Landstar System Reports Third Quarter Results

Oct 14, 2010, 07:50 ET from Landstar System, Inc.

JACKSONVILLE, Fla., Oct. 14 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported net income in the 2010 third quarter of $21.8 million, or $0.44 per diluted share, on revenue of $623 million.  Under the terms of the purchase agreement by which the Company acquired National Logistics Management Co. (NLM) in July 2009, Landstar agreed to pay additional purchase price contingent upon the achievement by NLM of certain levels of earnings through 2014.  As previously announced, Landstar recently agreed with the prior owner of NLM to buy-out the Company's contingent payment obligations in exchange for a total payment of $3.8 million.  Excluding the one-time charge of $3.8 million, or $0.05 per diluted share, net income in the 2010 third quarter was $24.2 million, or $0.49 per diluted share.  Net income in the 2009 third quarter was $20.1 million, or $0.39 per diluted share, on revenue of $501 million.

Truck transportation revenue hauled by business capacity owners and truck brokerage carriers in the 2010 third quarter was $573.5 million, or 92 percent of revenue, compared to $455.9 million, or 91 percent of revenue, in the 2009 third quarter.  Included in revenue hauled by truck brokerage carriers in the 2010 and 2009 third quarters were $20.3 million and $12.3 million, respectively, of fuel surcharges invoiced to customers.  In the 2010 and 2009 third quarters, the Company also invoiced customers $48.5 million and $36.2 million, respectively, of fuel surcharges that were passed 100 percent to business capacity owners and excluded from revenue.  Revenue hauled by rail, air and ocean cargo carriers was $36.2 million, or six percent of revenue, in the 2010 third quarter compared to $31.1 million, or six percent of revenue, in the 2009 third quarter.  Transportation management fee revenue generated by the supply chain solutions companies was $4.3 million, or one percent of revenue, in the 2010 third quarter compared to $3.7 million, or one percent of revenue, in the 2009 third quarter.  

Commenting on Landstar's 2010 third quarter, Landstar's Chairman, President and CEO, Henry Gerkens said, "I am pleased with the results of the Company's 2010 third quarter.  Revenue in the 2010 third quarter increased 24 percent over the 2009 third quarter due to stronger pricing and an increase in the number of loads hauled by business capacity owners, truck brokerage carriers and air and ocean carriers.  The total number of truck transportation loads hauled in the 2010 third quarter increased 10 percent over the 2009 third quarter.  Additionally, from a pricing standpoint, revenue per load for truck transportation in the 2010 third quarter increased 14 percent over the 2009 third quarter."

"Net revenue, defined as revenue less the cost of purchased transportation and commissions to agents, in the 2010 third quarter increased 13 percent over the 2009 third quarter and, excluding the impact of the one-time charge described above, operating income and diluted earnings per share in the 2010 third quarter increased 21 percent and 26 percent, respectively, over the 2009 third quarter, all in-line with our previous guidance."

"Landstar continues to generate outstanding returns. Trailing twelve month return on average shareholders' equity was 29 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 21 percent.  Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.05 per share.  The dividend is payable on November 26, 2010 to stockholders of record at the close of business on November 1, 2010.  It is the intention of the Board of Directors to continue to pay a quarterly dividend.  During the 2010 third quarter, Landstar purchased 745,220 shares of its common stock at a total cost of $29.6 million.  Under the Company's authorized share purchase program, the Company currently has a total of 2,000,000 shares of its common stock available for purchase."

"The total number of loads hauled in September and early October has been negatively impacted by a significant reduction in the number of loads hauled under the Company's less-than-truckload substitute line haul service offering.  I expect that trend to continue throughout the Company's 2010 fourth quarter.  I currently anticipate less-than-truckload substitute line haul revenue to represent only five percent of total 2010 fourth quarter revenue compared to 13 percent in the prior year quarter.  Otherwise, I see moderately increased load volume compared to the 2009 fourth quarter and a strong pricing environment due to tight capacity.  Assuming current trends continue throughout the 2010 fourth quarter, including the estimated decline in fourth quarter less-than-truckload substitute line haul revenue, I would expect 2010 fourth quarter revenue to be within a range of $580 million to $620 million, net revenue to be in a range of $97 million to $104 million and diluted earnings per share to be within a range of $0.45 to $0.50.  It also should be noted that the fourth quarter has been the most unpredictable of any quarter in each of the previous five years."

