Landstar System Reports Second Quarter Diluted Earnings Per Share Of $0.66

Jul 25, 2013, 07:50 ET from Landstar System, Inc.

JACKSONVILLE, Fla., July 25, 2013 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2013 second quarter diluted earnings per share of $0.66, the second best second quarter diluted earnings per share in the Company's history. Gross profit margin representing gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) divided by revenue was 16.1 percent and operating margin, representing operating income divided by gross profit, was 45.7 percent.  Revenue for the 2013 second quarter was $679.3 million

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2013 second quarter was $622.7 million, or 92 percent of revenue, and revenue hauled by rail, air and ocean cargo carriers was $42.6 million, or 6 percent of revenue. 

Trailing twelve-month return on average shareholder's equity was 33 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 25 percent.  During the 2013 second quarter, Landstar purchased 884,327 shares of its common stock at a total cost of $46,603,000. Currently, there are 1,107,550 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program. As of June 29, 2013, the Company had $102 million in cash and short term investments and $20 million in borrowings outstanding under its senior credit facility. As of June 29, 2013, there was $170 million available for borrowing under the Company's senior credit facility.

Commenting on Landstar's 2013 second quarter performance, Landstar Chairman, President and CEO, Henry Gerkens said, "Revenue, gross profit margin, operating margin and diluted earnings per share in the 2013 second quarter were all in line with our recent expectations, as previously communicated in our 2013 second quarter mid- quarter update call on May 28, 2013. Consistent with the 2013 first quarter, the Company experienced softness in both the number of loads and revenue per load on loads hauled via truck throughout the second quarter with much of the softness coming from revenue hauled on unsided/platform equipment. Despite the soft operating environment, Landstar's operating margin for the 2013 second quarter was a very solid 45.7 percent. In addition, our 2013 second quarter operating margin was negatively impacted by increased insurance and claims expense and an approximate $2 million in costs for Landstar's Annual Agent Convention which was held in the 2013 second quarter as opposed to the first quarter of the prior year. The 2013 second quarter operating results, although not equal to the 2012 second quarter results, demonstrates the resiliency of our variable cost business model."

Gerkens continued, "During the first several weeks of the 2013 third quarter, revenue trends remained somewhat choppy, but improved from the trends experienced in the 2013 second quarter compared to the 2012 second quarter. Although the revenue generated in the first several weeks of July of 2013 remained below the revenue generated in the comparable 2012 period, I am encouraged by the improved trends. Based upon current revenue trends and considering the soft U.S. industrial production forecasts for the balance of the year, I would anticipate revenue for the 2013 third quarter to be in a range of $670 million to $715 million. Additionally, assuming approximately the same level of insurance and claims expense as a percentage of BCO revenue as incurred in the 2013 second quarter, I would anticipate an operating margin of between 46 percent and 48 percent and diluted earnings per share in a range of $0.67 to $0.72 per diluted share."

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 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," "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 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)

Twenty Six Weeks Ended

Thirteen Weeks Ended

June 29,

June 30,

June 29,

June 30,

2013

2012

2013

2012

Revenue

$        1,307,661

$         1,384,996

$          679,340

$       735,973

Investment income

745

792

371

405

Costs and expenses:

Purchased transportation

993,029

1,055,703

516,424

562,781

Commissions to agents

102,829

106,692

53,741

56,460

Other operating costs, net of gains on asset dispositions

9,526

11,188

4,201

4,716

Insurance and claims

23,654

20,401

11,848

9,306

Selling, general and administrative

70,976

76,461

35,750

37,662

Depreciation and amortization

14,993

13,404

7,810

6,664

Total costs and expenses

1,215,007

1,283,849

629,774

677,589

Operating income

93,399

101,939

49,937

58,789

Interest and debt expense

1,511

1,494

771

770

Income before income taxes

91,888

100,445

49,166

58,019

Income taxes 

34,682

37,743

18,740

22,164

Net income

$            57,206

$             62,702

$           30,426

$         35,855

Earnings per common share

$                1.23

$                 1.34

$               0.66

$             0.76

Diluted earnings per share

$                1.23

$                 1.33

$               0.66

$             0.76

Average number of shares outstanding:

Earnings per common share  

46,380,000

46,856,000

46,253,000

46,915,000

Diluted earnings per share

46,555,000

47,083,000

46,386,000

47,104,000

Dividends paid per common share

$                   -

$               0.110

$                  -

$           0.055

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

June 29,

Dec. 29,

2013

2012

ASSETS

Current assets:

Cash and cash equivalents

$        67,474

$        74,284

Short-term investments

34,560

35,528

Trade accounts receivable, less allowance

of $8,142 and $8,650

391,449

408,787

Other receivables, including advances to independent

contractors, less allowance of $4,257 and $4,657

56,483

55,278

Deferred income taxes and other current assets

23,187

18,067

Total current assets

573,153

591,944

Operating property, less accumulated depreciation

and amortization of $155,499 and $158,999

179,777

158,953

Goodwill

57,470

57,470

Other assets

81,831

71,054

Total assets

$      892,231

$      879,421

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Cash overdraft

$        27,025

$        33,647

Accounts payable

188,529

188,981

Current maturities of long-term debt

25,252

19,016

Insurance claims

67,392

64,509

Other current liabilities

33,402

38,186

Total current liabilities

341,600

344,339

Long-term debt, excluding current maturities

94,033

95,125

Insurance claims

20,538

21,896

Deferred income taxes and other non-current liabilities

43,816

38,607

Shareholders' equity:

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

shares, issued 66,996,081 and 66,859,864 shares

670

669

Additional paid-in capital

177,486

173,976

Retained earnings

1,100,162

1,042,956

Cost of 21,296,347 and 20,411,736 shares of common

stock in treasury

(886,135)

(839,517)

Accumulated other comprehensive income

61

1,370

Total shareholders' equity

392,244

379,454

Total liabilities and shareholders' equity 

$      892,231

$      879,421

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Twenty Six Weeks Ended

Thirteen Weeks Ended

June 29,

June 30,

June 29,

June 30,

2013

2012

2013

2012

Revenue generated through (in thousands):

Business Capacity Owners (1)

$     645,548

$     701,248

$     341,499

$      371,886

Truck Brokerage Carriers

551,822

578,932

281,181

308,090

Rail intermodal

36,688

36,220

18,677

18,838

Ocean and air cargo carriers

45,021

40,127

23,918

22,458

Other (2)   

28,582

28,469

14,065

14,701

$  1,307,661

$  1,384,996

$     679,340

$      735,973

Number of loads:

Business Capacity Owners (1)

392,370

415,150

204,600

215,950

Truck Brokerage Carriers

331,740

333,600

167,780

175,570

Rail intermodal

14,390

14,820

7,370

7,660

Ocean and air cargo carriers

8,040

7,910

4,070

3,930

746,540

771,480

383,820

403,110

Revenue per load:

Business Capacity Owners (1)

$          1,645

$          1,689

$         1,669

$          1,722

Truck Brokerage Carriers

1,663

1,735

1,676

1,755

Rail intermodal

2,550

2,444

2,534

2,459

Ocean and air cargo carriers

5,600

5,073

5,877

5,715

June 29,

June 30,

2013

2012

Truck Capacity Providers

Business Capacity Owners (1) (3)

7,876

7,959

Truck Brokerage Carriers:

     Approved and active (4)

20,844

19,283

     Approved

11,228

9,051

32,072

28,334

Total available truck capacity providers

39,948

36,293

(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 8,368 and 8,478 at June 29, 2013 and June 30, 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.



RELATED LINKS

http://www.landstar.com