Landstar System Reports Record First Quarter Revenue Of $688 Million And Record First Quarter Diluted Earnings Per Share Of $0.61

JACKSONVILLE, Fla., April 24, 2014 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported record first quarter net income of $27.6 million, or $0.61 per diluted share, on record first quarter revenue of $688 million in the 2014 first quarter. Landstar reported net income from continuing operations of $25.8 million, or $0.55 per diluted share, on revenue from continuing operations of $623 million in the 2013 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $105 million in the 2014 first quarter compared to $96 million in gross profit from continuing operations in the 2013 first quarter. Operating margin, representing operating income divided by gross profit, was 42.7 percent in the 2014 first quarter.           

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2014 first quarter was $645.2 million, or 94 percent of revenue, compared to $574.7 million, or 92 percent of revenue from continuing operations, in the 2013 first quarter.  Revenue hauled by rail, air and ocean cargo carriers was $33.5 million, or 5 percent of revenue, in the 2014 first quarter compared to $39.1 million, or 6 percent of revenue from continuing operations, in the 2013 first quarter. 

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 28 percent.  As of March 29, 2014, the Company had $150 million in cash and short term investments. As of March 29, 2014, there was $192 million available for borrowing under the Company's senior credit facility.  Landstar purchased approximately 637,000 shares of its common stock during the 2014 first quarter at an aggregate cost of $37.1 million. Currently, there are approximately 2,131,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.  In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.06 per share payable on May 30, 2014 to stockholders of record at the close of business on May 8, 2014.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"I am extremely pleased with the Company's 2014 first quarter performance," said Landstar Chairman and CEO Henry Gerkens. "2014 first quarter revenue, gross profit, operating income, net income, and diluted earnings per share were all first quarter records. Strength in demand for truck transportation services that began in the 2013 fourth quarter increased as we moved through the 2014 first quarter. Significant growth in revenue hauled via van equipment outpaced the growth in revenue hauled via unsided/platform equipment, though I believe that the growth in revenue hauled via unsided/platform equipment was slightly reduced due to the harsh weather experienced in January and February. Overall, the number of loads hauled via truck in the 2014 first quarter increased 4 percent over the 2013 first quarter while revenue per load increased 8 percent over the same period. It should also be noted that 2014 first quarter diluted earnings per share was negatively impacted compared to 2013 first quarter diluted earnings per share from continuing operations by approximately $0.03 per diluted share due to the fact that the Company's annual agent meeting was held in the 2014 first quarter compared to 2013, when it was held in the second quarter. In addition, no provision for incentive compensation was included in the 2013 first quarter, whereas, a provision for incentive compensation of approximately $0.03 per diluted share was recorded in the 2014 first quarter. Operating margin in the first quarter is typically lower than the operating margin of any other quarter. In the 2014 first quarter, operating margin on a quarter over prior year quarter comparison was negatively impacted by the timing of the agent convention and provision for incentive compensation, although in-line with the operating margin anticipated in our previously issued guidance."

Gerkens continued, "As I mentioned earlier, the underlying increase in demand that began in the 2013 fourth quarter accelerated as we moved through the 2014 first quarter.  The increase in underlying demand combined with an industry-wide reduction in truck productivity, reflecting regulatory changes and severe weather that impacted the country during the 2014 first quarter, created supply chain disruption, tightening capacity and increasing spot rates. As we move into the second quarter, I expect that normal uptick in seasonal freight patterns will continue to drive strong demand for our truck services.  Supporting this expectation, demand for the Company's truck services accelerated during the first few weeks of the April fiscal period. During this period, the rate of growth in both the number of loads hauled and revenue per load on truck transportation revenue as compared to the comparable period of the prior year has exceeded the rate of growth experienced in the 2014 first quarter compared to the 2013 first quarter. Based on current trends, I anticipate 2014 second quarter revenue to be within a range of $750 million to $800 million. I also anticipate diluted earnings per share in the 2014 second quarter to be in a range of $0.73 to $0.78."

