Landstar System Reports Third Quarter Results

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.

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SOURCE Landstar System, Inc.