2014

Landstar System Reports Fourth Quarter Results

JACKSONVILLE, Fla., Jan. 27 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported 2009 fourth quarter net income of $18.6 million, or $0.37 per diluted share, from revenue of $547.7 million.  Net income for the 2008 fourth quarter was $24.6 million, or $0.47 per diluted share, from revenue of $603.8 million.  

Revenue hauled by third-party truck capacity providers in the 2009 fourth quarter was $498.4 million, or 91 percent of revenue, compared to $547.4 million, or 91 percent of revenue, in the 2008 fourth quarter.  Included in revenue hauled by third-party truck capacity providers in the 2009 and 2008 fourth quarters were $16.8 million and $24.6 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers.  In the 2009 and 2008 fourth quarters, the Company also invoiced customers $40.7 million and $54.5 million, respectively, of fuel surcharges that were passed 100 percent to third-party BCO Independent Contractors and excluded from revenue.  Revenue hauled by rail, air and ocean cargo carriers was $35.0 million, or 6 percent of revenue, in the 2009 fourth quarter compared to $47.0 million, or 8 percent of revenue, in the 2008 fourth quarter.  Transportation management fee revenue was $4.4 million, or 1 percent of revenue, in the 2009 fourth quarter.  

Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.045 per share.  The dividend is payable on February 26, 2010 to stockholders of record at the close of business on February 5, 2010.  It is the intention of the Board of Directors to continue to pay a quarterly dividend.  During the 2009 fourth quarter, Landstar purchased 665,000 shares of its common stock at a total cost of $24.1 million.

The Company's variable cost business model continues to generate significant cash flow.  During 2009, the Company purchased 1,625,000 shares of its common stock at a total cost of $55.8 million and completed two acquisitions, while at the same time reduced borrowings on its senior credit facility by $30 million.  Under the Company's authorized share purchase program, the Company currently has a total of 1,375,000 shares of its common stock available for purchase.  

Commenting on Landstar's 2009 fourth quarter, Landstar's Chairman, President and CEO, Henry Gerkens said, "I am pleased with the way the Company finished 2009, particularly as it relates to revenue.  Sequentially, Landstar was able to increase revenue by 9 percent over the 2009 third quarter, and that was significantly better than has been experienced in the fourth quarter compared to the third quarter in each of the prior three years.  The increased revenue was primarily the result of a general increase in rate per load of approximately 4 percent, combined with increased loadings of approximately 6 percent over the 2009 third quarter.  2009 fourth quarter revenue compared to the 2008 fourth quarter decreased 9 percent, significantly better than the 28 percent decrease experienced during the first nine months of 2009 compared to the first nine months of 2008.

Gerkens continued, "Diluted earnings per share in the 2009 fourth quarter compared to the 2008 fourth quarter was negatively impacted by $0.10 per diluted share due to increased insurance and claims expense attributable to an unusual amount of adverse development of commercial trucking claims in the 2009 fourth quarter, partly offset by $0.03 per diluted share from a lower provision for taxes.  Although the cost of insurance and claims in the quarter was much higher than a typical quarter, our 2009 accident frequency rate was the lowest in Landstar history, demonstrating the Company's continued emphasis on safety.  Operating margin was 5.0 percent in the 2009 fourth quarter compared to 6.8 percent in the 2008 fourth quarter, primarily as a result of the adverse development of commercial trucking claims."

"As we moved through the 2009 fourth quarter, both the number of loads and rate per load continued to show signs of strengthening.  Through the first several weeks of January, I have seen daily volume increases of approximately five to ten percent compared to January 2009, while rate per load continues to show improvement.  Assuming these trends continue for the balance of the quarter, I would anticipate 2010 first quarter revenue to increase over the 2009 first quarter revenue in a mid to upper single digit range.  As a result, I anticipate Landstar's earnings to be within a range of $0.28 to $0.32 per diluted share.  Although I remain cautiously optimistic about 2010, I will not be providing specific annual revenue and earnings guidance.  From a longer term perspective, our goals are to achieve a cumulative average growth rate in revenue over a three to five year period in a mid-teen range, to increase annual operating margins and to grow earnings per share at a slightly higher rate than the rate of revenue increase."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5 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 Fourth Quarter 2009 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 2008 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 9001:2000 quality 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)
    
