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

Jul 21, 2011, 07:50 ET from Landstar System, Inc.

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.



RELATED LINKS

http://www.landstar.com