ | 111.88 | ||||||||||
Vested | (28,621 | ) | $ | 98.83 | (28,621 | ) | $ | 98.83 | ||||||||
Forfeited | (2,351 | ) | $ | 106.34 | (2,351 | ) | $ | 106.34 | ||||||||
Non-vested at December 26, 2020 | 60,440 | $ | 103.65 | 60,440 | $ | 103.65 | ||||||||||
Granted | 26,351 | $ | 150.20 | |||||||||||||
Vested | (29,055 | ) | $ | 104.35 | ||||||||||||
Forfeited | (1,300 | ) | $ | 97.81 | ||||||||||||
Non-vested at December 25, 2021 | 56,436 | $ | 125.16 | |||||||||||||
Granted | 25,354 | $ | 152.54 | |||||||||||||
Vested | (27,074 | ) | $ | 122.68 | ||||||||||||
Forfeited | (6,921 | ) | $ | 144.45 | ||||||||||||
Non-vested at December 31, 2022 | 47,795 | $ | 138.30 | |||||||||||||
Options Outstanding | Options Exercisable | Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||
Number of Options | Weighted Average Exercise Price per Share | Number of Options | Weighted Average Exercise Price per Share | |||||||||||||||||||||||||||||
Options at December 30, 2017 | 189,040 | $ | 49.34 | 169,240 | $ | 48.50 | ||||||||||||||||||||||||||
Exercised | (99,926 | ) | $ | 48.36 | ||||||||||||||||||||||||||||
Options at December 29, 2018 | 89,114 | $ | 50.44 | 88,114 | $ | 50.35 | ||||||||||||||||||||||||||
Exercised | (44,647 | ) | $ | 49.64 | ||||||||||||||||||||||||||||
Number of Options | Weighted Average Exercise Price per Share | Number of Options | Weighted Average Exercise Price per Share | |||||||||||||||||||||||||||||
Options at December 28, 2019 | 44,467 | $ | 51.24 | 44,467 | $ | 51.24 | 44,467 | $ | 51.24 | 44,467 | $ | 51.24 | ||||||||||||||||||||
Exercised | (26,817 | ) | $ | 49.31 | (26,817 | ) | $ | 49.31 | ||||||||||||||||||||||||
Options at December 26, 2020 | 17,650 | $ | 54.16 | 17,650 | $ | 54.16 | 17,650 | $ | 54.16 | 17,650 | $ | 54.16 | ||||||||||||||||||||
Exercised | (9,080 | ) | $ | 52.97 | ||||||||||||||||||||||||||||
Options at December 25, 2021 | 8,570 | $ | 55.42 | 8,570 | $ | 55.42 | ||||||||||||||||||||||||||
Exercised | (6,670 | ) | $ | 55.14 | ||||||||||||||||||||||||||||
Options at December 31, 2022 | 1,900 | $ | 56.40 | 1,900 | $ | 56.40 | ||||||||||||||||||||||||||
Options Outstanding | ||||||||||||
Range of Exercise Prices Per Share | Number Outstanding | Weighted Average Remaining Contractual Term (years) | Weighted Average Exercise Price per Share | |||||||||
$ | 1,500 | 0.1 | $ | 41.80 | ||||||||
$ | 16,150 | 1.9 | $ | 55.31 | ||||||||
| 17,650 | 1.7 | $ | 54.16 | |||||||||
Options Exercisable | ||||||||||||
Range of Exercise Prices Per Share | Number Exercisable | Weighted Average Remaining Contractual Term (years) | Weighted Average Exercise Price per Share | |||||||||
$ | 1,500 | 0.1 | $ | 41.80 | ||||||||
$ | 16,150 | 1.9 | $ | 55.31 | ||||||||
| 17,650 | 1.7 | $ | 54.16 | |||||||||
Transportation | Transportation | |||||||||||||||||||||||
Logistics | Insurance | Total | Logistics | Insurance | Total | |||||||||||||||||||
2022 | ||||||||||||||||||||||||
External revenue | $ | 7,358,008 | $ | 78,554 | $ | 7,436,562 | ||||||||||||||||||
Internal revenue | 79,229 | 79,229 | ||||||||||||||||||||||
Investment income | 3,162 | 3,162 | ||||||||||||||||||||||
Interest and debt expense | 3,620 | 3,620 | ||||||||||||||||||||||
Depreciation and amortization | 57,453 | 57,453 | ||||||||||||||||||||||