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 2014 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 2013 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 worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation logistics services to a broad range of customers 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 29,


March 30,







2014


2013










Revenue




$          688,197


$       622,880

Investment income



363


374










Costs and expenses:







Purchased transportation


530,031


477,496


Commissions to agents


52,704


49,032


Other operating costs, net of gains on asset dispositions


6,586


5,240


Insurance and claims



11,857


11,763


Selling, general and administrative


35,600


31,477


Depreciation and amortization


6,768


6,438












Total costs and expenses


643,546


581,446










Operating income



45,014


41,808

Interest and debt expense



768


740










Income from continuing operations before income taxes


44,246


41,068

Income taxes 




16,608


15,317

Income from continuing operations


27,638


25,751










Income from discontinued operations, net of income taxes


-


1,029










Net income




$           27,638


$         26,780



















Earnings per common share:





   Income from continuing operations


$               0.61


$             0.55

   Income from discontinued operations


-


0.02

   Earnings per common share


0.61


0.58










Diluted earnings per share:






   Income from continuing operations


$               0.61


$             0.55

   Income from discontinued operations


-


0.02

   Diluted earnings per share


0.61


0.57










Average number of shares outstanding:






Earnings per common share  


45,407,000


46,507,000


Diluted earnings per share


45,596,000


46,722,000










Dividends per common share


$               0.06


$                -

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)




























March 29,


Dec. 28,








2014


2013

ASSETS







Current assets:








Cash and cash equivalents



$      114,166


$      180,302


Short-term investments



35,560


34,939


Trade accounts receivable, less allowance






of $3,594 and $3,773



411,545


378,732


Other receivables, including advances to independent






contractors, less allowance of $4,212 and $4,253

81,986


73,903


Deferred income taxes and other current assets

14,778


14,592



Total current assets



658,035


682,468











Operating property, less accumulated depreciation






     and amortization of $160,307 and $157,985

171,717


177,329

Goodwill





31,134


31,134

Other assets




83,236


79,765

Total assets




$      944,122


$      970,696











LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:








Cash overdraft




$        21,179


$        27,780


Accounts payable



171,085


157,796


Current maturities of long-term debt


27,685


27,567


Insurance claims



93,790


92,280


Other current liabilities



62,308


70,237



Total current liabilities



376,047


375,660











Long-term debt, excluding current maturities

61,599


73,938

Insurance claims




23,912


24,171

Deferred income taxes and other non-current liabilities

39,387


42,446











Shareholders' equity:







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






shares, issued 67,121,124 and 67,017,858 shares

671


670


Additional paid-in capital



180,979


179,807


Retained earnings



1,197,962


1,173,044


Cost of 22,168,803 and 21,528,693 shares of common






stock in treasury



(936,101)


(899,028)


Accumulated other comprehensive loss

(334)


(12)



Total shareholders' equity



443,177


454,481

Total liabilities and shareholders' equity 

$      944,122


$      970,696

 


Landstar System, Inc. and Subsidiary


Supplemental Information


(Unaudited)



















Thirteen Weeks Ended





March 29,


March 30,





2014


2013

Revenue generated through (in thousands):














Business Capacity Owners (1)



$     343,652


$      304,049


Truck Brokerage Carriers



301,513


270,641


Rail intermodal



16,495


18,011


Ocean and air cargo carriers



17,016


21,103


Other (2)   



9,521


9,076





$     688,197


$      622,880















Number of loads:














Business Capacity Owners (1)



198,870


187,770


Truck Brokerage Carriers



165,450


163,960


Rail intermodal



6,410


7,020


Ocean and air cargo carriers



3,890


3,970





374,620


362,720















Revenue per load:














Business Capacity Owners (1)



$         1,728


$          1,619


Truck Brokerage Carriers



1,822


1,651


Rail intermodal



2,573


2,566


Ocean and air cargo carriers



4,374


5,316



















March 29,


March 30,





2014


2013

Truck Capacity Providers














Business Capacity Owners (1) (3)



7,922


7,851


Truck Brokerage Carriers:







     Approved and active (4)



21,588


20,571


     Approved



11,291


11,200





32,879


31,771


Total available truck capacity providers



40,801


39,622

 

(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 revenue generated

          by the transportation logistics segment.           


(3) Trucks provided by Business Capacity Owners were 8,424 and 8,348 at March 29, 2014 and

          March 30, 2013, 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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