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 2010 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 2009 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 9001:2008 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)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 25,

September 26,

September 25,

September 26,

2010

2009

2010

2009

Revenue

$              1,812,635

$                1,461,081

$                622,826

$             500,670

Investment income

1,069

954

495

279

Costs and expenses:

Purchased transportation

1,381,955

1,090,219

474,665

372,328

Commissions to agents

134,695

117,735

47,316

39,484

Other operating costs

21,952

21,749

6,448

6,911

Insurance and claims

37,609

29,056

11,480

10,257

Selling, general and administrative (1)

114,886

99,690

41,070

33,078

Depreciation and amortization

18,444

17,414

6,456

6,213

Total costs and expenses (1)

1,709,541

1,375,863

587,435

468,271

Operating income (1)

104,163

86,172

35,886

32,678

Interest and debt expense

2,699

3,093

1,035

957

Income before income taxes (1)

101,464

83,079

34,851

31,721

Income taxes

38,761

31,466

13,315

11,859

Net income (1)

62,703

51,613

21,536

19,862

Less: Net loss attributable to noncontrolling interest

(712)

(214)

(266)

(214)

Net income attributable to Landstar System, Inc. and subsidiary (1)

$                   63,415

$                     51,827

$                  21,802

$               20,076

Earnings per common share attributable to Landstar System, Inc. and subsidiary (1)

$                       1.27

$                         1.01

$                      0.44

$                   0.39

Diluted earnings per share attributable to Landstar System, Inc. and subsidiary (1)

$                       1.27

$                         1.01

$                      0.44

$                   0.39

Average number of shares outstanding:

Earnings per common share  

49,921,000

51,325,000

49,434,000

51,069,000

Diluted earnings per share

49,990,000

51,507,000

49,447,000

51,245,000

Dividends paid per common share

$                   0.1400

$                     0.1250

$                  0.0500

$               0.0450

(1)

The 2010 thirty-nine and thirteen-week periods include a $3,800 one-time charge for the buyout of the contingent payment obligations in connection with the 2009 acquisition of NLM.  Net of related income tax benefits, these costs reduced net income for the thirty-nine and thirteen-week periods ended September 25, 2010 by $2,348, or $0.05 per common share ($0.05 per diluted share).

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

Sep. 25,

Dec. 26,

2010

2009

ASSETS

Current assets:

Cash and cash equivalents

$              55,075

$              85,719

Short-term investments

24,243

24,325

Trade accounts receivable, less allowance of $5,973 and $5,547

320,188

278,854

Other receivables, including advances to independent contractors, less allowance of $5,042 and $5,797

22,778

18,149

Deferred income taxes and other current assets

19,303

19,565

Total current assets

441,587

426,612

Operating property, less accumulated depreciation and amortization of $136,105 and $124,810

137,101

116,656

Goodwill

57,470

57,470

Other assets

77,482

48,054

Total assets

$            713,640

$            648,792

LIABILITIES AND EQUITY

Current liabilities:

Cash overdraft

$              22,497

$              28,919

Accounts payable

146,707

121,030

Current maturities of long-term debt

23,488

24,585

Insurance claims

33,004

41,627

Other current liabilities

53,392

42,474

Total current liabilities

279,088

258,635

Long-term debt, excluding current maturities

103,643

68,313

Insurance claims

33,111

30,680

Deferred income taxes

21,261

23,013

Equity

Landstar System, Inc. and subsidiary shareholders' equity

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,517,400 and 66,255,358 shares

665

663

Additional paid-in capital

167,909

161,261

Retained earnings

822,452

766,040

Cost of 17,397,564 and 16,022,111 shares of common stock in treasury

(715,093)

(660,446)

Accumulated other comprehensive income

1,181

498

Total Landstar System, Inc. and subsidiary shareholders' equity

277,114

268,016

Noncontrolling interest

(577)

135

Total equity

276,537

268,151

Total liabilities and equity

$            713,640

$            648,792

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 25,

September 26,

September 25,

September 26,

2010

2009

2010

2009

Revenue generated through (in thousands):

Business Capacity Owners (1)

$        966,221

$        840,391

$       334,485

$        289,726

Truck Brokerage Carriers

705,189

495,661

239,026

166,182

Rail intermodal

51,840

57,094

17,748

20,366

Ocean cargo carriers

34,045

25,459

13,210

7,941

Air cargo carriers

13,853

10,259

5,291

2,751

Other (2)  

41,487

32,217

13,066

13,704

$     1,812,635

$     1,461,081

$       622,826

$        500,670

Number of loads:

Business Capacity Owners (1)

624,270

561,840

203,500

196,840

Truck Brokerage Carriers

456,410

363,000

148,080

122,980

Rail intermodal

23,120

28,600

7,630

10,310

Ocean cargo carriers

4,930

3,920

1,820

1,330

Air cargo carriers

4,870

6,440

1,740

1,340

1,113,600

963,800

362,770

332,800

Revenue per load:

Business Capacity Owners (1)

$            1,548

$            1,496

$           1,644

$            1,472

Truck Brokerage Carriers

1,545

1,365

1,614

1,351

Rail intermodal

2,242

1,996

2,326

1,975

Ocean cargo carriers

6,906

6,495

7,258

5,971

Air cargo carriers

2,845

1,593

3,041

2,053

September 25,

September 26,

2010

2009

Truck Capacity

Business Capacity Owners (1) (3)

7,893

8,070

Truck Brokerage Carriers:

    Approved and active (4)

17,393

14,541

    Approved

9,490

10,576

26,883

25,117

Total available truck capacity providers

34,776

33,187

Agent Locations

1,341

1,403

(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 8,481 and 8,655 at September 25, 2010 and September 26, 2009, 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