2014

Landstar System Reports 27 Percent Increase in Diluted Earnings Per Share to a Second Quarter Record of $0.62

JACKSONVILLE, Fla., July 21, 2011 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2011 record second quarter diluted earnings per share of $0.62 per diluted share, from net income of $29.6 million, compared to net income of $24.4 million, or $0.49 per diluted share, for the 2010 second quarter.  Operating margin was 43.6 percent in the 2011 second quarter compared to 38.2 percent in the 2010 second quarter.  Revenue for the 2011 second quarter was $675.6 million compared to $641.7 million in the 2010 second quarter.  

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2011 second quarter was $621.5 million, or 92 percent of revenue, compared to $592.0 million, or 92 percent of revenue, in the 2010 second quarter.  In the 2011 and 2010 second quarters, the Company invoiced customers $78.7 million and $53.1 million, respectively, of fuel surcharges that were passed 100 percent to BCOs and excluded from revenue.  Included in revenue hauled by third-party truck capacity providers in the 2011 and 2010 second quarters were $25.9 million and $23.1 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers.  Also included in revenue hauled by third-party truck capacity providers was revenue generated under the Company's less-than-truckload substitute line haul service offering of $18.8 million and $70.5 million in the 2011 and 2010 second quarters, respectively.  Revenue hauled by rail, air and ocean cargo carriers was $39.9 million, or 6 percent of revenue, in the 2011 second quarter compared to $35.0 million, or 5 percent of revenue, in the 2010 second quarter.  Transportation management fee revenue generated by the supply chain solutions companies was $5.6 million and $4.9 million in the 2011 and 2010 second quarters, respectively.

Trailing twelve-month return on average shareholder's equity was 35 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 25 percent.  Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.055 per share.  This represents a 10 percent increase in the Company's quarterly dividend.  The dividend is payable on August 26, 2011 to stockholders of record at the close of business on August 8, 2011.  It is the intention of the Board of Directors to continue to pay a quarterly dividend.  During the 2011 second quarter, Landstar purchased 196,693 shares of its common stock at a total cost of $9.3 million.  Under the Company's authorized share purchase program, the Company currently has a total of 526,000 shares of its common stock available for purchase.  

"I am extremely pleased with the Company's 2011 second quarter operating performance," said Henry Gerkens, Landstar's Chairman, President and CEO.  "Despite the anticipated revenue decline in our substitute line haul service offering, revenue increased five percent over the 2010 second quarter.  Excluding the substitute line haul revenue from both the 2011 and 2010 second quarters, revenue increased 15 percent.  I would characterize the overall second quarter freight environment as a little choppy, but moving in an upward direction.  Pricing continued to be strong.   Consolidated operating income increased 22 percent, while earnings per diluted share increased 27 percent to $0.62 per diluted share, the best second quarter diluted earnings per share in Landstar history."

Gerkens continued, "Recent trends in June, and thus far in July, indicate continued strength in revenue per load with a relatively stable increase in the number of loads hauled month over prior year month.  I expect these trends to continue throughout the 2011 third quarter.  In addition, excluding disaster relief service revenue, revenue generated in the Company's third quarter has historically been very similar to revenue generated in the Company's second quarter.  As such, I would expect revenue, gross profit, operating income and diluted earnings per share to be similar to those experienced during the 2011 second quarter."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2:00 pm 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 Second Quarter 2011 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, expectations and intentions.  Terms such as "anticipates," "believes," "estimates," "intention," "plans," "predicts," "may," "should," "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 workers' compensation claims; unfavorable development of existing claims; dependence on independent sales agents; dependence on third-party capacity providers; disruptions or failures in our computer systems; a downturn in domestic or international economic growth or growth in the transportation sector; substantial industry competition; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2010 fiscal year, described in Item 1A Risk Factors, and 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 Landstar undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar:

Landstar System, Inc. is a non-asset based provider of integrated supply chain solutions.  Landstar delivers safe, specialized transportation, warehousing and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees.  All Landstar transportation companies are certified to ISO 9001:2008 quality management system standards and RC14001:2008 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)

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 25,


June 26,


June 25,


June 26,





2011


2010


2011


2010












Revenue


$ 1,247,547


$ 1,189,809


$    675,561


$    641,721

Investment income


921


574


393


289












Costs and expenses:










Purchased transportation


941,360


907,290


509,982


490,089


Commissions to agents


98,175


87,379


54,004


46,971


Other operating costs


15,623


15,504


7,679


7,968


Insurance and claims


24,715


26,129


13,449


13,831


Selling, general and administrative


73,046


73,816


35,782


36,973


Depreciation and amortization


12,787


11,988


6,388


6,196














Total costs and expenses


1,165,706


1,122,106


627,284


602,028












Operating income


82,762


68,277


48,670


39,982

Interest and debt expense


1,605


1,664


777


810












Income before income taxes


81,157


66,613


47,893


39,172

Income taxes


31,002


25,446


18,295


14,962












Net income


50,155


41,167


29,598


24,210

Less: Net loss attributable to noncontrolling interest


(62)


