Landstar System (LSTR) 8-K Landstar System Reports Fourth Quarter

Exhibit 99.1

For Immediate Release	Contact: Kevin Stout
	Landstar System, Inc.
	www.landstar.com
January 29, 2020	904-398-9400

LANDSTAR SYSTEM REPORTS FOURTH QUARTER

REVENUE OF $994.9 MILLION AND

DILUTED EARNINGS PER SHARE OF $1.27

Jacksonville, FL - Landstar System, Inc. (NASDAQ: LSTR) reported diluted earnings per share of $1.27 in the 2019 fourth quarter on revenue of $994.9 million. Revenue in the 2019 fourth quarter was at themid-point of the Company’s guidance issued on October 23, 2019, while diluted earnings per share was below thelow-end of the guidance of $1.40. As further described later in this press release, the shortfall in diluted earnings per share to our guidance was entirely attributable to insurance and claims costs in the quarter, well above the insurance and claims costs anticipated as part of the October 23, 2019 earnings guidance. Landstar reported diluted earnings per share of $1.68 on revenue of $1.182 billion in the 2018 fourth quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2019 fourth quarter was $911.8 million, or 92 percent of revenue, compared to $1.078 billion, or 91 percent of revenue, in the 2018 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2019 fourth quarter was $571.8 million compared to $705.0 million in the 2018 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2019 fourth quarter was $315.2 million compared to $346.6 million in the 2018 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $63.0 million, or 6 percent of revenue, in the 2019 fourth quarter compared to $84.8 million, or 7 percent of revenue, in the 2018 fourth quarter.

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Trailing twelve-month return on average shareholders’ equity was 31 percent and trailing twelve-month return on invested capital, representing net income divided by the sum of average equity plus average debt, was 27 percent. Landstar purchased approximately 849,000 shares of its common stock during fiscal year 2019 at an aggregate cost of approximately $88.6 million. As previously disclosed by the Company in a Form8-K filed with the Securities and Exchange Commission on December 10, 2019, its Board of Directors increased the number of shares of its common stock that the Company is authorized to purchase under its stock purchase program by 1,849,068 and declared a specialone-time cash dividend in the amount of $2.00 per share that was paid on January 24, 2020, to stockholders of record as of the close of business on January 10, 2020. Currently, Landstar is authorized to purchase up to a total of 3,000,000 shares of the Company’s common stock under its share purchase programs. In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.185 per share payable on March 13, 2020, to stockholders of record as of the close of business on February 17, 2020. It is currently the intention of the Board to pay dividends on a quarterly basis going forward. As of December 28, 2019, the Company had $352 million in cash and short term investments and $216 million available for borrowings under the Company’s senior credit facility.

“As expected, the macroeconomic environment during the 2019 fourth quarter made for challenging comparisons against our record 2018 fourth quarter performance,” said Landstar President and Chief Executive Officer Jim Gattoni. “Soft demand, driven by slowing production in the U.S. manufacturing sector, and more readily available truck capacity drove Landstar’s truck rates and volumes below prior year levels in the 2019 fourth quarter. Overall, 2019 fourth quarter revenue was 16 percent below 2018 fourth quarter revenue, mostly due to a 9 percent decrease in revenue per load on loads hauled via truck and a 7 percent decrease in truck loadings. The Company’s fourth quarter earnings guidance issued on October 23, 2019 anticipated fourth quarter diluted earnings per share of $1.40 to $1.46 reflecting insurance and claims costs at 3.6 percent of estimated fourth quarter BCO revenue. Diluted earnings per share fell below our guidance, entirely due to higher insurance and claims costs than we anticipated in our initial estimate. During the 2019 fourth quarter, we incurred $7.2 million of unfavorable development of prior year claims that drove actual insurance and claims costs to 5.7 percent of BCO revenue in the quarter.”

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Gattoni further commented, “Landstar’s financial performance in 2018 was by far the best in the Company’s history, making for very difficult comparisons in 2019. We experienced year-over-year declines in both truck volumes and price for much of 2019, and revenue for fiscal year 2019 was 11% below that of fiscal year 2018. Nevertheless, 2019 was still the second best financial year in the Company’s history after 2018, with 2019 revenue, gross profit, operating income and diluted earnings per share each representing the second highest annual amount achieved in Landstar history.”