Operating income | 524,500 | 46,583 | 571,083 | |||||||||||||||||||||
Expenditures on long-lived assets | 26,005 | 26,005 | ||||||||||||||||||||||
Goodwill | 41,220 | 41,220 | ||||||||||||||||||||||
Finance lease additions | 30,659 | 30,659 | ||||||||||||||||||||||
Total assets | 1,704,557 | 227,322 | 1,931,879 | |||||||||||||||||||||
2021 | ||||||||||||||||||||||||
External revenue | $ | 6,465,711 | $ | 71,857 | $ | 6,537,568 | ||||||||||||||||||
Internal revenue | 62,558 | 62,558 | ||||||||||||||||||||||
Investment income | 2,857 | 2,857 | ||||||||||||||||||||||
Interest and debt expense | 3,976 | 3,976 | ||||||||||||||||||||||
Depreciation and amortization | 49,609 | 49,609 | ||||||||||||||||||||||
Operating income | 464,282 | 41,386 | 505,668 | |||||||||||||||||||||
Expenditures on long-lived assets | 23,261 | 23,261 | ||||||||||||||||||||||
Goodwill | 40,768 | 40,768 | ||||||||||||||||||||||
Finance lease additions | 48,674 | 48,674 | ||||||||||||||||||||||
Total assets | 1,736,854 | 308,611 | 2,045,465 | |||||||||||||||||||||
2020 | ||||||||||||||||||||||||
External revenue | $ | 4,076,519 | $ | 56,462 | $ | 4,132,981 | $ | 4,076,519 | $ | 56,462 | $ | 4,132,981 | ||||||||||||
Internal revenue | 54,003 | 54,003 | 54,003 | 54,003 | ||||||||||||||||||||
Investment income | 3,399 | 3,399 | 3,399 | 3,399 | ||||||||||||||||||||
Interest and debt expense | 3,953 | 3,953 | 3,953 | 3,953 | ||||||||||||||||||||
Depreciation and amortization | 45,855 | 45,855 | 45,855 | 45,855 | ||||||||||||||||||||
Operating income | 221,210 | 31,740 | 252,950 | 221,210 | 31,740 | 252,950 | ||||||||||||||||||
Expenditures on long-lived assets | 30,626 | 30,626 | 30,626 | 30,626 | ||||||||||||||||||||
Goodwill | 40,949 | 40,949 | 40,949 | 40,949 | ||||||||||||||||||||
Finance lease additions | 31,633 | 31,633 | 31,633 | 31,633 | ||||||||||||||||||||
Total assets | 1,301,991 | 351,808 | 1,653,799 | 1,301,991 | 351,808 | 1,653,799 | ||||||||||||||||||
2019 | ||||||||||||||||||||||||
External revenue | $ | 4,028,336 | $ | 56,241 | $ | 4,084,577 | ||||||||||||||||||
Internal revenue | 46,587 | 46,587 | ||||||||||||||||||||||
Investment income | 5,041 | 5,041 | ||||||||||||||||||||||
Interest and debt expense | 3,141 | 3,141 | ||||||||||||||||||||||
Depreciation and amortization | 44,468 | 44,468 | ||||||||||||||||||||||
Operating income | 258,742 | 40,162 | 298,904 | |||||||||||||||||||||
Expenditures on long-lived assets | 19,416 | 19,416 | ||||||||||||||||||||||
Goodwill | 38,508 | 38,508 | ||||||||||||||||||||||
Finance lease additions | 29,054 | 29,054 | ||||||||||||||||||||||
Total assets | 1,168,944 | 258,767 | 1,427,711 | |||||||||||||||||||||
2018 | ||||||||||||||||||||||||
External revenue | $ | 4,562,796 | $ | 52,348 | $ | 4,615,144 | ||||||||||||||||||
Internal revenue | 37,872 | 37,872 | ||||||||||||||||||||||
Investment income | 3,816 | 3,816 | ||||||||||||||||||||||
Interest and debt expense | 3,354 | 3,354 | ||||||||||||||||||||||
Depreciation and amortization | 43,570 | 43,570 | ||||||||||||||||||||||
Operating income | 303,426 | 28,309 | 331,735 | |||||||||||||||||||||
Expenditures on long-lived assets | 9,747 | 9,747 | ||||||||||||||||||||||
Goodwill | 38,232 | 38,232 | ||||||||||||||||||||||