(446)


-


(227)

Net income attributable to Landstar System,










Inc. and subsidiary


$      50,217


$      41,613


$      29,598


$      24,437












Earnings per common share attributable to










Landstar System, Inc. and subsidiary


$          1.05


$          0.83


$          0.62


$          0.49












Diluted earnings per share attributable to










Landstar System, Inc. and subsidiary


$          1.05


$          0.83


$          0.62


$          0.49












Average number of shares outstanding:










Earnings per common share  


47,826,000


50,165,000


47,782,000


50,123,000


Diluted earnings per share


47,907,000


50,259,000


47,912,000


50,215,000












Dividends paid per common share


$        0.100


$        0.090


$        0.050


$        0.045



Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)



















June 25,


Dec. 25,





2011


2010

ASSETS





Current assets:





Cash and cash equivalents

$   39,544


$   44,706


Short-term investments

30,489


23,266


Trade accounts receivable, less allowance






of $4,155 and $5,324

385,540


307,350


Other receivables, including advances to independent






contractors, less allowance of $4,987 and $5,511

25,493


23,943


Deferred income taxes and other current assets

21,008


21,652



Total current assets

502,074


420,917








Operating property, less accumulated depreciation







and amortization of $146,476 and $137,830

123,895


132,649

Goodwill


57,470


57,470

Other assets

60,873


72,846

Total assets

$ 744,312


$ 683,882








LIABILITIES AND EQUITY




Current liabilities:





Cash overdraft

$   26,347


$   24,877


Accounts payable

175,325


137,297


Current maturities of long-term debt

17,260


22,172


Insurance claims

44,442


40,215


Other current liabilities

53,077


53,785



Total current liabilities

316,451


278,346








Long-term debt, excluding current maturities

93,894


99,439

Insurance claims

31,273


31,468

Deferred income taxes

20,214


23,662








Equity






Landstar System, Inc. and subsidiary shareholders' equity





Common stock, $0.01 par value, authorized 160,000,000






shares, issued 66,589,780 and 66,535,169 shares

666


665


Additional paid-in capital

163,355


169,268


Retained earnings

889,561


844,132


Cost of 18,872,652 and 18,674,902 shares of common






stock in treasury

(772,489)


(763,182)


Accumulated other comprehensive income

1,387


881



Total Landstar System, Inc. and subsidiary shareholders'







equity

282,480


251,764

Noncontrolling interest

-


(797)



Total equity

282,480


250,967

Total liabilities and equity

$ 744,312


$ 683,882




Landstar System, Inc. and Subsidiary


Supplemental Information


(Unaudited)

















Twenty Six Weeks Ended



Thirteen Weeks Ended




June 25,


June 26,



June 25,


June 26,




2011


2010



2011


2010

Revenue generated through (in thousands):






















Business Capacity Owners (1)


$        669,748


$        631,736



$       362,854


$        345,595


Truck Brokerage Carriers


472,391


466,163



258,668


246,408


Rail intermodal


34,832


34,092



18,367


19,316


Ocean cargo carriers


26,031


20,835



12,198


11,700


Air cargo carriers


16,900


8,562



9,340


3,959


Other (2)  


27,645


28,421



14,134


14,743




$     1,247,547


$     1,189,809



$       675,561


$        641,721























Number of loads:






















Business Capacity Owners (1)


402,730


420,770



210,690


223,020


Truck Brokerage Carriers


287,210


308,330



151,470


158,980


Rail intermodal


14,830


15,490



7,570


8,620


Ocean cargo carriers


3,950


3,110



2,120


1,650


Air cargo carriers


4,000


3,130



2,050


1,630




712,720


750,830



373,900


393,900























Revenue per load:






















Business Capacity Owners (1)


$            1,663


$            1,501



$           1,722


$            1,550


Truck Brokerage Carriers


1,645


1,512



1,708


1,550


Rail intermodal


2,349


2,201



2,426


2,241


Ocean cargo carriers


6,590


6,699



5,754


7,091


Air cargo carriers


4,225


2,735



4,556


2,429































June 25,


June 26,









2011


2010

Truck Capacity






















Business Capacity Owners (1) (3)







7,711


7,818


Truck Brokerage Carriers:











    Approved and active (4)







17,696


16,670


    Approved







8,984


9,047









26,680


25,717


Total available truck capacity providers







34,391


33,535













































(1) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.

(2) Includes premium revenue generated by the insurance segment and warehousing and transportation management fee revenue generated by the transportation logistics segment.

(3) Trucks provided by Business Capacity Owners were 8,231 and 8,399 at June 25, 2011 and June 26, 2010, respectively.

(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.



SOURCE Landstar System, Inc.



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