10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 26, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

Commission File Number:

0-21238

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)


Delaware		06-1313069
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

13410 Sutton Park Drive South, Jacksonville, Florida

(Address of principal executive offices)

32224

(Zip Code)

(904)

398-9400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LSTR	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past

90 days:

Yes

☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)

Yes

☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

☒

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of the close of business on July 19, 2021 was 38,275,799.

Table of Contents

Index


PART I – Financial Information
Item 1. Financial Statements (unaudited)

Consolidated Balance Sheets as of June 26, 2021 and December 26, 2020		Page 4

Consolidated Statements of Income for the Twenty Six and Thirteen Weeks Ended June 26, 2021 and June 27, 2020		Page 5

Consolidated Statements of Comprehensive Income for the Twenty Six and Thirteen Weeks Ended June 26, 2021 and June 27, 2020		Page 6

Consolidated Statements of Cash Flows for the Twenty Six Weeks Ended June 26, 2021 and June 27, 2020		Page 7

Consolidated Statements of Changes in Shareholders’ Equity for the Twenty Six and Thirteen Weeks Ended June 26, 2021 and June 27, 2020		Page 8

Notes to Consolidated Financial Statements		Page 10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		Page 18

Item 3. Quantitative and Qualitative Disclosures About Market Risk		Page 30

Item 4. Controls and Procedures		Page 30

PART II – Other Information
Item 1. Legal Proceedings		Page 31

Item 1A. Risk Factors		Page 31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		Page 32

Item 6. Exhibits		Page 32

Signatures		Page 34
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

Table of Contents

PART I -

FINANCIAL INFORMATION

Item 1. Financial Statements

The interim consolidated financial statements contained herein reflect all adjustments (all of a normal, recurring nature) which, in the opinion of management, are necessary for a fair statement of the financial condition, results of operations, cash flows and changes in shareholders’ equity for the periods presented. They have been prepared in accordance with Rule

10-01

of Regulation

S-X

and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the twenty six weeks ended June 26, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 25, 2021.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2020 Annual Report on Form

10-K.

Table of Contents

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)


	June 26, 2021			December 26, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	186,404		$	249,354
Short-term investments		52,560			41,375
Trade accounts receivable, less allowance of $6,199 and $8,670		902,950			764,169
Other receivables, including advances to independent contractors, less allowance of $6,843 and $7,239		49,819			134,757
Other current assets		41,533			18,520

Total current assets		1,233,266			1,208,175

Operating property, less accumulated depreciation and amortization of $321,181 and $299,407		281,016			296,996
Goodwill		40,973			40,949
Other assets		147,958			107,679

Total assets	$	1,703,213		$	1,653,799

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Cash overdraft	$	70,554		$	74,748
Accounts payable		481,711			380,505
Current maturities of long-term debt		30,450			35,415
Insurance claims		41,854			149,774
Dividends payable		—			76,770
Other current liabilities		95,646			88,925

Total current liabilities		720,215			806,137

Long-term debt, excluding current maturities		51,181			65,359
Insurance claims		43,053			38,867
Deferred income taxes and other noncurrent liabilities		58,591			51,601
Shareholders’ Equity
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,229,880 and 68,183,702 shares		682			682
Additional paid-in capital		238,422			228,875
Retained earnings		2,199,637			2,046,238
Cost of 29,954,081 and 29,797,639 shares of common stock in treasury		(1,606,716	)		(1,581,961	)
Accumulated other comprehensive loss		(1,852	)		(1,999	)

Total shareholders’ equity		830,173			691,835

Total liabilities and shareholders’ equity	$	1,703,213		$	1,653,799

See accompanying notes to consolidated financial statements.

Table of Contents

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


	Twenty Six Weeks Ended				Thirteen Weeks Ended
	June 26, 2021		June 27, 2020		June 26, 2021		June 27, 2020
Revenue	$	2,858,252	$	1,751,080	$	1,570,718	$	823,514
Investment income		1,432		2,002		748		835
Costs and expenses:
Purchased transportation		2,226,526		1,344,390		1,228,241		635,133
Commissions to agents		221,702		150,642		121,693		75,266
Other operating costs, net of gains on asset sales/dispositions		16,545		15,674		8,903		7,368
Insurance and claims		45,629		44,708		24,124		19,751
Selling, general and administrative		99,522		85,928		54,114		40,601
Depreciation and amortization		24,244		22,972		12,143		11,467
Impairment of intangible and other assets		—		2,582		—		2,582

Total costs and expenses		2,634,168		1,666,896		1,449,218		792,168

Operating income		225,516		86,186		122,248		32,181
Interest and debt expense		2,009		1,928		967		976

Income before income taxes		223,507		84,258		121,281		31,205
Income taxes		53,973		19,109		28,987		6,951

Net income	$	169,534	$	65,149	$	92,294	$	24,254

Diluted earnings per share	$	4.41	$	1.68	$	2.40	$	0.63

Average diluted shares outstanding		38,403,000		38,816,000		38,402,000		38,379,000

Dividends per common share	$	0.420	$	0.370	$	0.210	$	0.185

See accompanying notes to consolidated financial statements.

Table of Contents

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	Twenty Six Weeks Ended						Thirteen Weeks Ended
	June 26, 2021			June 27, 2020			June 26, 2021			June 27, 2020
Net income	$	169,534		$	65,149		$	92,294		$	24,254
Other comprehensive income (loss):
Unrealized holding (losses) gains on available-for-sale investments, net of tax (benefit) expense of ($243), $338, ($96) and $770		(883	)		1,237			(349	)		2,816
Foreign currency translation gains (losses)		1,030			(6,170	)		1,450			1,732

Other comprehensive income (loss)		147			(4,933	)		1,101			4,548

Comprehensive income	$	169,681		$	60,216		$	93,395		$	28,802

See accompanying notes to consolidated financial statements.

Table of Contents

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Twenty Six Weeks Ended
	June 26, 2021			June 27, 2020
OPERATING ACTIVITIES
Net income	$	169,534		$	65,149
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of operating property and intangible assets		24,244			22,972
Non-cash interest charges		224			126
Provisions for losses on trade and other accounts receivable		1,393			6,528
Gains on sales/disposals of operating property		(766	)		(1,812	)
Impairment of intangible and other assets		—			2,582
Deferred income taxes, net		6,240			6,228
Stock-based compensation		10,893			1,201
Changes in operating assets and liabilities:
(Increase) decrease in trade and other accounts receivable		(55,236	)		99,601
Increase in other assets		(24,704	)		(24,809	)
Increase (decrease) in accounts payable		101,206			(31	)
Increase in other liabilities		7,882			10,231
(Decrease) increase in insurance claims		(103,734	)

SEC Form 10-Q filed by Landstar System, Inc.