Finance lease additions | 46,595 | 46,595 | ||||||||||||||||||||||
Total assets | 1,175,040 | 205,524 | 1,380,564 | |||||||||||||||||||||
Fiscal Years Ended | ||||||||||||
December 26, 2020 | December 28, 2019 | December 29, 2018 | ||||||||||
Operating income | $ | 9,196 | $ | 16,679 | $ | 13,960 | ||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 6,989 | $ | 12,683 | $ | 10,582 | ||||||
Earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.18 | $ | 0.32 | $ | 0.26 | ||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.18 | $ | 0.32 | $ | 0.26 | ||||||
Fiscal Years Ended | ||||||||||||
December 31, 2022 | December 25, 2021 | December 26, 2020 | ||||||||||
Operating income | $ | 11,331 | $ | 9,708 | $ | 9,196 | ||||||
Net income | $ | 8,570 | $ | 7,359 | $ | 6,989 | ||||||
Diluted earnings per share | $ | 0.23 | $ | 0.19 | $ | 0.18 | ||||||
| /s/KPMG LLP |
Page | ||||
| 39 | ||||
| 40 | ||||
| 41 | ||||
| 42 | ||||
| 43 | ||||
| 44 | ||||
| (2) | Financial Statement Schedules |
| (3) | Exhibits |
Exhibit No. | Description | |
(3) | Articles of Incorporation and By-Laws: | |
3.1 | ||
(4) | Instruments defining the rights of security holders, including indentures: | |
4.1 P | Specimen of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 33-57174)) | |
Description of Securities (Incorporated by reference to Exhibit 4.4 to the Registrant’s Annual Report on Form 10-K for fiscal year ended December 28, 2019 (Commission FileNo. 0-21238)) | ||
(10) | Material contracts: | |
10.1+ | ||
10.2+ | ||
| Landstar System, Inc. Supplemental Executive Retirement Plan, as amended and restated as of January 1, 2015 (Incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 (Commission File No. 0-21238)) | ||
| 32.2** | |||
| 101 * | The following materials from the Company’s Annual Report on Form 10-K for the fiscal year ended December | ||
| Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101). | |||
| + | management contract or compensatory plan or arrangement |
| * | Filed herewith. |
| ** | Furnished herewith. |
| Date: February | LANDSTAR SYSTEM, INC. | |||||
| By: | /s/ JAMES B. GATTONI | |||||
| James B. Gattoni | ||||||
President and | ||||||
Chief Executive Officer | ||||||
| By: | /s/ JAMES P. TODD | |||||
| James P. Todd | ||||||
| Vice President, Chief Financial Officer and Assistant Secretary | ||||||
Signature | Title | Date | ||
/s/ JAMES B. GATTONI James B. Gattoni | President and Chief Executive | |||
| Officer; Principal Executive | ||||
| February 24, 2023 | ||||
/s/ JAMES P. TODD James P. Todd | Vice President and | |||
| Chief Financial Officer and Assistant Secretary; Principal Financial Officer and Principal Accounting Officer | February 24, 2023 | |||
* Homaira Akbari | Director | February | ||
| 24, 2023 | ||||
* David G. Bannister | Director | February | ||
| 24, 2023 | ||||
* James L. Liang | Director | February 24, 2023 | ||
* Diana M. Murphy | Chairman of the Board | February | ||
| 24, 2023 | ||||
* Anthony J. Orlando | Director | February | ||
| 24, 2023 | ||||
* George P. Scanlon | Director | February | ||
| 24, 2023 | ||||
* Teresa L. White | Director | February | ||
| 24, 2023 | ||||
| By: | /s/ MICHAEL K. KNELLER | |||
| Michael K. Kneller | ||||
Attorney In Fact* | ||||