                              Fiscal Year End         Thirteen Weeks Ended
                              ---------------         --------------------
                             Dec. 26,    Dec. 27,     Dec. 26,     Dec. 27,
                               2009        2008         2009         2008
                             --------    --------     --------     --------
    
    Revenue                 $2,008,796  $2,643,069    $547,715    $603,837
    Investment income            1,268       3,339         314         653
    
    Costs and expenses:
      Purchased
       transportation        1,503,520   2,033,384     413,301     460,175
      Commissions to agents    160,571     203,058      42,836      49,201
      Other operating costs     29,173      28,033       7,424       7,219
      Insurance and claims      45,918      36,374      16,862       9,215
      Selling, general and
       administrative          133,612     137,758      33,922      32,301
      Depreciation and
       amortization             23,528      20,960       6,114       5,402
                             ---------   ---------     -------     -------
    
        Total costs and
         expenses            1,896,322   2,459,567     520,459     563,513
                             ---------   ---------     -------     -------
    
    Operating income           113,742     186,841      27,570      40,977
    Interest and debt
     expense                     4,030       7,351         937       1,716
                             ---------   ---------     -------     -------
    
    Income before income
     taxes                     109,712     179,490      26,633      39,261
    Income taxes                39,762      68,560       8,296      14,656
                             ---------   ---------     -------     -------
    Net income                  69,950     110,930      18,337      24,605
    Less: Net loss
     attributable to
     noncontrolling
     interest                    (445)           -       (231)           -
                             ---------   ---------     -------     -------
    Net income
     attributable to
     Landstar System,
     Inc. and subsidiary       $70,395    $110,930     $18,568     $24,605
                             =========   =========     =======     =======
    
    Earnings per common
     share attributable to
      Landstar System, Inc.
       and subsidiary            $1.38       $2.11       $0.37       $0.47
                             =========   =========     =======     =======
    
    Diluted earnings per
     share attributable to
     Landstar System, Inc.
     and subsidiary              $1.37       $2.10       $0.37       $0.47
                             =========   =========     =======     =======
    
    Average number of
     shares outstanding:
       Earnings per common
       share                51,095,000  52,503,000  50,404,000  51,973,000
                            ==========  ==========  ==========  ==========
       Diluted earnings per
       share                51,280,000  52,854,000  50,594,000  52,197,000
                            ==========  ==========  ==========  ==========
    
    Dividends paid per
     common share              $0.1700     $0.1550     $0.0450     $0.0400
                            ==========  ==========  ==========  ==========
    
    
    
    
    
    
                       Landstar System, Inc. and Subsidiary
                           Consolidated Balance Sheets
                 (Dollars in thousands, except per share amounts)
                                   (Unaudited)
    
                                                        Dec. 26,    Dec. 27,
                                                          2009        2008
                                                        --------    --------
    ASSETS
    Current assets:
      Cash and cash equivalents                         $85,719     $98,904
      Short-term investments                             24,325      23,479
      Trade accounts receivable, less allowance
        of $5,547 and $6,230                            278,854     315,065
      Other receivables, including advances to
       independent contractors, less allowance 
       of $5,797 and $4,298                              18,149      10,083
      Deferred income taxes and other current
       assets                                            19,565      27,871
                                                        -------     -------
        Total current assets                            426,612     475,402
                                                        -------     -------
    
    Operating property, less accumulated
     Depreciation and amortization 
     of $124,810 and $106,635                           116,656     124,178
    Goodwill                                             57,470      31,134
    Other assets                                         48,054      32,816
                                                       --------    --------
    Total assets                                       $648,792    $663,530
                                                       ========    ========
    
    LIABILITIES AND EQUITY
    Current liabilities:
      Cash overdraft                                    $28,919     $32,065
      Accounts payable                                  121,030     105,882
      Current maturities of long-term debt               24,585      24,693
      Insurance claims                                   41,627      23,545
      Accrued income taxes                                9,957      12,239
      Other current liabilities                          32,517      38,161
                                                        -------     -------
        Total current liabilities                       258,635     236,585
                                                        -------     -------
    
