Landstar System Reports Record Quarterly Revenue Of $814 Million And Record Quarterly Diluted Earnings Per Share Of $0.80 In The Second Quarter

Jul 23, 2014, 07:50 ET from Landstar System, Inc.

JACKSONVILLE, Fla., July 23, 2014 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported record second quarter net income of $35.9 million, or $0.80 per diluted share, on record revenue of $814 million in the 2014 second quarter. Revenue and diluted earnings per share for the 2014 second quarter were the highest quarterly revenue and diluted earnings per share in Landstar history.  Landstar reported net income from continuing operations of $29.5 million, or $0.64 per diluted share, on revenue from continuing operations of $674 million in the 2013 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $121.6 million in the 2014 second quarter compared to $103.6 million in gross profit from continuing operations in the 2013 second quarter. Operating margin, representing operating income divided by gross profit, was 48.1 percent in the 2014 second quarter.       

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2014 second quarter was $764.7 million, or 94 percent of revenue, compared to $622.7 million, or 92 percent of revenue from continuing operations, in the 2013 second quarter.  Revenue hauled by rail, air and ocean cargo carriers was $39.9 million, or 5 percent of revenue, in the 2014 second quarter compared to $42.6 million, or 6 percent of revenue from continuing operations, in the 2013 second 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 June 28, 2014, the Company had $130 million in cash and short term investments. As of June 28, 2014, there was $192 million available for borrowing under the Company's senior credit facility.  Landstar purchased approximately 940,000 shares of its common stock during the 2014 first half at an aggregate cost of $56.4 million. Currently, there are approximately 1,828,000 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 $0.07 per share payable on August 29, 2014 to stockholders of record at the close of business on August 11, 2014.  This represents a 17 percent increase to the Company's previous quarterly dividend.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"Landstar's 2014 second quarter results were outstanding," said Landstar Chairman and CEO Henry Gerkens. "Revenue, gross profit, operating income, net income, and diluted earnings per share were all second quarter records. Overall, demand for Landstar's truck transportation services in the 2014 second quarter was very strong, as the number of loads hauled via truck increased 9 percent over the 2013 second quarter.  Even stronger was the revenue per load hauled via truck which increased 13 percent over the 2013 second quarter. Both the number of loads hauled via truck and the related average revenue per load were the highest quarterly amounts in the Company's history.  From an equipment standpoint, revenue hauled via van equipment during the 2014 second quarter increased 26 percent compared to revenue hauled via van equipment in the 2013 second quarter while revenue hauled via unsided/platform equipment, in the 2014 second quarter exceeded the 2013 second quarter by 18 percent. Despite an increased provision for incentive compensation, our operating margin was an impressive 48.1 percent in the 2014 second quarter, the second highest second quarter operating margin in Landstar's history. And finally, diluted earnings per share from continuing operations in the 2014 second quarter increased 25 percent over the 2013 second quarter."

Gerkens continued, "At this point, I believe the current operating environment will remain very much intact throughout the balance of 2014.  The increase in underlying demand as well as industry-wide truck productivity issues should continue to contribute to the very healthy pricing environment for spot market transactions. Although the 2014 third quarter is only several weeks old, the strong trends have continued.  Based on the continuation of these positive trends through the 2014 third quarter and given that the revenue generated in the Company's third quarter has historically been very similar to revenue generated in the Company's second quarter, I would expect 2014 third quarter revenue, gross profit, operating income and diluted earnings per share to be similar with those experienced in the 2014 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 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 and expectations.  Terms such as "anticipates," "believes," "estimates," "intention," "expects," "plans," "predicts," "may," "should," "could," "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 the Company's computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed 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 the Company 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 RC14001:2013 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 28,

June 29,

June 28,

June 29,

2014

2013

2014

2013

Revenue

$  1,502,640

$  1,297,270

$     814,443

$     674,390

Investment income

695

745

332

371

Costs and expenses:

Purchased transportation

1,158,964

994,536

628,933

517,040

Commissions to agents

116,565

102,747

63,861

53,715

Other operating costs, net of gains on asset dispositions

12,829

9,385

6,243

4,145

Insurance and claims

25,706

23,572

13,849

11,809

Selling, general and administrative

72,352

63,977

36,752

32,500

Depreciation and amortization

13,333

13,563

6,565

7,125

Total costs and expenses

1,399,749

1,207,780

756,203

626,334

Operating income

103,586

90,235

58,572

48,427

Interest and debt expense

1,486

1,511

718

771

Income from continuing operations before income taxes

102,100

88,724

57,854

47,656

Income taxes 

38,537

33,481

21,929

18,164

Income from continuing operations

63,563

55,243

35,925

29,492

Income from discontinued operations, net of income taxes

-

1,963

-

934

Net income

$       63,563

$       57,206

$       35,925

$       30,426

Earnings per common share:

   Income from continuing operations

$           1.41

$           1.19

$           0.80

$           0.64

   Income from discontinued operations

-

0.04

-

0.02

   Earnings per common share

1.41

1.23

0.80

0.66

Diluted earnings per share:

   Income from continuing operations

$           1.40

$           1.19

$           0.80

$           0.64

   Income from discontinued operations

-

0.04

-

0.02

   Diluted earnings per share

1.40

1.23

0.80

0.66

Average number of shares outstanding:

Earnings per common share  

45,171,000

46,380,000

44,935,000

46,253,000

Diluted earnings per share

45,362,000

46,555,000

45,128,000

46,386,000

Dividends per common share

$           0.12

$               -

$           0.06

$               -

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

June 28,

Dec. 28,

2014

2013

ASSETS

Current assets:

Cash and cash equivalents

$     93,133

$   180,302

Short-term investments

36,633

34,939

Trade accounts receivable, less allowance

of $4,442 and $3,773

460,079

378,732

Other receivables, including advances to independent

contractors, less allowance of $3,785 and $4,253

54,615

73,903

Deferred income taxes and other current assets

28,712

14,592

Total current assets

673,172

682,468

Operating property, less accumulated depreciation

and amortization of $160,434 and $157,985

175,086

177,329

Goodwill

31,134

31,134

Other assets

83,136

79,765

Total assets

$   962,528

$   970,696

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Cash overdraft

$     27,202

$     27,780

Accounts payable

195,335

157,796

Current maturities of long-term debt

29,419

27,567

Insurance claims

77,909

92,280

Other current liabilities

42,285

70,237

Total current liabilities

372,150

375,660

Long-term debt, excluding current maturities

63,386

73,938

Insurance claims

23,821

24,171

Deferred income taxes and other non-current liabilities

43,113

42,446

Shareholders' equity:

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

shares, issued 67,162,401 and 67,017,858 shares

672

670

Additional paid-in capital

183,681

179,807

Retained earnings

1,231,187

1,173,044

Cost of 22,471,704 and 21,528,693 shares of common

stock in treasury

(955,442)

(899,028)

Accumulated other comprehensive loss

(40)

(12)

Total shareholders' equity

460,058

454,481

Total liabilities and shareholders' equity

$   962,528

$   970,696

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Twenty Six Weeks Ended

Thirteen Weeks Ended

June 28,

June 29,

June 28,

June 29,

2014

2013

2014

2013

Revenue generated through (in thousands):

Business Capacity Owners (1)

$    740,689

$    645,548

$ 397,037

$ 341,499

Truck Brokerage Carriers

669,154

551,822

367,641

281,181

Rail intermodal

37,021

36,688

20,526

18,677

Ocean and air cargo carriers

36,437

45,021

19,421

23,918

Other (2)   

19,339

18,191

9,818

9,115

$ 1,502,640

$ 1,297,270

$ 814,443

$ 674,390

Number of loads:

Business Capacity Owners (1)

411,370

392,370

212,500

204,600

Truck Brokerage Carriers

357,170

331,740

191,720

167,780

Rail intermodal

14,280

14,390

7,870

7,370

Ocean and air cargo carriers

8,010

8,040

4,120

4,070

790,830

746,540

416,210

383,820

Revenue per load:

Business Capacity Owners (1)

$        1,801

$        1,645

$     1,868

$     1,669

Truck Brokerage Carriers

1,873

1,663

1,918

1,676

Rail intermodal

2,593

2,550

2,608

2,534

Ocean and air cargo carriers

4,549

5,600

4,714

5,877

June 28,

June 29,

2014

2013

Truck Capacity Providers

Business Capacity Owners (1) (3)

8,074

7,876

Truck Brokerage Carriers:

     Approved and active (4)

23,807

20,844

     Approved

11,743

11,228

35,550

32,072

Total available truck capacity providers

43,624

39,948

(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 8,591 and 8,368 at June 28, 2014 and June 29, 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.



RELATED LINKS

http://www.landstar.com