Gattoni continued, “January of any given year is typically the slowest month of the year. Through the first several weeks of January, there has been little change in the macroeconomic environment experienced throughout 2019, characterized by soft demand, weakness in the U.S. manufacturing sector, and readily available truck capacity. Additionally, the 2019 first quarter was seasonally the strongest quarter of 2019, setting the stage for a difficult quarter-over-prior-year-quarter comparison heading into the first quarter of 2020. I expect these conditions to result in earnings in the 2020 first quarter to be well below that of the 2019 first quarter. From a revenue standpoint, the number of loads hauled via truck in the first few weeks of 2020 was below the corresponding period of the prior year in amid-single digit percentage range, somewhat similar to the year-over-prior-year percentage decrease experienced in the 2019 fourth quarter. Revenue per load on loads hauled via truck in the first few weeks of January was below the same period of the prior year in amid-single digit percentage range, a slight improvement to the year-over-prior-year percentage decrease experienced in the 2019 fourth quarter. I expect the volume and pricing trends experienced in the first few weeks of January to continue through the first quarter. As such, I anticipate revenue for the 2020 first quarter to be in a range of $915 million to $965 million.”

Gattoni added that, “In early January, a BCO with a motor carrier subsidiary of the Company was involved in a tragic vehicular accident involving a fatality. The Company is still in the process of obtaining all the facts concerning this incident and, as such, it is too soon to estimate the ultimate financial exposure of this tragic accident. Current facts

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as known to us indicate that it is probable this accident will adversely impact the financial results of the Company’s 2020 first quarter. It is highly likely that, once all facts are determined, the estimated ultimate cost of this tragic accident will reduce first quarter diluted earnings per share to an amount below thelow-end of the Company’s 2020 first quarter diluted earnings per share guidance. While our evaluation is still preliminary and our investigation continues, the Company’spre-tax loss exposure at the time of this accident included our $5 million self-insured retention and up to $3.5 million relating to aggregate losses above our self-insured retention during an annual policy year (May 1 to April 30). Additional insurance and claims expense of $8.5 million in the 2020 first quarter would result in a charge of $0.16 per diluted share.”

Gattoni concluded, “Based on the range of revenue estimated for the 2020 first quarter and excluding the cost of the ultimate resolution of this recent tragic accident, I would anticipate diluted earnings per share to be in a range of $1.10 to $1.20. This range of diluted earnings per share includes insurance and claims expense estimated at 4.0 percent of BCO revenue, representing average insurance and claims costs as a percentage of BCO revenue over the past three years.”

Landstar will provide a live webcast of its quarterly earnings conference call tomorrow morning at 8:00 a.m. ET. To access the webcast, visit the Company’s website at www.landstar.com; click on “Investor Relations” and “Webcasts,” then click on “Landstar’s Fourth Quarter 2019 Earnings Release Conference Call.”

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not based on historical facts are “forward-looking statements”. This press release contains forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “will,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party

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insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; U.S. foreign trade relationships; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber and other information security incidents; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; regulations focused on diesel emissions and other air quality matters; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10K for the 2018 fiscal year, described in Item 1A Risk Factors, and in other SEC filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar:

Landstar System, Inc. is a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees. Landstar transportation services companies are certified to ISO 9001:2015 quality management system standards and RC14001:2015 environmental, health, safety and security management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market^® under the symbol LSTR.

(Tables follow)

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Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

	Fiscal Years Ended						Fiscal Quarters Ended
	December 28,			December 29,			December 28,		December 29,
	2019			2018			2019		2018
Revenue	$	4,084,577		$	4,615,144		$	994,879	$	1,182,351
Investment income		5,041			3,816			1,305		1,062
Costs and expenses:
Purchased transportation		3,127,474			3,569,961			761,828		911,251
Commissions to agents		342,226			378,002			84,364		102,174
Other operating costs, net of gains/losses on asset sales/dispositions		37,274			31,803			8,743		7,627
Insurance and claims		80,319			75,677			25,071		17,959
Selling, general and administrative		158,953			188,212			38,236		47,264
Depreciation and amortization		44,468			43,570			11,423		11,050
Total costs and expenses		3,790,714			4,287,225			929,665		1,097,325
Operating income		298,904			331,735			66,519		86,088
Interest and debt expense		3,141			3,354			863		899
Income before income taxes		295,763			328,381			65,656		85,189
Income taxes		68,060			73,168			15,608		16,889
Net income		227,703			255,213			50,048		68,300
Less: Net (loss)/income attributable to noncontrolling interest		(17	)		(68	)		—		44
Net income attributable to Landstar System, Inc. and subsidiary	$	227,720		$	255,281		$	50,048	$	68,256
Earnings per common share attributable to Landstar System, Inc. and subsidiary	$	5.72		$	6.19		$	1.27	$	1.69
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary	$	5.72		$	6.18		$	1.27	$	1.68
Average number of shares outstanding:
Earnings per common share		39,786,000			41,273,000			39,472,000		40,501,000
Diluted earnings per share		39,786,000			41,310,000			39,472,000		40,514,000
Dividends per common share	$	2.700		$	0.630		$	2.185	$	0.165