    Long-term debt, excluding current maturities         68,313     111,752
    Insurance claims                                     30,680      38,278
    Deferred income taxes                                23,013      23,779
    
    Equity
    Landstar System, Inc. and subsidiary
     shareholders' equity
       Common stock, $0.01 par value, authorized
        160,000,000 shares, issued 66,255,358 
        and 66,109,547 shares                               663         661
      Additional paid-in capital                        161,261     154,533
      Retained earnings                                 766,040     704,331
      Cost of 16,022,111 and 14,424,887 shares
       of common stock in treasury                     (660,446)   (605,828)
      Accumulated other comprehensive income
       (loss)                                               498       (561)
                                                       --------    --------
        Total Landstar System, Inc. and subsidiary
         shareholders' equity                           268,016     253,136
                                                       --------    --------
    Noncontrolling interest                                 135           -
                                                       --------    --------
        Total equity                                    268,151     253,136
                                                       --------    --------
    Total liabilities and equity                       $648,792    $663,530
                                                       ========    ========
    
    
    
    
    
                     Landstar System, Inc. and Subsidiary
                           Supplemental Information
                                  (Unaudited)
    
                                 Fiscal Year End        Thirteen Weeks Ended
                                ------------------      --------------------
                               Dec. 26,   Dec. 27,      Dec. 26,   Dec. 27,
                                 2009       2008          2009       2008
                               --------   ---------     --------    -------
    Revenue generated
     through (in thousands):
    ------------------------
       Business Capacity
        Owners (1)            $1,140,004  $1,388,353    $299,613    $317,371
       Truck Brokerage
        Carriers                 694,467     996,269     198,806     230,007
       Rail intermodal            76,346     136,367      19,252      29,431
       Ocean cargo carriers       33,835      42,153       8,376      12,824
       Air cargo carriers         17,621      14,891       7,362       4,756
       Other (2)                  46,523      65,036      14,306       9,448
                              ----------  ----------    --------    --------
                              $2,008,796  $2,643,069    $547,715    $603,837
                              ==========  ==========    ========    ========
    
    Number of loads:
    ----------------
       Business Capacity
        Owners (1)               761,940     820,680     200,100     182,350
       Truck Brokerage
        Carriers                 501,980     571,600     138,980     136,350
       Rail intermodal            37,890      58,510       9,290      12,900
       Ocean cargo carriers        5,370       5,380       1,450       1,390
       Air cargo carriers          7,780       8,260       1,340       2,740
                               ---------   ---------     -------     -------
                               1,314,960   1,464,430     351,160     335,730
                               =========   =========     =======     =======
    
    Revenue per load:
    -----------------
       Business Capacity
        Owners (1)                $1,496      $1,692      $1,497      $1,740
       Truck Brokerage
        Carriers                   1,383       1,743       1,430       1,687
       Rail intermodal             2,015       2,331       2,072       2,281
       Ocean cargo carriers        6,301       7,835       5,777       9,226
       Air cargo carriers          2,265       1,803       5,494       1,736
    
    
                                                       Dec. 26,     Dec. 27,
                                                         2009         2008
                                                       --------     --------
    Truck Capacity
    --------------
    
      Business Capacity Owners (1) (3)                    7,926        8,455
                                                         ------       ------
      Truck Brokerage Carriers:
           Approved and active (4)                       14,887       16,135
           Approved                                       9,886       10,036
                                                         ------       ------
                                                         24,773       26,171
                                                         ------       ------
      Total available truck capacity providers           32,699       34,626
                                                         ======       ======
    
    Agent Locations                                       1,366        1,428
    ---------------                                      ======       ======
    
    
    (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. Also, included in the 2008 fiscal
    year was $27,638 of revenue for bus capacity provided for evacuation
    assistance related to the storms that impacted the Gulf Coast in the
    third quarter of 2008.
    
    (3) Trucks provided by Business Capacity Owners were 8,519 and 9,039
    at December 26, 2009 and December 27, 2008, 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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