Landstar System Reports First Quarter Diluted Earnings Per Share of $0.57

JACKSONVILLE, Fla., April 25, 2013 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2013 first quarter diluted earnings per share of $0.57 from net income of $26.8 million, equaling the record first quarter net income and diluted earnings per share that were achieved in the 2012 first quarter.  Operating margin, representing operating income divided by gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) was 42.3 percent in the 2013 first quarter compared to 40.8 percent in the 2012 first quarter.  Revenue for the 2013 first quarter was the second highest first quarter revenue in Landstar history at $628.3 million compared to $649.0 million in the 2012 first quarter. 

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2013 first quarter was $574.7 million, or 91 percent of revenue, compared to $600.2 million, or 92 percent of revenue, in the 2012 first quarter.  Revenue hauled by rail, air and ocean cargo carriers was $39.1 million, or 6 percent of revenue, in the 2013 first quarter compared to $35.1 million, or 5 percent of revenue, in the 2012 first quarter. 

The resiliency of Landstar's variable cost business model continues to generate outstanding returns and provide a strong balance sheet.  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 27 percent.  As of March 30, 2013, the Company had $139.8 million in cash and short term investments and $25 million in borrowings outstanding under its senior credit facility. As of March 30, 2013, there was $167 million available for borrowing under the Company's senior credit facility. Currently, there are 1,992,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.

Commenting on Landstar's 2013 first quarter performance, Landstar Chairman, President and CEO, Henry Gerkens said,  "Diluted earnings per share was $0.57 in the 2013 first quarter, matching the first quarter record of $0.57, which was set last year.  Operating margin in the 2013 first quarter of 42.3 percent was the highest first quarter operating margin in Landstar history. The Company's annual agent meeting was held in the 2013 second quarter versus in the 2012 first quarter, which resulted in a favorable comparison of the 2013 first quarter operating margin to the 2012 first quarter operating margin. From a revenue standpoint, revenue in the 2013 first quarter was the second highest first quarter revenue in Landstar history.  Demand for the Company's truck services was choppy throughout the 2013 first quarter due in large part to inclement weather. Additionally, the 2013 first quarter had 2 fewer full work days than the 2012 first quarter. In general, Landstar experienced softness throughout the 2013 first quarter in both the number of loads and revenue per load on loads hauled via truck with much of the softness coming from revenue hauled on heavy/specialized platform equipment."

Gerkens continued, "Demand for the Company's truck services continued to be soft during the first few weeks of April. Based on current trends, I anticipate 2013 second quarter revenue to be below revenue for the 2012 second quarter, similar to the shortfall experienced in the 2013 first quarter over the 2012 first quarter. Diluted earnings per share in the 2013 second quarter will be negatively impacted when compared to the 2012 second quarter by approximately $0.03 per diluted share related to the Company's annual agent meeting held in April 2013, as described above. In addition, estimated insurance and claims expense for the 2013 second quarter, calculated using a historical 5 year average of insurance and claims expense as a percentage of BCO revenue, is projected to be higher than insurance and claims expense in the 2012 second quarter. Including the $0.03 per diluted share charge for the Company's annual agent meeting and what amounts to a normalized insurance and claims expense, I anticipate diluted earnings per share to be within a range of $0.68 to $0.73 for the 2013 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 First Quarter 2013 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," "expects," "plans," "predicts," "projects," "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 other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third-party capacity providers; decreased demand for transportation services; substantial industry competition; disruptions or failures in our computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; acquired businesses; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2012 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 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 and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees.  All Landstar transportation services 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)

























Thirteen Weeks Ended







March 30,


March 31,







2013


2012










Revenue




$          628,321


$       649,023

Investment income



374


387










Costs and expenses:







Purchased transportation


476,605


492,922


Commissions to agents


49,088


50,232


Other operating costs, net of gains on asset dispositions


5,325


6,472


Insurance and claims



11,806


11,095


Selling, general and administrative


35,226


38,799


Depreciation and amortization


7,183


6,740












Total costs and expenses


585,233


606,260










Operating income



43,462


43,150

Interest and debt expense



740


724










Income before income taxes


42,722


42,426

Income taxes 




15,942


15,579










Net income




$           26,780


$         26,847



















Earnings per common share


$               0.58


$             0.57










Diluted earnings per share



$               0.57


$             0.57










Average number of shares outstanding:






Earnings per common share  


46,507,000


46,800,000


Diluted earnings per share


46,722,000


47,061,000










Dividends paid per common share


$                  -


$           0.055

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)




























Mar. 30,


Dec. 29,








2013


2012

ASSETS







Current assets:








Cash and cash equivalents



$        90,782


$        74,284


Short-term investments



48,974


35,528


Trade accounts receivable, less allowance






of $8,333 and $8,650



378,931


408,787


Other receivables, including advances to independent






contractors, less allowance of $4,227 and $4,657

64,017


55,278


Deferred income taxes and other current assets

14,629


18,067



Total current assets



597,333


591,944











Operating property, less accumulated depreciation






      and amortization of $161,007 and $158,999

161,459


158,953

Goodwill





57,470


57,470

Other assets




68,772


71,054

Total assets




$      885,034


$      879,421











LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:








Cash overdraft




$        27,385


$        33,647


Accounts payable



179,014


188,981


Current maturities of long-term debt


20,673


19,016


Insurance claims



65,857


64,509


Other current liabilities



41,890


38,186



Total current liabilities



334,819


344,339











Long-term debt, excluding current maturities

82,448


95,125

Insurance claims




21,427


21,896

Deferred income taxes and other non-current liabilities

38,538


38,607











Shareholders' equity:







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






shares, issued 66,973,215 and 66,859,864 shares

670


669


Additional paid-in capital



175,841


173,976


Retained earnings



1,069,736


1,042,956


Cost of 20,412,020 and 20,411,736 shares of common






stock in treasury



(839,532)


(839,517)


Accumulated other comprehensive income

1,087


1,370



Total shareholders' equity



407,802


379,454

Total liabilities and shareholders' equity 

$      885,034


$      879,421

 


Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)





















Thirteen Weeks Ended





March 30,


March 31,





2013


2012

Revenue generated through (in thousands):














Business Capacity Owners (1)



$     304,049


$      329,362


Truck Brokerage Carriers



270,641


270,842


Rail intermodal



18,011


17,382


Ocean and air cargo carriers



21,103


17,669


Other (2)   



14,517


13,768





$     628,321


$      649,023















Number of loads:














Business Capacity Owners (1)



187,770


199,200


Truck Brokerage Carriers



163,960


158,030


Rail intermodal



7,020


7,160


Ocean and air cargo carriers



3,970


3,980





362,720


368,370















Revenue per load:














Business Capacity Owners (1)



$         1,619


$          1,653


Truck Brokerage Carriers



1,651


1,714


Rail intermodal



2,566


2,428


Ocean and air cargo carriers



5,316


4,439



















March 30,


March 31,





2013


2012

Truck Capacity Providers














Business Capacity Owners (1) (3)



7,851


7,825


Truck Brokerage Carriers:







     Approved and active (4)



20,571


18,946


     Approved



11,200


9,382





31,771


28,328


Total available truck capacity providers



39,622


36,153





























(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 8,348 and 8,350 at March 30, 2013 and 

March 31, 2012, 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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