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Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

	December 28,			December 29,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	319,515		$	199,736
Short-term investments		32,901			40,058
Trade accounts receivable, less allowance of $7,284 and $6,413		588,549			691,604
Other receivables, including advances to independent contractors, less allowance of $7,667 and $6,216		35,553			23,744
Other current assets		21,370			16,287
Total current assets		997,888			971,429
Operating property, less accumulated depreciation and amortization of $280,849 and $250,153		285,855			284,032
Goodwill		38,508			38,232
Other assets		105,460			86,871
Total assets	$	1,427,711		$	1,380,564
LIABILITIES AND EQUITY
Current liabilities:
Cash overdraft	$	53,878		$	55,339
Accounts payable		271,996			314,134
Current maturities of long-term debt		42,632			43,561
Insurance claims		44,532			40,176
Dividends payable		78,947			—
Accrued compensation		9,884			29,489
Other current liabilities		51,035			53,119
Total current liabilities		552,904			535,818
Long-term debt, excluding current maturities		70,212			84,864
Insurance claims		33,575			30,429
Deferred income taxes and othernon-current liabilities		49,551			40,320
Equity
Landstar System, Inc. and subsidiary shareholders’ equity
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,083,419 and 67,870,962 shares		681			679
Additionalpaid-in capital		226,123			226,852
Retained earnings		1,962,161			1,841,279
Cost of 28,609,926 and 27,755,001 shares of common stock in treasury		(1,465,284	)		(1,376,111	)
Accumulated other comprehensive loss		(2,212	)		(5,875	)
Total Landstar System, Inc. and subsidiary shareholders’ equity		721,469			686,824
Noncontrolling interest		—			2,309
Total equity		721,469			689,133
Total liabilities and equity	$	1,427,711		$	1,380,564

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Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

	Fiscal Years Ended						Fiscal Quarters Ended
	December 28,			December 29,			December 28,			December 29,
	2019			2018			2019			2018
Revenue generated through (in thousands):
Truck transportation
Truckload:
Van equipment	$	2,371,188		$	2,791,494		$	571,767		$	704,971
Unsided/platform equipment		1,295,817			1,386,387			315,202			346,603
Less-than-truckload		98,324			102,531			24,849			26,083
Total truck transportation		3,765,329			4,280,412			911,818			1,077,657
Rail intermodal		118,305			128,976			30,750			32,950
Ocean and air cargo carriers		121,485			134,577			32,227			51,858
Other(1)		79,458			71,179			20,084			19,886
	$	4,084,577		$	4,615,144		$	994,879		$	1,182,351
Revenue on loads hauled via BCO Independent Contractors(2)included in total truck transportation	$	1,831,752		$	2,001,665		$	441,617		$	482,321
Number of loads:
Truck transportation
Truckload:
Van equipment		1,337,089			1,398,388			322,517			353,066
Unsided/platform equipment		513,579			516,613			122,467			127,854
Less-than-truckload		155,592			145,269			39,976			38,630
Total truck transportation		2,006,260			2,060,270			484,960			519,550
Rail intermodal		47,590			53,030			12,220			12,770
Ocean and air cargo carriers		30,110			28,970			7,960			7,720
		2,083,960			2,142,270			505,140			540,040
Loads hauled via BCO Independent Contractors(2)included in total truck transportation		954,990			949,330			232,120			231,860
Revenue per load:
Truck transportation
Truckload:
Van equipment	$	1,773		$	1,996		$	1,773		$	1,997
Unsided/platform equipment		2,523			2,684			2,574			2,711
Less-than-truckload		632			706			622			675
Total truck transportation		1,877			2,078			1,880			2,074
Rail intermodal		2,486			2,432			2,516			2,580
Ocean and air cargo carriers		4,035			4,645			4,049			6,717
Revenue per load on loads hauled via BCO Independent Contractors(2)	$	1,918		$	2,109		$	1,903		$	2,080
Revenue by capacity type (as a % of total revenue);
Truck capacity providers:
BCO Independent Contractors(2)		45	%		43	%		44	%		41	%
Truck Brokerage Carriers		47	%		49	%		47	%		50	%
Rail intermodal		3	%		3	%		3	%		3	%
Ocean and air cargo carriers		3	%		3	%		3	%		4	%
Other		2	%		2	%		2	%		2	%
							December 28,			December 29,
							2019			2018
Truck Capacity Providers
BCO Independent Contractors(2)								9,554			9,884
Truck Brokerage Carriers:
Approved and active(3)								39,497			41,069
Other approved								16,820			17,985
								56,317			59,054
Total available truck capacity providers								65,871			68,938
Trucks provided by BCO Independent Contractors(2)								10,243			10,599

(1) Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro.

(2) BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.

(3) Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end.